THC Global Group Ltd’s (ASX:THC) Canadian operations are performing strongly despite the COVID-19 pandemic with hydroponics equipment and cultivations solution provider CMP Wholesale achieving record sales in the June quarter as cannabis demand remains robust.
CMP Wholesale's unaudited trading revenue was A$3 million, a 50% increase on Q2 2019, which the company believes is, in part, due to the launch of new service offerings at the micro-cultivator and home-cultivator sectors.
THC is expanding its service offering in this sector with the expected launch of Canndeo Fulfilment, a new business unit which will provide expert advice and support in the cultivation of cannabis including sales of plant genetics and mature seedlings.
Shares are up more than 5% to A$0.305 cents.
Final stage approval for Canadian cultivation
The company is in final stage approval for its Canadian cultivation and dealers licence for growth and sales of cannabis genetics, enabling launch of a site lease and flower buy-back opportunity for new micro-cultivators.
In providing these services, THC Global is targeting to support a currently under-serviced sector in the cannabis market – micro and home cultivators.
First revenues from Canndeo Fulfilment are expected to be earned in Q4 2020 following cultivation and dealers licence grants and the start of first production.
“We continue to build revenues”
Chief executive officer Ken Charteris said he was pleased to see continued growth from its Canadian operations against the expectations of a challenging market in the first half of 2020.
“We continue to build revenues and broaden our product and service offering as well as our customer base.
“We anticipate further growth as we commence export of our Australian produced medicinal cannabis medicines into Canada, raising the bar in the supply of affordable, high quality, pharma GMP medicines to Canadian patients.”
Medicinal cannabis export
The company is preparing to begin the export of medicinal cannabis medicines from Australia to Canada for supply into the Canadian market under the Canndeo Canada brand.
Canndeo Canada will service the medicinal and nutraceutical markets in Canada – both being large market opportunities with over 350,000 registered patients in Canada.
THC Global’s Canadian operations have achieved Health Canada licensing for Class I, II, III devices and Natural Health Products Subject to the grant of an export authority and matching Canadian import authority, THC Global will produce and export an initial 3,000 bottles of medicinal cannabis medicines to Canada in the second half of 2020.
Utilising the Company’s Health Canada granted licence, Canndeo Canada will supply these medicines through partnered cannabis clinics, telehealth and virtual clinics as well as direct patient supply facilities.
THC Global’s rollout of the Canndeo Canada brand will target medicines affordability with full pharma GMP licensed supply.
Share purchase plan update
The share purchase plan (SPP) launched on June 25 will close on Friday, July 10, offering eligible shareholders the opportunity to apply for up to $30,000 of new shares at A$0.30 without brokerage or other transaction costs.