Little Green Pharma Ltd (ASX: LGP) has entered into a 2.5 year take-or-pay contract with new distribution partner Four 20 Pharma GmbH for the exclusive supply of LGP’s recently-developed, high-THC (25% THC) SMS strain into Germany.
The Agreement represents a minimum take-or-payment commitment of at least $7.5 million over 30 months, including payment of a development fee to help defray strain development costs.
The transaction resulted from a recent, tightly-executed bidding process for the 25% THC strain which successfully positioned LGP in front of a range of potential new distribution partners.
The company proposes to engage in similar tender processes for other new strains, as well as rolling out SMS into other jurisdictions.
The transaction represents a significant evolutionary step in LGP’s supply processes and contract portfolio, with the Agreement joining LGP’s minimum exclusivity commitment purchase agreements with Demecan in Germany for the potential supply of up to 1.3 tonne per year (representing an annual revenue opportunity of ~$9 million ) of white-label flower from its Danish Facility and with Sana Life Sciences in the UK for the supply of LGP branded oils (representing an annual revenue opportunity of $1.44m) from its Western Australian Facility.
Four 20 Pharma is a GMP licensed German manufacturer, wholesaler and importer of medicinal cannabis. Since its establishment in 2018, the company has positioned itself as one of the biggest players in the German medicinal cannabis market, with its growth underpinned by the success of its “420 NATURAL” brand, one of the highest selling medicinal cannabis brands in Germany.
Little Green Pharma’s Chief Executive Officer, Fleta Solomon, said:
“The Agreement represents another significant milestone in LGP’s continued growth of its Danish Facility, as well as an exciting development in LGP’s supply processes that promises to dramatically shorten LGP’s supply timelines for future key strains,” Little Green Pharma’s CEO, Fleta Solomon, said.
“We look forward to working closely with Four 20 Pharma to bring this highly-prospective new strain to market as quickly as possible.
“We are very excited by our new SMS strain as well as the opportunity to be partnering with Four 20 Pharma, one of the largest medicinal cannabis operators in Germany and with a highly successful track record of supplying its 420 Natural brand cannabis products into the German market.”