Australian-owned medical marijuana company Phytotech has merged with MMJ Bioscience in an effort to expand from cultivating cannabis to developing and distributing it in pill form.

Phytotech will acquire 100% of the issued capital of Canadian company MMJ Bioscience Inc with the aim of bringing marijuana-based pharmaceutical and nutraceutical products to a global market.

The deal is structured on Phytotech’s scrip share value (based on a pre-deal share price of $0.305 per share) of $15.5 million upfront and an additional $5.185 million in performance shares when certain milestones are achieved.

The “merger of equals” aims to create an expanding “farm to pharma” global strategy.

Phytotech says the transaction will not include any equity raising given it has sufficient funds available to meet the working capital requirements of MMJ until revenues commence.

Revenue from sales of a proprietary gastro-resistant cannabidiol (CBD) pill are expected by July 2015, as well as near-term license approval for MMJ’s Duncan Facility (near Vancouver, BC) to produce up to 700kg of medical cannabis per year.

MMJ has three fully owned subsidiaries which will join the merged entity as part of the deal.

Image: Phytotech ASX release.

Anticipated cash flows from the Duncan Facility in Canada and sales from CBD supplements in Europe are expected to fund future business expansion, research and clinical trials.

Boaz Wachtel, managing director of PhytoTech said: “We expect substantial value uplift upon completion of each of the performance milestones structured into the deal. Furthermore, we are excited by the opportunity to produce and supply a GMP-produced CBD pill which, to our knowledge, will be the first of its kind in the MC market.”

NOW READ: The boss of medical marijuana company Phytotech whose shares soared on debut has suddenly quit

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