Memorandum of Agreement between Bright Green Corporation and the Department of Justice, Drug Enforcement 7 Administration

Exhibit 10.1

UNITED STATES DEPARTMENT OF JUSTICE

DRUG ENFORCEMENT ADMINISTRATION

MEMORANDUM OF AGREEMENT

I. Background and Purpose

This Memorandum of Agreement (MOA) is between the Department of Justice, Drug Enforcement Administration (DEA), and Bright Green Corporation (Grower) who has applied for a DEA registration as a bulk manufacturer to supply to researchers of any (or all) of the following schedule I controlled substances: Marihuana Extract (7350) and Marihuana (7360) at 1033 George Hanosh Boulevard, Grants, New Mexico 87020, under DEA Document Control Number W20078135E.

The Single Convention on Narcotic Drugs, 1961, (Single Convention), 18 U.S.T. 1407, requires the United States to purchase and take physical possession of marihuana crops and to control importation, exportation, and wholesale trading. DEA codified regulations at 21 C.F.R. Part 1318 to ensure DEA carries out these obligations. See 85 FR 82333-01 (Final Rule, Controls To Enhance the Cultivation of Marihuana for Research in the United States (2020)). These regulations also contain provisions and obligations for Grower, which extend beyond the Controlled Substance Act’s (CSA) general requirements that registrants maintain records, make certain reports, and maintain effective controls against diversion (e.g., security).

This MOA’s purpose is to outline the means by which DEA and Grower agree to carry out these necessary and important functions.

II. Authority

III. Definition of Terms Used in This MOA

The definitions contained in the CSA at 21 U.S.C. § 802 and DEA regulations at 21 C.F.R. § 1318.02 are incorporated into this MOA. In addition, for purposes of this MOA, the term “manicured plant material” means the dried leaves, flowering tops, and seeds of marihuana that are deliverable to DEA within four months of harvest. (See 65 FR 69574-01). A DEA-registered researcher or manufacturer who has a bona fide supply agreement to purchase manicured plant material from Grower is identified herein as the “Buyer.”

IV. Obtaining Bona Fide Supply Agreements and Requests for Quota

Individual Manufacturing Quotas (IMQ): On or before May 1 of the year preceding the year in which marihuana is to be grown, Grower will furnish an individual manufacturing quota (IMQ) application utilizing DEA Form 189. Initial applications as well as any adjustments in an IMQ may be filed electronically utilizing DEA’s Quota Management System at https://apps.deadiversion.usdoj.gov/webforms/app189Login.jsp. For an IMQ to grow marihuana, Grower should express all quantities in terms of “manicured plant material.”

Grower also will include the following information with its request on an attachment to DEA Form 189:

If Grower does not anticipate commercial production but requires authority to grow marihuana to maintain a particular genetic strain or variety in anticipation of future plantings, then Grower shall submit an IMQ for that purpose. In these circumstances, all cuttings and biomass will be recorded, collected, and disposed of in accordance with Section XI.B of this MOA.

Grower will include in their IMQ application copies of documents that constitute the bona fide supply agreement(s) that justifies their quota application request. The bona fide supply agreement must include the name, address, and DEA registration number of the Buyer, along with the negotiated purchase price that the Buyer will pay along with the administrative fee to be paid to DEA. For purposes of calculating Grower’s IMQ, DEA will only consider bona fide supply agreements from existing DEA registrants.

If Grower enters into additional bona fide supply agreements after receiving its initial IMQ, Grower may apply for an adjustment to its IMQ for that calendar year, as provided in 21 U.S.C. § 826(e) and 21 C.F.R. §§ 1303.25(a) and 1303.27. DEA will calculate Grower’s IMQ in accordance with the requirements of 21 U.S.C. § 826 and 21 C.F.R. §§ 1303.25(b) and 1303.11. Grower shall communicate in writing (email preferred) any change in Buyers during the quota year, regardless of impact on Grower’s IMQ, to the Section Chief for the UN Reporting and Quota Section of DEA’s Diversion Control Division (UN Reporting and Quota Section).

If Grower produces marihuana in excess of its IMQ, Grower immediately will notify DEA of this event in writing (email preferred) to the Section Chief for the UN Reporting and Quota Section and the local DEA Office. These amounts shall be destroyed in accordance with Section XI.B of this MOA.

Grower may at any time abandon its right to manufacture all or any part of such quota by filing with the UN Reporting and Quota Section a written notice (email preferred) of such abandonment in accordance with the provisions of 21 CF.R. § 1303.27. Grower will identify which Buyer’s bona fide supply agreement resulted in the request to abandon any portion of its IMQ. If DEA has collected payment and an administrative fee from the Buyer, DEA will return the negotiated rate payment back to the Buyer, but not the administrative fee paid to DEA.

Individual Procurement Quota (IPQ): On or before April 1 of the year preceding the year in which marihuana is to be grown, Grower will furnish an individual procurement quota (IPQ) application utilizing DEA Form 250 identifying quantities of marihuana it intends to procure back from DEA for the purpose of producing marihuana extracts, marihuana preparations, or isolated chemical constituents. DEA will consider Grower’s IPQ requests in establishing its IMQ.

V. Pruning, Culling, and Sampling

Grower may collect samples of marihuana and distribute them to DEA-registered analytical laboratories for chemical analysis during the pendency of cultivation and prior to DEA’s taking possession of the marihuana grown. To limit the risk of diversion and keep the distribution within the legitimate purposes permitted by the CSA, the quantity of samples collected and distributed must be small and fully consumed during analytical testing. Grower will maintain records of the quantity sampled for testing purposes and the date of these transfers to DEA-registered analytical laboratories utilizing DEA Form 222.

Grower may prune plants or cull unwanted plants as it deems appropriate. All cuttings and biomass resulting from pruning and culling operations will be recorded using DEA Form 41, collected, and disposed of in accordance with Section XI.B of this MOA.

The amounts sampled and the amounts pruned will be excluded from Grower’s total crop that DEA is required to purchase and possess. These quantities also will be excluded from Grower’s IMQ.

VI. Harvest – Advance Notification, Harvest, Packaging, and Transfer of Ownership

Grower will provide DEA with 15-day advance written notification, via email to the Chief of the Regulatory Section of DEA’s Diversion Control Division (Regulatory Section), of its intent to harvest marihuana. Grower will provide the date/time in which harvesting will begin. The quantity authorized to be harvested will not exceed Grower’s IMQ.

DEA will only accept an appropriately packaged and labeled product. Grower will package and label the crop at Grower’s expense in accordance with 21 C.F.R. Part 1302. Additionally, Grower will package the crop in containers consistent with the needs of Grower’s Buyers, but each unit will not exceed 22.7 kilograms (50 pounds) in overall weight. The container will protect the product from contamination. Additionally, packaging will not impart a toxic or deleterious substance into the product. Each package will bear a label containing the following information:

Two DEA personnel will arrive at Grower’s registered location to take physical possession of the crop. While DEA will make every effort to arrive on the day of harvest, DEA will take possession within four months of the harvest. DEA will take ownership of the crop by executing a DEA Form 222, expressing all quantities in kilograms. DEA will prepare DEA Form 222 and present it to an individual who is authorized to obtain and execute a DEA Form 222 on behalf of Grower. Grower will retain the original DEA Form 222 (as the supplier); DEA will retain a copy of the executed DEA Form 222 (as the purchaser). Execution of DEA Form 222 constitutes the transfer of ownership from Grower to DEA.

If Grower has grown marihuana for its own research and product development efforts, which may include the bulk manufacturing of marihuana extracts and highly purified cannabinoids and derivatives, and has obtained a procurement quota from DEA for that purpose, following execution of DEA Form 222 transferring ownership to DEA, Grower will execute a DEA Form 222. In this case, DEA will be the supplier, and Grower will be the purchaser. DEA will retain the original DEA Form 222 (as the supplier); Grower will retain a copy of the executed DEA Form 222 (as the purchaser).

If a Buyer(s) has not paid the negotiated purchase price and administrative fee to DEA at the time in which DEA and Grower are prepared to transfer ownership, then DEA will not accept title to that corresponding quantity of marihuana. If payment from the Buyer has not been received within four months of harvest, and if Grower fails to provide a substitute bona fide supply agreement from a new Buyer, DEA will direct Grower to destroy that corresponding quantity of marihuana.

VII. Storage of Marihuana on Behalf of DEA and Sampling for Analytical Testing

Grower will identify a secure location in the Grower’s approved schedule I vault or safe where Grower will store marihuana owned by DEA on behalf of DEA. This schedule I vault or safe will be in a location where Grower has a DEA registration permitting Grower to store marihuana. DEA will have the right to access any schedule I vault or safe where any marihuana that it owns is stored by the Grower. Grower must demonstrate to DEA’s satisfaction its ability to prevent the commingling of marihuana stocks maintained on behalf of DEA with stocks of marihuana that DEA subsequently distributed back to Grower pursuant to a DEA-issued procurement quota. Grower will employ safeguards to prevent diversion of marihuana owned by DEA.

DEA’s Regulatory Section may authorize Grower in writing (to include email) to retrieve samples of marihuana in DEA’s possession for the purpose of conducting chemical analysis.

VIII. Distributions of Marihuana from DEA’s Stocks

DEA’s Regulatory Section will authorize Grower in writing (to include email) to make distributions from DEA’s stocks of marihuana to those Buyers who entered into bona fide supply agreements with Grower once DEA has confirmed that the Buyer has made payment to DEA for both the negotiated rate and the administrative fee. DEA will identify that particular batch or lot number, and the quantity, of the marihuana that will be removed.

Two of Grower’s employees who have undergone criminal background checks as a condition of their employment will enter the secure storage area and remove the amount identified by DEA. Grower will record the amount removed and provide confirmation to DEA in writing (email preferred) to DEA’s Regulatory Section. Grower shall bear the cost of shipping marihuana to the Buyer.

IX. Distributions of Marihuana, Marihuana Extracts, and Marihuana Resin from Grower’s Existing Stocks

Grower will provide DEA with 15-day advance written notification (via email) of its intent to distribute marihuana, marihuana extracts (which do not meet the definition of a marihuana preparations), or marihuana resins from its existing inventory. Grower will provide this written email notification on company letterhead and include the name of the Buyer(s), their DEA registration number, and the quantity to be distributed.

DEA’s Regulatory Section will provide a written authorization or objection to Grower’s proposed distribution. Any DEA objection will be based on its conclusion that a proposed distribution is likely to be diverted or otherwise be in conflict with the CSA, or on the basis that a researcher, who is the intended recipient of the marihuana, has been issued an Immediate Suspension Order (ISO) or a final order revoking their DEA registration. In the event of written objection from DEA to the proposed distribution, Grower agrees not to make the proposed distribution.

This 15-day advance notification process does not apply to distributions of marihuana preparations (including marihuana extracts that contain alcohol or other non-cannabis-derived solvents) in Grower’s possession.

X. Invoicing and Payment for Harvested Marihuana Transferred to DEA

When Grower provides its 15-day advance notification of its intent to harvest marihuana (see Section VI above), it will invoice DEA for the harvested marihuana it intends to sell to DEA. The invoice will state the quantity and negotiated price for each Buyer and the DEA Registration number of the Buyer with which Grower has a bona fide supply agreement. The quantity of marihuana on the invoice will not exceed Grower’s IMQ. The Grower will send the invoice to the Registration and Program Support Section of DEA’s Diversion Control Division (Registration and Program Support Section).

DEA will pay Grower within 30 days of taking ownership of the crop. DEA and Grower will arrange for payment via Electronic Fund Transfer.

XI. Other General Terms

XII. Correspondence with DEA Headquarters Personnel

Direct written communications to DEA’s headquarters elements who are referred to in this MOA should be directed to the email (preferred) and postal addresses below:

XIII. Non-Liability of Drug Enforcement Administration

The United States assumes no liability with respect to the performance of any contractual terms agreed to by Grower and a Buyer of bulk marihuana, including but not limited to the quantity or quality of any marihuana delivered to a Buyer. If a Buyer deems the delivered marihuana to be defective, the Buyer’s sole remedy for damages will be against Grower and not the United States.

XIV. Duration, Amendment, and Effect

XIV. Additional Terms and Conditions