ECS Botanics Holdings Ltd’s (ASX: ECS) subsidiary company ECS Botanics MC Pty Ltd has secured a binding agreement to supply resin to Australian cannabis company, Cannvalate Pty Ltd.
Cannvalate focuses on the late part of the medicinal cannabis value chain and has one of Australia’s largest network of medicinal cannabis prescribing doctors, representing a significant share of the total prescribing market. Cannvalate acts on behalf of The Valens Company in Australia to manufacture medicinal cannabis through an exclusive arrangement with locally based Epsilon Healthcare Limited (ASX.EPN) who make the GMP medicinal products on their behalf.
The agreement commences on the execution date and continues for a period of three years post installation of ECS’ extraction equipment at it tolling partner Sun Pharmaceuticals Pty Ltd facility, automatically renewing on a yearly basis unless terminated.
Executive General Manager, Nan-Maree Schoerie, said the agreement with Cannvalate is expected to generate ECS approximately $592,500 in revenue over the next twelve months, after which there is a minimum obligation of $4,906,000 over the remaining term of the agreement, which commences upon the commissioning of extraction equipment at Sun Pharma.
Nan-Maree Schoerie said the agreement with Cannvalate reinforces the quality of ECS’ long term cultivation plan, and the increasing demand for Australian sourced medicinal cannabis products for the local and export market.
ECS is Australia largest grower of biomass for the extract market and recently partnered with Sun Pharma in a supply and tolling agreement to accelerate plans for the cultivation and extraction of competitively priced cannabis oils .
The TGA is expected to enforce stricter quality standards on imported medicinal cannabis products in March 2022. A change of this nature will ensure a level playing field for domestic manufacturers vs importers and therefore demand for Australian grown and manufactured products is expected to significantly increase over the course of the next 12 months, further enhancing ECS’ growth prospects.
This agreement further highlights ECS’ attractiveness as a supply chain partner to both global and local companies. We are delighted that Cannvalate (and their partner Valens) have selected ECS as their resin supplier and look forward to a long and rewarding relationship,” Nan-Maree Schoerie said.
