Flying high on two commercial developments earlier in the week, Queensland Bauxite (ASX: QBL) has revealed that its subsidiary, Medical Cannabis Limited (MCL) has entered into a binding memorandum of understanding with Burleigh Heads Cannabis (BHC).
The value in the deal is based on BHC’s medical cannabis import license approved by the Office of Drug Control (ODC), giving the company the right to operate secure storage facilities for medical cannabis products.
The signed memorandum stipulates that BHC will provide the import and storage services for MCL’s international medical cannabis products, and by extension, provide Queensland Bauxite with a welcome commercial diversifier given it 55% stake in MCL.
MCL has distribution rights for medical cannabis products in Australia, including the Canntab suite of products, which are exported from Canada by Canntab Therapeutics.
The deal provides MCL with immediate access to the required Australian licenses and secured storage facilities that are required to import its Canntab medical cannabis pharmaceutical extended release pills from Canada.
From raw to natural commodities
The signed deal overlaps MCL’s strategy of creating mutually beneficial strategic alliances in the growing medical cannabis industry in Australia, but also, to take its ambitions to a global level.
Earlier this week, MCL launched Australia’s first grown and processed hemp seed oil soft-gel capsules.
Furthermore, Queensland Bauxite’s subsidiary arranged a deal to supply hundreds of Coles stores around Australia with various products and oil blends that have hemp ingredients.
According to Queensland Bauxite, MCL remains on target to commence distribution of the Canntab pill in the second half of this year, with the companies both confirming that the initial import of the Canntab product to Australia from Canada will be arranged by BHC “free of charge to MCL”.
Given clear commercial opportunity available to both parties, the duo intends to “negotiate in good faith”, a potentially larger strategic alliance between the companies.
“MCL’s partnership with BHC represents a significant milestone in value creation as the Canntab product moves ever closer to be market ready. We are pleased that MCL is continuing to achieve its goals in a timely and effective manner,” said Pnina Feldman, chairperson of Queensland Bauxite.
“The company remains on track for first revenues from the Canntab product to be generated in the second half of the year,” added Ms Feldman.