MediPharm Labs Corp. Secures Australian Supply Deal

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MediPharm Labs Corp. (CDNX: ) is going global after signing a deal to supply Australian distributor AusCann with private label cannabis derivatives.

It is the Ontario-based firm’s first ever international sales agreement and it makes MediPharm the first Canadian producer to export CBD oil to Australia. It will ship purified oil concentrates Down Under, and AusCann will then turn it into capsules for patients across the country.

Australia legalized marijuana for medicinal purposes at a federal level in February 2016, but domestic cultivation is still in its formative stages and it largely relies on imports to meet growing patient demand. AusCann is one of the leading lights in this nascent market and it has also teamed up with Khiron Life Sciences in a bid to dominate the Latin American industry.

Positive Reaction

Medipharm’s share price increased 7.3% from C$2.75 at the close of trading Feb. 20 to $2.95 as the markets opened the morning after the news was announced. Like the majority of marijuana stocks, MediPharm has been on a tear this year. Its share price decreased to $1.20 on Dec. 18 following a difficult couple of months for the industry, and it has staged a strong rally in 2019, a common pattern seen in the marijuana trade.

It made its biggest jump on Feb. 12, when it announced a $34.7 million deal with an unspecified North American producer to supply it with private label purified oil. The licensed producer agreed to buy $7.7 million worth of oil up front and pay $27 million over the subsequent 12 months for more product, with the option to buy a further $13.5 million worth of cannabis oil. If it takes up the option, it would take the deal past the $48 million mark.

That news saw MediPharm’s share price increase 34.2% overnight to $2.59 and it has continued on an upward march ever since, now reaching all-time highs after announcing its international expansion.

A CBD Oil Boom

“Listing on the Frankfurt Stock Exchange is an important step in our future growth as we focus on both domestic and international opportunities and also raises MediPharm’s awareness among the global investor community,” said chief executive Patrick McCutcheon.

MediPharm is a B2B supplier of ready-to-sell CBD oil and concentrates for the medicinal and recreational marijuana markets. It has the capacity to process 100,000 kilos of dried cannabis flower per year, but by the second quarter of 2019 it should have expanded that to 250,000 kilos. It provides turnkey and contract processing services to Canadian producers, and it offers raw materials, formulations, processing, and packaging.

Another Australian cannabis company, MMJ PhytoTech Ltd., is a strategic investor in MediPharm, with 5.88 million shares and 2.94 million warrants exercisable at C$1.20 per share by October 2020. MediPharm’s management team owns shares and all members have increased shareholdings every time a financing opportunity has arisen.

In recent months it has secured a supply deal with Canopy Growth Corp. and has been added to the Horizons Marijuana Life Sciences Index ETF. On Tuesday it also announced a listing on the Frankfurt Stock Exchange, trading under the ticker symbol MLZ, and it continues to trade on the OTC in the US under the symbol MLCPF.

“Listing on the Frankfurt Stock Exchange is an important step in our future growth as we focus on both domestic and international opportunities and also raises MediPharm’s awareness among the global investor community,” said chief executive Patrick McCutcheon, who said he wanted to expand into Europe.

He envisages a “robust global distribution platform” and expects to begin supplying additional international markets in the near future.

McCutcheon founded the business along with Keith Strachan, who was appointed president earlier this month. Laura Lepore, formerly of Home Capital Group Inc., was brought on as vice president covering investor relations, while Kirk Binns, Dr. Chris Taplas and Michael Perron were all promoted to align MediPharm’s leadership and organizational structure “for future prosperity”.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Martin Green
Martin Green is an experienced journalist with a strong focus on the cannabis, alcohol, and gambling industries. He is particularly interested in the political issues affecting the global marijuana trade, and he has a keen focus on regulation changes and legal topics. He holds a BA English Literature, MA Creative Writing and a National Qualification in Journalism diploma. He has worked in journalism since 2009 and written for a broad range of newspapers, business titles and magazines, including The Sun, The Metro, The Journal, Livestrong, Drinks Retailing News, Harpers, Sportsbook Review, Vital Football, Essex Live and Surrey Live. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.

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