Affinity Energy & Health gets green light for new cannabis cultivation facility in Malta

Affinity Energy & Health ASX AEB cannabis cultivation facility Malta
Affinity Energy & Health's facility will be built to meet European Union GMP standards with the plan to produce 3,000kg of cannabis oil annually.

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.

European gateway

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.

Imelda Cotton has over 20 years experience as a journalist and communications professional. She has spent the bulk of her career in the resources sector, having also worked directly with oil and gas majors and as a journalist covering a vast array of ASX listed companies within the resources, energy, science and health sectors.