VANCOUVER, BC, Dec 2, 2021 / PRNewswire / – Xebra Brands Ltd. (“Xebra”) (XBRA: CSE) (XBRAF: OTC) (9YC: FSE), a cannabis company, announces that its wholly-owned Mexican subsidiary Desart MX, SA de CV (“Xebra Mexico”), has been judged by the Mexican Supreme Court issued an injunction positioning it in the Mexican CBD and CBG market with an absolute first mover advantage. All five Supreme Court justices voted unanimously in favor of the injunction against Xebra Mexico.

The decision of the Supreme Court is irrevocable and cannot be appealed. Next, the Supreme Court will mandate the federal court that previously tried the case to enforce the Supreme Court’s final decision and order the Mexican Health Authority (COFEPRIS) to give Xebra all approvals. Xebra expects this process to be completed as soon as possible.

As a result of the injunction and Mexican law, Xebra Mexico is the only company in Mexico who are authorized to legally carry out the following activities: importing cannabis seeds, growing cannabis, processing cannabis, extracting cannabinoids and manufacturing cannabis products. Xebra Mexico could also offer cannabis products within. Selling Mexico and for export. Xebra believes its first mover advantage in the Mexican CBD and CBG market could last for 1 to 3 years. Commercialization of high-THC cannabis is still prohibited in Mexico; However, the Mexican Congress is in the process of discussing a bill to make it fully legal. Earlier this year, possession of small amounts of cannabis was decriminalized.

The preliminary injunction from Xebra Mexico applies specifically to the industrial cannabis sector and expressly for cannabis with a low THC content (below 1%), i.e. practical for hemp cultivation and processing as well as for the production and sale of mainly CBD and CBG products such as tinctures , Oils, topicals, edibles, beverages, concentrates, distillates, emulsions and biomass, etc., and certain uses of the cannabis flower.

There is a lot of misinformation circulating about the legal status of cannabis in Mexico. While personal possession of small amounts of cannabis has been decriminalized and legalization is in progress, commercial cannabis activities to date as of the Supreme Court ruling in favor of Xebra Mexico have been very limited and currently fall into 3 categories:

  • INDUSTRIAL APPLICATIONS – Only Xebra Mexico is permitted to legally grow and process hemp and to manufacture CBD and CBG products such as tinctures, oils, topicals, edibles, beverages, concentrates, distillates, emulsions and biomass and to market the cannabis bloom. To the best of Xebra’s knowledge, there may only be two other companies in the Mexico currently legally have a limited supply of CBD products on the shelves where they are imported Mexico for distribution and sales. The companies obtained these rights in legal proceedings; however, they cannot grow or manufacture, and their right was not granted by the Supreme Court and so can be revoked by the authorities at any time. No company in Mexico can currently do anything with THC under the industrial category.
  • MEDICAL APPLICATION – This Ordinance under the General Health Law (Law of 2017) was enacted in January 2021. This category ONLY applies to the pharmaceutical industry and includes THC and all other cannabinoids such as CBD and CBG. The cultivation and processing is only allowed for the production of cannabis medicinal products, in practice, however, lengthy, multi-year human pharmaceutical studies are required for the approval of a cannabis medicinal product under this category, so that a company is essentially not expected to grow or in the foreseeable future Market time under this category. This category also includes research licenses that give laboratories, universities, large pharmaceutical companies, etc.
  • ADULT USE – There is no legal framework for commercializing cannabis for adults, however Congress is debating a bill and state legalization could come in 2022. Once a legal framework is approved, it can take up to 3 years for a company to start operating as it would likely require a lengthy application and approval / review process.

Xebra believes Mexico has the potential to become one of the largest cannabis consumption markets in the world in the short term. Mexico is also within the North American Free Trade Zone (USMCA), which gives it considerable cost advantages in cultivation and product manufacture Canada and The United States. Xebra believes that there is enough precedent in many agricultural crops and finished products to indicate that there is a possibility that ultimately most of North American industrial-scale cannabis production will end up being in Mexico.

More information on Xebra’s Mexican plans will be announced in due course.

ON BEHALF OF THE MANAGEMENT BOARD:

Rodrigo Gallardo
president

Certain information in this press release contains forward-looking statements under applicable securities laws. Any statements that are not historical facts may be considered forward-looking statements. This includes statements about the expectations of Xebra Brands Ltd. (the “Company”) in relation to: the final decision by the Supreme Court of Mexico to issue an injunction to the Company’s wholly owned subsidiary (the “Injunction”), obtain all approvals relating to the injunction, the Company receives a First mover benefit related to the injunction, other companies that grow or market cannabis Mexico, the possibility that most of North American industrial-scale cannabis production is in Mexico, or expectations regarding Xebra’s business; the legalization of cannabis and its derivatives in Mexico; the potential for increased industry-wide cannabis production in Mexico and the time of it; Export of cannabis products from Mexico; his ability to successfully implement his business plan or model; its ability to provide economic, environmental, social or other benefits of any kind in the communities in which it operates or will operate in the future; its ability to lead the way in a country or to obtain or retain government licenses, permits, or permits in general or in particular Mexico, Colombia, Canada, the Netherlands, or elsewhere; its ability to successfully apply for and obtain trademarks and other intellectual property in any jurisdiction; its ability to be competitive; its ability to cultivate, grow, or process hemp or cannabis Mexico, Colombia, Canada, the Netherlands, or elsewhere and related plans; financial, operational or other conditions relating to the company’s participation in the Dutch medical cannabis cultivation study; its ability to make cannabis beverages, wellness products, or other products; its ability to commercialize or sell cannabis beverages, wellness products, or other products, in Mexico, Colombia, Canada, the Netherlands, or elsewhere; its ability to commercialize or sell Vicious Citrus Lemonade in any jurisdiction in 2022 or anytime; its ability to commercialize or sell Elements wellness products in any jurisdiction at any time; its ability to manufacture wellness products with therapeutic effects or benefits; Plans for future growth and direction of the company; Financial projections, including expected earnings, gross profits, and EBITDA (a non-GAAP financial measure); plans to increase product volumes, capacity of existing facilities, supplies from third party growers and contractors; expected growth of the cannabis industry in general; Expectations, beliefs and assumptions of management; Events or developments expected by Xebra in the future; general economic conditions; and other risk factors set out in the Company’s prospectus dated September 30, 2021. All statements, other than statements of historical fact, are forward-looking information and statements. The words “aim”, “believe”, “expect”, “anticipate”, “consider”, “aim”, “intend”, “continue”, “plan”, “budget”, “estimate”, “may”, “Will” and similar expressions identify forward-looking information and statements. Forward-looking statements are necessarily based on a number of estimates and assumptions that, although believed to be reasonable by Xebra as of the date of these statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. These factors include, but are not limited to, Xebra’s inability to generate sufficient income or raise sufficient funds to carry out its business plan; Changes in government legislation, taxation, controls, regulations, and political or economic developments in various countries; Risks associated with farming and growing activities in general, including bad weather, access to seeds, poor crop yields and spoilage; Compliance with the import and export laws of various countries; significant fluctuations in cannabis prices and transportation costs; the risk of obtaining necessary licenses and permits; Inability, for any reason, to identify, negotiate and complete a potential acquisition; the ability to retain key employees; Dependence on third parties for services and deliveries; Non-performance by contracting parties; general economic conditions; the continued growth in global demand for cannabis products and the continued increase in the number of jurisdictions legalizing cannabis; and timely receipt of regulatory approval for license applications. The above list is not exhaustive and Xebra assumes no obligation to update or revise the above information unless required by law. Many of these uncertainties and contingencies could affect Xebra’s actual performance and could cause actual performance to differ materially from any forward-looking statements made by or on behalf of Xebra. Readers are cautioned that forward-looking statements are not guarantees of future performance and that readers should not place undue reliance on such forward-looking statements. There can be no assurance that these statements will prove to be accurate and actual results and future events could differ materially from those contained in these statements.

SOURCE Xebra Brands Ltd.