(Yicai Global) May 27 -- Zhejiang Yatai Pharmaceutical, an active ingredient producer for pharma products, is muscling its way into Canada's hemp field in a big way.

The company announced today it will lay out CAD7 million (USD5.2 Million)in cash to set up a joint venture with its Canadian cooperation partners to plant hemp, extract its active ingredients and develop derivative products.

The proposed JV will have a registered capital of CAD14 million, in which Yatai Pharma will take a 50 percent stake with CAD7 million in cash, while Rippington will take a 25 percent stake with CAD3.5 million in cash. Benchmark will take the remaining 25 percent for CAD3.5 million in intangible assets, including national licenses for cannabis cultivation, extraction and sales owned by its wholly-owned unit Potanicals Green Growers, as well as its commitment to apply for licenses for the hemp acreage.

The firm's shares [SHE:002370] rose 6 percent today to CNY17.84 (USD2.60) on the news.

Yatai, , which is based in Shaoxing, Zhejiang province on Shanghai's western outskirts, and Richmond, British Columbia-based Benchmark Botanics signed a preliminary deal on May 8 with third party Rippington Investment for a new joint venture, which sent the company's shares up 4 percent at that time.

The three made a pledge to reach an investment agreement by the end of this month that it seems they have now made good on.

Yatai and Rippington will put up capital for the JV, while a Benchmark unit with a Canadian cannabis production license will choose a site to build a facility and run its operations, including breeding, planting and extraction.

Editor: Ben Armour