Plant-based health and wellbeing company Affinity Energy & Health (ASX: AEB) has received the green light to develop a vertically-integrated medicinal cannabis operation in the Republic of Malta.
The company this week received approval from government investment approval agency Malta Enterprise for the construction and operation of a facility on a government-allocated industrial plot of 2200 square metres.
Affinity will use the new facility to cultivate, manufacture and distribute finished doses of medicinal products such as cannabis oil, cannabis plants or seeds or derivatives of cannabis.
It is one of only eight companies worldwide, including Canada’s Aurora Cannabis, to be issued with a Letter of Intent from the Maltese government.
Three-year production target
Affinity’s fully-automated, controlled-growing environment, hydroponic facility will be built to European Union standards of good manufacturing practice, with final engineering and design layout to be determined once the land has been allocated.
Production will target an initial 15 units, growing over three years to a total of 175 units yielding approximately 3000 kilograms of cannabis oil per year.
Affinity will establish a wholly-owned subsidiary in Malta to manage and operate the facility, and will inject $310,000 into the entity in the first year to help meet immediate production targets.
A further $5.3 million is expected to be invested in the subsidiary over the next three years to achieve increased production levels.
Funding for Phase 1 construction will be sourced from available facilities and cash reserves, with expansions to production funded from cash flow.
“This is an exciting development which will position Affinity as a globally-significant player in the medicinal cannabis sector and serves as a major endorsement of [our] strategic vision and expertise,” said managing director Mal James.
Malta joined the European Union in 2004 and provides Affinity with direct exposure to the growing European market of more than 500 million potential users of medicinal cannabis.
Currently, 23 of the 28 EU member countries have legalised medicinal cannabis.
The company is also currently working with Austrade and Colombian government enterprise ProColombia on the submission of a licence application for the cultivation, manufacture, export and domestic sale of medicinal cannabis in Colombia.
It is anticipated that the license will be issued before mid-2019.
Industry research predicts the global medicinal cannabis market will be worth more than $74 billion in 2024, up from $4.7b in 2017.
At mid-afternoon, shares in Affinity Energy & Health were trading 20% higher at $0.018.