Australia’s Little Green Pharma’s subsidiary in Denmark has inked a significant medical cannabis supply agreement with Germany’s Demecan.
Under the Agreement, LGP will supply Demecan with three high-THC strains (>22% THC) for distribution in Germany. Demecan is required to purchase at least 450kgs per annum of each strain, but there will be a ramp-up period of 6 – 12 months during the three-year agreement. LGP states the deal represents approximately AUD $9 million in total revenue per annum for the three strains.
Demecan will be paying half of the development costs of each strain successfully developed, subject to agreement caps. The first two strains expected to be delivered in the third quarter of this year, with the third later in 2022.
“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,” stated Little Green Pharma CEO, Fleta Solomon.
The Western Australian company acquired the large cultivation and manufacturing facility in Denmark last year – that’s the Denmark in Europe, not the town in LGP’s home state. According to the firm, the facility has the potential to produce more than 20 tonnes of biomass annually, including 12 tonnes per annum of dried cannabis flower. At the time of the acquisition, the facility was only operating at 25% of its existing nameplate capacity.
This isn’t the first arrangement LGP has struck with Demacan. Back in February 2020, a purchase agreement for Little Green Pharma to supply up to 1,000kg of its products annually over a three year term was inked. The first purchase order for 9,000 x 15 gram units of LGP’s cannabis flower medicines was made in March last year.
Established in 2016, Little Green Pharma was the first Australian medicinal cannabis company to manufacture locally-grown products for local patients. Its facility in Australia is in a secret location in the Southwest of WA and was producing 3 tonnes of dried biomass per annum as at June last year.