Canadian cannabis investment firm CannaRoyalty Corp. has signed a letter of intent to acquire a 20 percent equity interest in cannabis testing specialists Anandia Laboratories Inc. in a deal worth $4 million (USD $3,024,003.16) in cash, common shares, and equipment.

Anandia Labs holds a dealers license from Health Canada, permitting them analyze, extract, and cultivate cannabis for breeding and strain improvement. The dealers license allows the lab to expand its research efforts wider than licensed producers under the Access to Cannabis for Medical Purposes Regulations. Anandia serves as the testing facility for seven licensed producers in Canada.

Dr. Jonathan Page, Anandia co-founder, noted that the recent report by the Task Force on Cannabis Legalization and Regulation described analytical testing as “the ‘cornerstone’ for ensuring safe and effective products in the future cannabis market.”

“We have elected to partner with CannaRoyalty given their expertise in extraction, post-processing and the development of proprietary formulations,” Page said in a press release. “Building on our analytical chemistry expertise, our objective is to leverage our dealers license to build a national, best-in-class cannabis extraction and processing facility.”

Marc Lustig, CannaRoyalty CEO, said that the partnership with “exemplifies [their] approach of acquiring interests in high-value, strategic assets in the North American cannabis sector.”

“As the only independent Canadian testing facility specializing exclusively in cannabis, Anandia Labs is clearly well positioned given how crucial independent testing of cannabis products is to the future of the cannabis sector…” he said. “In addition, the value that we expect to help create through Anandia Labs’ dealers license for the extraction of derivatives – together with [their] impressive patent portfolio of genetics – gives CannaRoyalty shareholders exciting exposure to rapid and sustainable growth areas in Canada’s dynamic cannabis sector.”

The deal is expected to close on Jan. 31.

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