Following its expansion into Pakistan a few weeks ago, Creso Pharma may now be poised to enter the U.S. cannabis market.
Creso Pharma Limited (ASX:CPH) today executed a non-binding letter of intent with CERES Natural Remedies, a Vermont-based CBD, and plant-based remedies provider, to distribute and sell Creso's range of CBD and hemp animal health products anibidiol®, throughout the United States.
CERES focuses on plant based remedies and CBD and hemp products for the US market, and is the sister company to Champlain Valley Dispensary which was Vermont's first licensed medicinal cannabis company.
Both Champlain Valley Dispensary and CERES are subsidiaries of High Fidelity, the largest independent cannabis company in Vermont.
The Letter of Intent, which becomes a formal commercial agreement on April 1st, 2021, is dependent upon federal legalization of CBD throughout the United States, which would see that CERES stocks Creso Pharma products across its 50,000 distribution outlets throughout the United States.
Initially, it is intended that CERES will focus on Vermont, Maine, New Hampshire, New York, Connecticut, Massachusetts and Rhode Island and explore opportunities to target additional states across the US.
Creso and Ceres will work together collectively to prepare to sell and distribute within the US market upon legislation occurring which both groups believe will happen in 2021.
The initial term of the agreement is one year and will automatically renew after one year, unless either party notifies the other of their decision to not renew the agreement within 90 days prior to the expiry of the Initial or Renewal Term.
CERES will aim to achieve a target of at least US$5 million in sales over a two-year period, subject to federal legalisation of CBD in the US. The Company has recently witnessed considerable shift in the regulation of cannabis globally and eagerly awaits legislative reform in the US.
Creso and Ceres are forming the view this legislation may occur at some point during 2021 and intend to formalise the commercial agreement quickly in order to be able to move swiftly upon such legislation occurring.
The US represents a large, emerging addressable market for Creso. The global CBD pet supplements market was valued at US$27.7m in 2019 and is anticipated to grow at a 40% compound average growth rate from 2020 to 20271. This agreement leaves Creso very well placed to benefit with sales
expected to materially add to the Company's growing revenue profile.
Entering the US market with a high calibre partner such as CERES is a major achievement for Creso Pharma and we look forward to working with the group to outline a progress of the launch of anibidiol® across the country.Non-executive Chairman of Creso Pharma, Adam Blumenthal
"Importantly, CERES has an established distribution footprint and relationships with over 50,000 stores across the country, as well as a track record of scaling up its own branded products and international offerings. To this end, we are very confident that our animal health products will be well received," Blumenthal added.
"We will continue to monitor regulatory and policy shifts in the US to ensure the Company and CERES are primed for launch and expect first sales to add to the Company's revenue streams."
"Creso has a number of exciting growth initiatives across all key operating business pending and we look forward to updating shareholders as they materialise in the coming months."
CERES Executive Director, Shayne Lynn added: "We are excited to partner with Creso Pharma to introduce the Company's industry-leading animal healthcare products to the US market. We continue to witness rapid demand for CBD and hemp based pet health products through our network and anticipate anibidiol® to be very well received."
"We look forward to working with Creso's management team to explore additional growth opportunities which will benefit both parties and create a long term, value accretive partnership."
To learn more about Creso Pharma (ASX:CPH), visit the company HQ here.
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