The supply agreement will give LGP access to the German medicinal cannabis market, which is expected to be worth €7.7 billion by 2028.
Little Green Pharma Ltd (ASX: LGP) saw its stock climb by 3.70% in value today, after the company announced that it has secured a three-year purchase agreement from the Berlin-based Deutsche Medizinalcannabis GmbH—also known as DEMECAN— for the sale, export, and distribution of cannabis oils and LGP-cultivated dried cannabis flower.
This is a huge win for Little Green Pharma, as DEMECAN is the only German medicinal cannabis company that covers every aspect of the production chain, from cultivation, processing and manufacturing, all the way through to distribution and marketing.
DEMECAN is also currently the only producer of medicinal cannabis in Germany, making it a "strategically important partner" for LGP.
We are thrilled to enter into a partnership with DEMECAN. As the only company in Germany to cover the entire production chain for medicinal cannabis, DEMECAN is a leading supplier of medicinal cannabis in Germany. LGP Managing Director, Fleta Solomon
There is currently no minimum purchase order under the agreement—which is set to run for a three-year period—with the first expected shipment of LGP products currently scheduled to take place in Q2 2020.
The agreement also managed to lock down pricing premium for LGP's medicinal cannabis products, which means that they should generate considerably greater revenue when compared to the Australian market.
According to the Managing Director of LGP, Fleta Solomon, the deal represents an important milestone for the company, as Germany is "home to the largest population in the European Union and a rapidly growing medicinal cannabis industry."
"However, patient access to medicinal cannabis in Germany has been limited to date, with inadequate domestic production that is unlikely to produce sufficient product to satisfy the German market in the near term."
"The Agreement with DEMECAN allows LGP to expand its sales and distribution footprint in Germany to meet the growing demand for medicinal cannabis," Solomon said.
Under the terms of the deal, LGP will sell and export up to 1,000kg of dried cannabis flower—or 48,000 units of cannabis oil—per annum, while DEMECAN will be responsible for obtaining the approvals and licenses necessary to import the company's products into Germany.
The Executive Director of DEMECAN, Dr Cornelius Maurer, was also enthusiastic about the agreement with LGP, saying that the deal represents a significant opportunity for both companies.
"In this fast-growing industry, it is crucial to have established and reliable partners like LGP, who share our focus on patient well-being and positioning as a high-quality pharmaceutical producer and wholesaler," Maurer said.
To learn more about Little Green Pharma visit their Company HQ here.
Disclaimer: Past performance is not an indicator of future performance.
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