Medicinal cannabis and hemp company ECS Botanics (ASX: ECS) has announced another consecutive quarter of record revenue growth, driven by strong volumes from new and existing domestic customers.
The Australian company today reported a revenue of approximately $1.5 million for the December quarter, up 65% on September and 325% higher than the three months ended December 2020.
The significant growth was underpinned by strong, ongoing demand for ECS’ Goods Manufacturing Practice (GMP) manufactured medicinal cannabis products and the sale of hemp products, the company said.
During the period, ECS also secured supply agreements with local and international medicinal cannabis companies, most notably Sun Pharma and Cannvalate.
Further growth expected for oils business
Growth in the medicinal cannabis oil business is forecast to continue its upward trajectory with the 13,200 units of oil products produced for customers last quarter expected to increase to more then 20,000 units for the March period.
ECS said this growth has been supported by local market demand for Australian grown and manufactured product at a competitive price point.
The company said it is also experiencing increasing demand for dry flower and oils for the international markets, with preparations for an initial European export order exceeding $400,000 now underway.
ECS managing director Alex Keach said the company remains “very well positioned” to further its growth trajectory.
“Last year we signed a significant number of contracts domestically and overseas and it is now pleasing to see them convert into revenue,” he added.
Mr Keach believes the company’s business model provides it with a larger addressable market than its competitors.
“The business-to-business strategy and being able to take a seed all the way through to a GMP product is why we continue to attract new customers and deliver quarter-on-quarter growth,” he said.
Increasing capacity to meet growing demand
ECS owns farms and medicinal cannabis facilities in Tasmania and Victoria for the cultivation, processing and manufacturing of medicinal cannabis. It also cultivates hemp for the wholesale market and its retail food and wellness brand.
The company said new protected cropping enclosed are in production and additional processing facilities will be constructed in March to allow ECS to increase capacity to meet growing demand.
Cannabidiol (CBD) cultivation has begun at its Tasmanian facility with the first harvest expected in February.
ECS announced two new deals in late November. The first is a collaborative supply and toll processing agreement for cannabis biomass extraction with pharmaceutical company Sun Pharma.
Under this deal, Sun Pharma will supply resin to ECS as part of an offset agreement against the purchase of ECS’ wholly-owned SepareCo Supercritical carbon dioxide extractor and ancillary equipment, which is being installed at Sun Pharma’s pharmaceutical facility in Port Fairy, Victoria.
The second deal involves supplying the resin produced by ECS’ extractor at Sun Pharma’s facility to Cannvalate, which operates Australia’s largest medical cannabis distribution network.