ECS Botanics signs medicinal cannabis supply deal with MediCann Health

Victorian medicinal cannabis cultivator and manufacturer ECS Botanics (ASX: ECS) has secured a deal to supply $24 million of pharmaceutical-grade medicinal cannabis dried flower to Perth-based MediCann Health.

The agreement will commence in January 2024 with over four tonnes of product to be delivered exclusively to MediCann over five years.

It stipulates annual volumes of ECS-developed strains for supply, with MediCann liable for 80% of any volumes not purchased within a calendar year.

The total volume ordered by MediCann is expected to exceed minimum annual amounts.

Long-term agreement

ECS managing director Nan-Maree Schoerie welcomed the long-term agreement.

“We are excited to announce the expansion of our partnership with MediCann through this supply agreement… MediCann’s dedication to putting patients at the forefront of its business aligns perfectly with our own commitment to delivering top-tier medicinal cannabis,” she said.

“This agreement reinforces our dedication to meeting the growing demand for affordable, accessible and effective medicinal cannabis products… it highlights the strong local demand for our pharmaceutical-grade cannabis and provides us with a solid foundation to continue to deliver profitable growth.”

Two supply deals

The new agreement follows two supply deals signed in June with Melbourne-based Entoura and Sydney’s Precision Pharmaceuticals, with a total value of $11.9 million.

Both agreements will commence in the first quarter of 2024.

They are believed to have demonstrated scaling benefits from ECS’ recent capacity upgrades which have led to enhanced yields, the incorporation of additional outdoor fields and the expansion of protective cropping enclosures.

Strong financials

In August, ECS reported strong financials for the year ending 30 June, achieving positive net operating cashflow in light of strong demand for its products and cost-effective cultivation methods.

In January, the company entered a three-year medicinal cannabis supply agreement with German firm Ilios Santé GmbH, generating a minimum revenue of $9.9 million.

In June, it inked a 10-year deal with global cannabis company Geocann for the use of its VESIsorb technology for formulation products in Australia, New Zealand and the UK.

Over the reporting period, ECS produced 4.2 tonnes of dried cannabis flower (representing a 51% increase on the previous year) scheduled for sale into local and overseas markets.

The record volume was attributed to increased outdoor production resulting from cost-effective and sustainable cultivation methods including the integration of six new protected cropping enclosures.

“It has been a transformational year as we have become a profitable business producing pharmaceutical-grade medicinal cannabis and Australia’s lowest cost and most sustainable cultivator and manufacturer,” Ms Schoerie said.