Little Green Pharma Ltd (ASX: LGP) has executed a three-year sales agreement for the supply of white-label cannabis flower products to Deutsche Medizinalcannabis GmbH, one of Germany’s largest cannabis distributors.
Under the Agreement, LGP will provide Demecan with three high-THC strains (>22% THC) for distribution in Germany.
To maintain strain exclusivity and following a ramp-up period of between six and 12 months, Demecan is required to purchase at least 450kgs per annum of each strain. This represents approximately A$9 million in total revenue per annum for the three strains.
Demecan has a right of first offer to purchase the agreed strains for exclusive supply in the remainder of the European Union (other than Poland).
LGP has a 12-month window to develop the agreed strains within specification, with subsequent supply subject to the normal conditions such as obtaining approvals to supply into Germany and entry into a GMP Quality Agreement
Following relevant ramp-up periods, Demecan must purchase at least 38kgs per month to maintain strain exclusivity in Germany, with supply periods of at least three years for each product.
Demecan is a longstanding supporter and distributor of LGP’s medicinal cannabis products,” Little Green Pharma, CEO, Fleta Solomon, said.
“The agreement gives LGP access to some of the best-in-class distribution services in Germany and potentially across Europe as the parties look to roll out these strains across the EU.
“The agreement is perfectly aligned with our longstanding strategy to gain market share in Europe, and also marks a significant turning point for the LGP Denmark facility, being the first in what we hope is a suite of high-volume purchase agreements underpinning the Facility’s arc towards profitability and full production.”