The medicinal cannabis industry in Australia has been rapidly gaining momentum, reaching an estimated value of approximately $245 million in 2022 and is projected to maintain a strong CAGR of 16.71% from 2023 to 2027. While the availability of cannabis for general use remains restricted in Australia, the nation continues to attract cannabis manufacturing companies looking for support from local investors.
One such prominent player in the industry is Cann Group (ASX: CAN), which has solidified its position within this flourishing landscape. Cann Group recently announced a new variation agreement with Levin Health to supply medicinal cannabis products from 1 July 2023 to 31 December 2023, specifically oils worth approximately $880,000 to meet Levin’s production schedule over the supply period. Additionally, Cann will also continue to supply flower products in line with supply period needs. The dried flower and oil supplies will be fulfilled from Cann Group’s Mildura facility.
Commenting on the agreement, Cann Group CEO Peter Koetsier said “Securing longer-term supply agreements with our preferred partners is a critical component for our company’s strategic success. Cann recognises the importance of establishing stable and reliable supply chains using our TGO93 compliant cultivation and production facility to meet the evolving demands of our customers.”
Koetsier also mentioned that the agreement with Levin Health will boost Cann’s competitive advantage and position the company as a trusted and dependable partner in the industry.”
Specific order quantities for the second half of FY24 will be determined upon further meeting between the two parties.
Cann Group is a supplier of innovative cannabis medicines in the form of dried flower and oil products, as well as active pharmaceutical ingredients and extracts, to customers in Australia and worldwide. The Company has built research, cultivation and Good Manufacturing Practice (GMP) manufacturing facilities in Melbourne, and a large-scale cultivation and GMP manufacturing facility near Mildura, Victoria.
Cann Group also owns Europe-based medicinal and wellbeing cannabinoid company Satipharm. The Company acquired Satipharm back in March 2021 for CAD$4m. Satipharm itself is well-known for its patent-protected Gelpell® capsules containing broad spectrum hemp extract Cannabidiol oil (CBD) in a seamless gelatine bead. This bead is placed inside a hard gastro-resistant capsule ensuring the release of CBD in the small intestine where it has the greatest effect. The capsules are manufactured in Switzerland and deliver a consistent dose of cannabinoids.
Cann Group is seeking to increase production to reach 12.5 tonnes on an annualised basis having transitioned from Capital expenditure (Capex) to Operational expenditure (Opex) stage. From 2017 to 2022, Cann Group focused mostly on establishing core build of the Mildura facility, ensuring agricultural standards met, validating GMP & acquiring licences, optimising processes, and delivering first crops. Now the Company is focused on actualising commercial opportunities such as operating the Mildura facility, onboarding a commercial CEO with pharma experience, seeking long-term partnership deals, delivering large-scale quality crops more often, and eyeing further export opportunities.
Cann Group has announced a non-renounceable pro rata entitlement issue of approximately 97 million New Shares to raise up to approximately $11.7 million (before costs), which is expected to close at 5:00pm AEST on 18 July 2023.
Clara is a Business Reporter for The Sentiment.
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