The influence of Australian companies grabbing a foothold in Canada’s blossoming cannabis market continues to grow as The Hydroponics Company (ASX: THC) has concluded a letter of intent (LOI) with Ascent Industries to share both cannabis product and knowledge to collaboratively grow their respective businesses.
The news is yet another sign that the rapid pace of Australian medical cannabis companies grabbing market share in association with Canada’s leading firms, buoyed by the imminent legalisation of recreational cannabis by the Canadian Senate.
Other companies that have secured their own early stakes in Canada’s new cannabis frontier include the likes of Cann Group (ASX: CAN), Creso Pharma (ASX: CPH) and AusCann (ASX: AC8) – all three companies have made various incisions into a market that’s expected to grow at double-digit rates over the coming years.
Legal cannabis sales reached US$9.7 billion in North America in 2017, according to a report from Arcview Market Research and BDS Analytics.
In a report published this year, analysts predicted the legal cannabis market will grow at a compound rate of 28% per year to reach US$24.5 billion in sales by 2021, as more state-legal markets come online.
Ascending to commercial medical cannabis
Ascent is a leading licensed producer in Canada that was recently selected by Aurora Cannabis to supply its unique cannabis strains. Ascent is supplying 20,000kg of dried cannabis flower and up to 6,000kg of cannabis trim per year to Aurora.
Under the agreement between The Hydroponics Company and Ascent, the Australian company will have access to Ascent’s proprietary strains of cannabis sativa on a royalty-free basis.
It intends to grow, cultivate and manufacture high-grade cannabis at its certified Southport facility in Queensland and has also agreed to provide Ascent with access to its proprietary cannabis strains that have been developed over the past 17 years.
“We are pleased to progress our strategic relationship with Ascent Industries to further enhance the variety of our unique cannabis strains. Ascent is a leading licensed cannabis producer in Canada and through this collaboration with THC, both companies and their shareholders will benefit from significant synergies. THC continues to solidly build its plants catalogue to ensure that we have access to the best medicinal cannabis stock available,” said Steven Xu, chairman of The Hydroponics Company.
In further positive news, the companies have said they’ve agreed to negotiate an offtake agreement for The Hydroponic Company to supply Ascent with medicinal cannabis produced at its biomanufacturing facility at Southport.
The fully operational facility is one of the largest pharmaceutical botanicals extraction and refinement plants in the southern hemisphere, acquired for A$2.55 million from big pharma company LEO Pharma in April this year.