A key player in the global cannabis market, Little Green Pharma (ASX: LGP), has pulled the plug on its German distributor, Four 20 Pharma GmbH, after failing to meet the contract terms to bring a highly-prospective new THC strain to the German medical cannabis market by 19th November 2022.

Licensed as a manufacturer, wholesaler, and importer of medical cannabis, Four 20 Phama entered into a 2.5 year take-or-pay agreement with Little Green Pharma earlier this year on 19 May 2022 to on-board a high-THC cannabis strain for distribution across Germany. 

The strain, which contains THC levels of >25% (much more than usual strains), was bought during a tightly-executed bidding process by LGP with an aim to get the new product in front of a range of potential new distribution partners. 

The deal between the two represented a minimum take-or-payment obligation of at least $7.5 million over 30 months, including any payment to balance fees and to defray strain development costs. 

As part of the contract, Four 20 committed themselves to secure approvals from German regulators before an agreed satisfaction date of Saturday 19th November 2022, which they failed to meet nor did they attempt to extend to allow for more time. 

As such, Four 20 did not fulfil the agreed undertakings, and on that account, Little Green Pharma served a notice of default and has considered offering the strain via its own existing distribution channels across Germany.

In a separate announcement, the Company mentioned that they have received confirmation from the French Government to extend the period of the two-year French medical cannabis trial for a further 12 months until March 2024.

The trial is part of a two-year nationwide experiment in France that is primarily designed to evaluate the best conditions of access to medical cannabis.

The company says it has been in negotiations with the French Government in relation to an earlier request for its continued participation in the trial, given that LGP is the largest supplier of products and has been providing cannabis to participants free of charge.