The Hydroponics Company Ltd's (ASX:THC) shares have jumped 29% in morning trade following the company's subsidiary, Canndeo Ltd, being granted a Medicinal Cannabis Licence by the Office of Drug Control that authorises the cultivation and growth of cannabis plants for medicinal purposes.
Obtaining the licence meets one of Canndeo’s key milestones on the path to its goal – the commercial cultivation of medicinal cannabis in Australia.
This is the second of three licences approved, with the company having lodged a manufacturing licence and is awaiting approval.
Canndeo operates under a pharmaceutical model with a focus on the end-to-end supply of medicinal cannabis products.
THC is continuing to pursue a dual supply strategy intended to give it the capacity and capability to meet market demand with product it manufactures in Australia as well as imported products.
Details of the license
The Australian Government’s Office of Drug Control issued to Canndeo Ltd, a Medicinal Cannabis Licence for the growth and cultivation of cannabis plants under the medicinal cannabis provisions of the Narcotic Drugs Act 1967.
The licence is an important step along the path towards the company achieving its goal of establishing a legal domestic source of cannabis for medicinal use in Australia.
It also puts the THC Group amongst only a few companies to have two licences granted by The Office of Drug Control.
David Radford, chief executive officer for THC, commented:
"This licence is a major milestone in the company’s objective to supply high quality medicinal cannabis products from both local and international sources to the Australian patient groups.
"The issuing of this licence supports the strategic growth plan which, as advised in the recently released quarterly, is focused upon a build out of the existing Canadian business and an accelerated path to market for medicinal cannabis in Australia.
"It is a major step in the transition of the company towards commercial supply and monetisation of the opportunity that exists in the medicinal cannabis market and I congratulate the team for their diligent efforts in achieving this licence."
THC's plans in Canada
The Canadian market, following legalisation of cannabis for adult use, which is expected to take place in July 2018, is estimated to grow annually to a $5-10 billion local market.
THC’s wholly owned subsidiaries, Crystal Mountain Dragon Vision (CMDV), are primarily focused on serving this market.
CMDV is aiming to service the current larger licenced producers that have already commenced significant cropping and production of medical cannabis and the additional ones that will come online in the near future, as well as expanding its network of retail store customers internationally.
THC is therefore gaining exposure to one of the fastest growing cannabis markets in the world through its continued investment in the Canadian.