Creso Pharma (ASX: CPH) has become the first Australian cannabis company to own a Canadian licensed producer after gaining permission for a facility in Nova Scotia.
The Barangaroo-based firm’s subsidiary, Mernova Medical, has won a coveted license from Health Canada and it can now set about producing 40,000 kilos of cannabis per year. It becomes just the fifth licensed producer in Nova Scotia and the first crops will be produced in the third quarter of 2019.
Canadian cannabis firms have muscled into a huge number of markets around the world in recent years, so it is interesting to see Creso Pharma turning the tables. It has already built a 24,000 sq. ft. indoor growing facility in Windsor, Nova Scotia, and it can now begin cultivation.
It has also secured a three-year supply deal with TerrAscend, which will take a large chunk of the marijuana it produces. It is also in discussions with the Nova Scotia Liquor Corp. about becoming a dedicated distributor in the province, and it just needs to agree on a monthly commitment before gaining the supply deal.
It will also contain a storage room that can house up to $100 million worth of concentrated cannabis, which can be turned into derivatives for the European market. It can acquire wholesale cannabis from other producers for this storage room, or import cannabis from its proposed operations in Colombia. It gained a license to grow medicinal marijuana in the South American nation last year after it acquired Kunna Canada for $9.35 million in shares.
Creso Pharma said that demand for cannabis is outstripping supply in Canada and it is keen to capitalize. “It opens up substantial revenue opportunities given the high demand suppliers face following legalization,” said John Griese, chief operating officer for North America. “Our strategy of locking in sales revenue ahead of granting of the license [with TerrAscend] means we can hit the ground running and capitalize on the capabilities of this premium growing facility.”
Creso is keen to supply not just humans but also pets with cannabis derivatives in a number of markets across the globe. Its share price increased 1.3% this morning after the news was revealed.