Cann Group has published its quarterly report for the period ending June 30, 2019.
Cann Group Limited (ASX:CAN) recorded $2.3 million in revenue for the quarter, representing a 413% increase on the previous financial year.
This quarter saw the company deliver its first shipment of Australian sourced—and commercially grown—cannabis to the Victorian Government, as part of a supply agreement that was negotiated with the state's Department of Health and Human Services (DHHS).
The cannabis resin supplied was originally extracted at the Cann Group's Southern Facility in Melbourne
During this quarter the Cann Group also took ownership of the Mildura site which it had previously secured with the intention of making it the company's third planned facility.
Once complete, the Mildura facility is expected to house a state-of-the-art greenhouse which will be used for large scale cultivation purposes. The first prefabricated elements of the greenhouse structure have already been shipped from the company's supplier in the Netherlands, while additional groundwork is reported to have already begun at the site.
These renovations will take place alongside the ongoing remodelling of the facility's existing manufacturing space.
During the quarter IDT Australia received a manufacturing licence from the Office of Drug Control (ODC), which led to the company subsequently installing Cann's supercritical CO2 extraction equipment, which is required for the processing of medicinal cannabis.
Commissioning and validation works are now also being undertaken as IDT Australia readies itself to work with the Cann Group as a key manufacturing partner of cannabis-based product formulations intended for supply both locally and internationally.
There was also big news out of Canada in late June, as Aurora Cannabis received a permit from Health Canada to import cannabis cultivated by the Cann Group.
The Cann Group has already delivered the raw materials needed for this order to its new international manufacturing partner, IDT Australia, for Good Manufacturing Practice (GMP) testing, labeling and packing, before the products are eventually exported.
The permit granted to Aurora Cannabis will enable Cann to deliver the material for process validation purposes, with the commercial terms of supply to remain confidential.
This will fulfil the offtake agreement that Cann negotiated with Aurora Cannabis in March, and will see the company supply Aurora with GMO processed dry flower until 2024.
The agreement was huge news for Cann, as it covers the company's full production capacity beyond the materials cultivated for domestic needs.
The Cann Group also completed a strategic investment in a New Zealand based cannabis company operating under the name, Pure Cann NZ Limited, which has rapidly established itself in the NZ market. Cann Group made an investment of $6 million in Pure Cann to secure a 20% stake in the company, which will accrue over stages, with the initial 10% to be completed by 30 August 2019.
A further 10% will be accrued once new government regulations come into effect—and Pure Cann's board approves the construction of its commercial cultivation facility—while Cann Group will also retain an option to increase this stake to 30%.
In the coming quarter Cann Group's management will focus on the development of the new Mildura Facility, as the company moves towards operating at scale.
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