Little Green Pharma (ASX: LGP) has gained ground today after achieving the final regulatory hurdle to bring its expanded cultivation and manufacturing facility in Western Australia’s southwest region into production.
Australia’s first producer and exporter of locally-grown medicinal cannabis has been granted a Medicinal Cannabis Cultivation and Production Permit by the Office of Drug Control (ODC) for its expanded cultivation and manufacturing facility. The grant of the permit means the expanded facility is now fully ODC licenced and permitted.
The grant is a key milestone in LGP’s strategy to become a major supplier of premium medicinal cannabis products to Australia and European markets.
The expanded facility consists of nine flowering rooms equipped with a number of automated technologies to enhance cultivation effectiveness (including rolling benches, computer-timed LED lighting, climate control, and irrigation control). The facility also contains two mother plant rooms and two vegetation rooms.
At full capacity, the facility will be able to produce sufficient cannabis flower to manufacture more than 110,000 bottles of cannabis oil per annum. This enhanced capacity is in addition to LGP’s well-established third-party flower and resin supply lines and will help ensure LGP can meet its growing demand requirements.
The completion of permitting and commencement of significantly increased operations at our expanded cultivation and manufacturing facility represents the achievement of a major milestone for Little Green Pharma,” LGP Managing Director Fleta Solomon said.
“We expect the increased production scale will allow us to fulfill both growing demand in Australia as well as serve as a platform to become a significant supplier into the German, UK and other key European markets.”
The term of the permit is until 10 March 2021 in alignment with LGP’s Medicinal Cannabis and Manufacture licences. ODC permits are typically renewed annually or biennially on a rolling basis.
The company completed the expanded facility on time and on budget while maintaining a strong cash position of $6 million at end of March 2020.
The expanded facility forms a key part of the company’s commercial strategy to meet growing demand for medicinal cannabis products nationally as well as significantly enhance LGP’s standing as a supplier of medicinal cannabis in markets in the United Kingdom, Germany and other key European markets.
In Germany, LGP already has a foothold having entered into a three-year agreement with Berlin-based DEMECAN for the sale and export of up to 1,000kg of dried flower or 48,000 units of medicinal cannabis oil product, or any combination thereof, per annum.
Germany represents a significant opportunity for LGP as the largest medicinal cannabis market in Europe, estimated to be worth €7.7 billion (A$12.5 billion) by 2028. The number of prescriptions for medicinal cannabis in Germany is growing rapidly. There were 95,000 prescriptions at the end of 2018 and more than 240,000 prescriptions were expected by the end of 2019.
In the United Kingdom, LGP exported the first commercial quantity of Australian medicinal cannabis oil to the UK, shipping 1,000+ units to LYPHE Group Limited under a consignment sales agreement, a strategically important deal for LGP as it serves to demonstrate a viable commercial channel into the UK that paves the way for future sales growth.
The UK medical cannabis market is expected to grow to 2.5 million patients creating a market worth approximately €8.8 billion (A$14.6 billion) by 2028.
Shares in LGP shot up 2c, or 6.1%, to 35c in morning trade on Monday.