Over the years, the Australian cannabis market has consistently posted revenue growth and is expected to be valued at $1.1 billion by 2028. Both Aussies and Europeans are big consumers of cannabis, making them attractive markets for medical cannabis companies like Little Green Pharma (ASX: LGP).
Little Green Pharma posted a 37% revenue spike to $12.5 million in H1 FY24 (six months to September 30, 2023) from $9.2 million in H1 FY23. This boost is largely credited to its flower and oil product growth in Australia and Europe.
The Company saw a 90% surge in flower sales and successful vaporiser product launches across Australia in July 2023, pulling in $180k. However, oil product revenue dipped slightly from over $5 million in H1 FY23 to $4.6 million in H1 FY24. This aligns with a recent Statista survey, which found flowers to be the top pick among Aussies as of September 2023, with vapes and oils following closely behind.
Notably, LGP’s Australian revenue witnessed a robust increase of 36% in H1 FY24, reaching $10.8 million, while European revenue has surged by 61%, totalling $2 million, compared to the prior comparative period.
Besides, Little Green Pharma also gained a new CEO: Paul Long, appointed on August 29, 2023. At the same time, the now-former CEO Fleta Solomon has transitioned to an Executive Director role, concentrating on communications, market positioning, ESG, and branding. Solomon remains the company’s third-largest shareholder.
LGP’s strategic initiatives in H1 FY24, including the completion of the Danish facility commissioning, a 41% reduction in research and development costs, and a 37% increase in revenue, have collectively contributed to a remarkable 70% reduction in the net loss from ordinary activities. The net loss after tax decreased from $7.4 million to $2 million.
The Company also expanded its product portfolio in the Australian market by introducing eight new products. These include a CBD200 isolate cannabis oil, three new cannabis flower products, a ‘trial box’ product, and three new inhalation cartridges.
Expanding its European base, Little Green Pharma reported that the French government has presented an amendment expected to be signed into law by the end of December 2023. This amendment could open new avenues for LGP and its distribution partners, enabling them to capitalise on their first-mover advantage in France following the conclusion of the French medicinal cannabis Pilot program in March 2024.
As regulations and restrictions surrounding cannabis ease in Germany, Little Green Pharma is seeing a demand uptick there.
Closer to home, Little Green Pharma’s subsidiary, Reset Mind Sciences Limited, secured a long-term lease for its clinic, offices, and GMP manufacturing facility in Shenton Park, WA. Focusing on psychedelics, this subsidiary received a $250,000 contribution from the Health Insurance Fund of Australia under its Strategic Alliance Agreement.
Though Little Green Pharma introduced its vapes this year in July and is seeing their positive impact on revenue, it might have to face a tough climate come 2024. The Australian government is beginning a crackdown on vapes, citing that they are more frequently being used for non-therapeutic reasons by Aussie teens. New regulations might include curbing the sale of vapes, emphasising non-flavoured vapes and basic pharmaceutical packaging and a complete ban on imports to reduce the appeal and access to vapes. Plus, the product standards for therapeutic vapes will be strengthened.
This makes the Company’s Europe expansion a crucial move.
In FY24, LGP wants to expand its supply into France, Poland, and the UK. But it’s worth noting that the Company’s cash equivalents have decreased from $12.4 million in H2 FY23 (ending March 2023) to $6.1 million in H1 FY24, as it emphasised new product developments and expansions.
Alinda is a Business Reporter for The Sentiment
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