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Australian cannabis company Creso Pharma expands into Canadian market with A$10 million acquisition deal

July 28, 2017 Business News No Comments Email Email

Medicinal cannabis company Creso Pharma (ASX:CPH) continues to grow its presence overseas, this time taking its first steps into the lucrative Canadian cannabis market.

Creso Pharma and Canadian cannabis company Mernova Medicinal Inc. have inked a deal that will see Creso acquire the upcoming Nova Scotia-based production company for A$10.2 million worth of cash and equity.

The deal will allow Creso Pharma, which has offices in Perth, Sydney and Switzerland, to produce its own medicinal cannabis products in Canada, a country already known for allowing the export of medicinal cannabis products into the Australian market. Under Canadian legislation Creso would also be able to export to a number of other countries that accept medicinal cannabis imports.

“This move gives Creso a number of strategic benefits, not only when it comes to expanding to overseas markets, but also when it comes to cultivating and manufacturing our own innovative medicinal cannabis products. These will be standardized in dose and formulation, in innovative and proprietary delivery technologies, and will provide patients with new therapeutic choices beyond smoking or vaping,” says Creso Pharma CEO and Co-Founder Dr Miri Halperin Wernli.

“This deal gives us the opportunity to rationalise and vertically integrate our supply and production chain through our own 100 per cent owned GMP-quality cultivation and extraction facility. This will be beneficial to both our medicinal cannabis products and our nutraceutical products, including for our hemp-based complementary feed products for companion and zoo animals.”

“We’re also looking forward to pursuing further opportunities in the Canadian market, when it comes to both local distribution and exporting to other countries such as Australia that already accept medicinal cannabis imports.”

Mernova Medicinal has applied for a cultivation license and could be the first recipient of the license in the Nova Scotia province. Under current Canadian legislation, companies must prove they can cultivate cannabis crop before receiving a cultivation license. Creso and Mernova will build the facility according to GMP standards.

The company already has more than 20,000 square feet of land to start construction of a GMP-grade cultivation facility. This area could be increased to 200,000, which would allow Creso to conduct research and development around cultivation, production and extraction of cannabis in a secure, state of the art facility. Once the site goes live, Creso Pharma expects to produce the first cannabis crop within 12 months.

The current expected revenue potential of the first crop is between A$15.9 million and A$31.8 million per annum.

The Mernova deal will give Creso access to the Canadian medicinal cannabis market, which Health Canada estimates will be worth A$1.3 billion in sales by 2024.

It could also open the door for Creso to expand into a properly regulated recreational market down the track, with Canada expected to legalise the recreational use of cannabis from 1 July 2018.

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