MGC Pharmaceuticals secures CBD extract supply agreement worth $1m

MGC Pharmaceuticals ASX MXC CBD extract supply Mabsut Life

MGC Pharmaceuticals (ASX: MXC) has secured yet another supply agreement, this time with European distributor Mabsut Life, with this contract, alone, expected to generate more than A$1 million in annual sales.

Masbut Life is targeting the emerging European medicinal cannabis supply chain in Germany, Czech Republic and Austria.

The binding agreement allows for MGC Pharmaceuticals to supply Masbut Life with at least 12kg of its industrial grade cannabidiol (CBD) extract each quarter.

Effective immediately, Masbut Life has placed a purchase order for 2kg of the extract, which MGC Pharmaceuticals manufactures at its European facilities.

Additionally, Masbut Life will make a US$40,000 pre-payment within the next two weeks.

Masbut Life plans to develop the CBD into its vape pen cartridges and sold throughout Europe under its electronic cigarette Mabsut branding.

The electronic cigarettes will comprise 100% cannabis ingredients, eliminating the inclusion of potentially harmful chemicals or solvents.

MGC Pharmaceuticals anticipates the deal will bring in A$1 million in annual revenue for an initial two-year period. Upon mutual agreement of both parties, the contract can be renewed each year.

Additionally, Mabsut Life has the first refusal over MGC Pharmaceutical’s future cannabis-based products it may desire to distribute in the region.

“The supply agreement with Mabsut Life builds on a number of transformational deals we have recently executed that provides the company with a diverse and growing revenue base,” MGC Pharmaceuticals co-founder and chief executive officer Roby Zomer said.

Earlier this week, MGC Pharmaceutical executed a definitive supply agreement with Australia-based HL Pharma Pty Ltd, which will involve HL Pharma distributing MGC Pharmaceuticals’ epilepsy product CannEpil™. An initial binding heads of agreement regarding the deal was signed at the beginning of the month. The distribution agreement with HL Pharma is anticipated to generate a minimum of A$1 million in annual revenue.

The HL Pharma agreement came hot on the heels of a multi-million dollar supply agreement with South Korean cosmetics manufacturer Varm Cosmo.

At the end of October, MGC Announcement it had signed the first of three exclusive binding sales agreements with Varm Cosmo. The initial agreement is worth A$8 million and MGC Pharmaceuticals will supply about 30kg of pure CBD to Varm Cosmo per annum.  A further two definitive agreements are due imminently amounting to approximately A$40 million in revenue for MGC Pharmaceuticals.

Cannabis stocks on the ASX

There are now more than 20 cannabis stocks listed on the ASX, with many making substantial inroads into developing and selling medicinal and nutraceutical cannabis-based products in Australia and internationally.

Global cannabis consumption is estimated to hit $500 billion by 2029 as countries around the world relax regulations in the face of mounting evidence revealing the health benefits the drug and its derivatives can provide.

Lorna has more than 10 years’ experience as a finance journalist and editor. She has written for an array of industry publications reporting on various sectors, including: resources, energy, construction, biotech, pharma, science and technology, agriculture, and chemicals. Specialising in resources, Lorna has covered a myriad of small and large cap ASX and dual-listed stocks.