ECS ditches new cartridges to enter vapes and pastilles market

As of early 2023, over three million Aussies aged 14 and above were found to either smoke or vape. With a greater number of teens and young Aussies taking up vaping, it has created a massive potential market for cannabis cultivators and manufacturers like ECS Botanics (ASX: ECS).

ECS is launching a range of GMP-certified cannabidiol (CBD) and tetrahydrocannabinol (THC) pastilles and THC vapes. The pastilles (sweet medicinal pills) are available in both CBD and THC forms and combinations of both. The white-label pastilles range is sugar-free, plant-based, and available in various flavours and colours. Pastilles are chewed and dissolved in the mouth, allowing active ingredients to enter the bloodstream rapidly.

ECS is also launching a white-label THC distillate vape infused with additional terpenes (chemical compounds responsible for flavour, colour and aroma). Made in Australia, the vape cartridges use oil concentrates derived from ECS’ pharmaceutical-grade extracts. These extracts, in turn, are issued from the Company’s Australian-grown flower, packaged in child-resistant packaging. 

The cartridges will be available in 0.5 and 1 mL, and this new THC distillate vape infused with additional terpenes replaces the previous dried flower vaporiser cartridge product that ECS was going to introduce to the market in 2023.

ECS Managing Director, Nan-Maree Schoerie commented, “The expansion of our B2B product range to include GMP-certified CBD and THC pastilles and THC vapes provides our customers and their patients with alternative dosage methods. These products are manufactured under stringent pharmaceutical-grade GMP standards that meet all TGA quality and compliance requirements to manufacture pharmaceutical-grade cannabinoid products.”

The Company also noted that given its “improved performance in financial year 2023”, it will be boosting the base remuneration of Managing Director Nan-Maree Schoerie to $315,500, exclusive of superannuation, up from the previous $298,759.

In FY23, ECS reported a record revenue of $15.6 million, up 117% on FY22. Its EBITDA grew 10% to $1.6 million. It produced 50% more cannabis, allowing for the launch of new products and R&D. Come Q1 FY24, it witnessed a positive net operating cash flow, delivering a cash flow of $280k, with customer receipts growing 58% on Q1 FY23 to $4 million. 

As demand for its medical cannabis oils grows, Schoerie feels that ECS will have more avenues for profits.

Schoerie added, “Pastilles and vapes are relatively new delivery methods in the Australian market and will provide local patients with advanced treatment options. These innovative product ranges complement our existing B2B offering, leveraging our expertise to meet growing consumer demand for premium medicinal cannabis solutions. We have already received pre-orders for these new products and expect demand to increase rapidly.”

ECS’s products are expected to be in the market before the end of this quarter and will increase the ECS Botanics white-label offering to a range of four products: flowers, oils, pastilles and vapes. 

The Company ended Q1 FY24 with $2.5 million in cash.