Medicinal cannabis developer The Hydroponics Company (ASX: THC) is aiming to add significant production capabilities to its recently-acquired growing facility, and thereby continue the build-up of its cannabis supply chain.
The medical cannabis company has signed a binding term sheet with Jenbrook and Meluka Health to create a de-facto trilateral agreement that will see all three companies benefitting from each other’s specialities.
Incidentally, Meluka Health is 50% owned by EVE Investments (ASX: EVE), an ASX-listed investment company that invests in technology companies with a focus on the medical nutrition sector.
The deal sees The Hydroponics Company securing exclusive leasing rights of organic certified land in northern NSW from Jenbrook, which the company will use to grow medicinal cannabis.
The produce will then be offloaded to Meluka Health as part of an off-take agreement that ultimately means medical cannabis will be used in Meluka’s upcoming set of honey products.
The terms of the deal also state that Meluka will provide The Hydroponics Company with its proprietary tea tree extracts for “for use in the development of new medicinal cannabis products”, the company said.
Although it has not been revealed exactly how it plans to combine medical cannabis and tea tree extracts as part of its existing commercial strategy just yet.
According to an official statement, the trio will enter into their trilateral set of agreements subject to a 60-day due diligence window.
If and when completed, the deal builds upon The Hydroponic Company’s acquisition of one of the largest pharmaceutical botanicals extraction and refinement plants in the southern hemisphere late last month, and importantly, creates the production capacity to supply patients and medical cannabis study trials both in Australia and overseas.
“The execution of the term sheet by THC has the potential to give THC another low-cost growing facility offering high quality organic medicinal cannabis crops as well as potential synergies with the Meluka Health team to deliver new products to the market made with THC’s cannabis.
With the acquisition of THC’s bio-manufacturing facility last week, THC is now in a prime position for both expansion of its research program and to enter into production,” said Mr Steven Xu, chairman of The Hydroponics Company.