Creso Pharma (ASX:CPH) has announced that wholly-owned subsidiary, Mernova Medical, has been granted a license to cultivate by Health Canada.
It makes Creso the only ASX-listed company with a 100 per cent ownership interest in a company that has a license to cultivate cannabis in Canada, and only the fifth licensed producer in Nova Scotia, Canada.
The license gives Mernova Medical the ability to begin planting crops in the new, 24,000 square foot purpose-built, indoor growing facility in Nova Scotia.
Creso said Mernova Medical has already signed a three year supply agreement with TerrAscend Canada, committing a large portion of the facility’s capacity and securing committed revenue before growing begins.
The company also reported that Mernova Medical has been in discussions with the Nova Scotia Liquor Corp (NSLC), the province’s dedicated distributor of cannabis. Mernova Medical will be able to supply the NSLC as soon as a monthly commitment of kilograms of product can be met.
According to John Griese, Creso's North America chief operating officer, “We are excited to achieve this much anticipated milestone. The license makes Creso one of only a handful of companies with a license to produce cannabis in Atlantic Canada.
"It opens up substantial revenue opportunities given the high demand suppliers face following legalisation in Canada last year.
“Our strategy of locking in sales revenue ahead of granting of the license means we can hit the ground running and capitalise on the capabilities of this premium growing facility.”
Dr Miri Halperin Wernli, Creso’s CEO and co-founder, said: “It is a great achievement that Creso now has the ability to cultivate and produce cannabis plants in Canada, a country where demand for cannabis is currently outstripping supply.
"Our rigorous research and production processes will ensure the products grown and produced at the Mernova Medical Windsor facility will be of the highest quality and, as a result, demand premium pricing.
"In addition to selling excess capacity to third parties, the Mernova Medical Windsor facility allows Creso to vertically integrate its production. In-house cultivation allows Creso to lower the cost of production with respect to its current cannabis product range. Creso can ensure raw material supply security as well as maintaining the highest quality level.
“Securing the license is another critical step we have taken over the past year fulfilling our goal to position Creso as a global cannabis brand with operations and the ability to supply human and animal health products across the world.”