The Hydroponics Company (ASX: THC) announced its subsidiary Canndeo Ltd has secured an agreement with Europe-based Endoca to distribute cannabis throughout Australia.
Endoca produces GMP certified medicinal cannabis and will initially distribute a high purity cannabidiol (CBD) oil, capsules and a combined CBD and CBDA oil throughout Australia. Endoca’s medicinal cannabis sales are above EUR50 million a year.
“The distribution agreement with Endoca is an important milestone for The Hydroponics Company and Canndeo in its program to deliver medicinal cannabis solutions into Australia,” The Hydroponics Company chief executive officer David Radford said.
Mr Radford added the company’s strategy was to supply Australia with the world’s best cannabis products and knowledge. He said Australian doctors and patients will soon be able to access these products.
The Hydroponics Company wholly owns Canndeo which operates under a pharmaceutic model and has expertise in breeding, growth and extraction of medicinal cannabis. Canndeo gained its cannabis research licence in July 2017 and its medicinal licence earlier this month.
Only the manufacturing licence remains to be granted before the companies’ research, development and growing facility in Australia can be legally operated.
The Hydroponics Company plans to meet Australian demand by both importing and manufacturing locally.
The companies are targeting patients with dementia, epilepsy and other neurological disorders.
Shares in The Hydroponics Company soared more than 30% in early morning trade.
Cannabis stocks on the ASX
Last week, Small Caps published a piece on cannabis stocks trading on the ASX, which revealed multiple small cap companies have edged into the newly created market since it was legalised in 2016.
Because of its weather, Australia has the potential to grow large outdoor crops, unlike other countries which require greenhouses such as Canada.
According to a Deloitte report, Canada is estimated to burn through 600,000kg of cannabis a year, which will exceed its growing capacity.
Meanwhile, the US market has been valued at US$50 billion by 2026 and global demand $500 billion by 2029.
There are currently more than 20 ASX-listed small cap stocks developing medicinal cannabis-based products to target these markets.