Why are Australian cannabis shares APH and LGP on the rise?

Source: photolona, Shutterstock

Summary

  • Australian Primary Hemp has signed another retail distribution agreement with Coles Group Limited.
  • Cannabis player Little Green Pharma has entered into a non-exclusive distribution agreement with Balancial to distribute its products in Denmark.

While the markets opened marginally lower today, two cannabis stocks released significant updates, leading to a rise in their respective share price.

Plant-based health and wellness products manufacturer and distributor, Australian Primary Hemp Ltd (ASX:APH), updated the market with its second retail distribution agreement with Coles Group Limited (ASX:COL).

On the other hand, vertically integrated medicinal cannabis player Little Green Pharma Ltd (ASX:LGP) announced a non-exclusive distribution agreement with Balancial Danmark ApS.

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Following the announcements, the share price of APH and LGP moved up on the ASX. At AEST 11:31 AM, APH shares were trading at AU$0.395, up 6.756%, while LGP shares were trading 1.307% higher at AU$0.775.

Cannabis stocks have had a mixed start today with Medlab Clinical Limited (ASX:MDC) and Botanix Pharmaceuticals Limited (ASX:BOT) trading in the green, while Althea Group Holdings Limited (ASX:AGH) and MGC Pharmaceuticals Limited (ASX:MXC) were trading in the red (at 11:38 AM AEST).

Let us dive deeper and discuss the agreements in detail-

APH signs another retail distribution deal with Coles Group

Australian Primary Hemp Ltd announced that it had obtained a second retail distribution agreement with Coles Group Limited. This distribution agreement will carry five additional Mt. Elephant range products of APH from stores across Australia from July 2021.

The second distribution agreement with Coles follows APH’s recent agreement for Coles to range the Mt. Elephant Mylk products and continues the Company’s commercialisation as well as distribution strategy with this brand and product range.

Furthermore, the Company anticipates that the agreement with Coles will generate sales revenue of approximately AU$3.0 million per annum from July 2021. APH also notified that this is the Company’s largest distribution agreement so far.

Source: © Harmoony | Megapixl.com

Under the terms of the agreement, Coles will carry:

  • Elephant Almond and Buckwheat Pancakes in two flavours- Chocolate and Vanilla,
  • Superfood Protein Balls in Choc Cherry, Chocolate and Hazelnut.

All the products in the range of Mt. Elephant comprise variations of hemp seeds, flour, or protein resulting from 100% Australian-grown hemp, a nutritionally dense source of Gamma Linoleic acids, Magnesium and Omega-3 and -6.

ALSO READ: APH and Woolworths’ retail distribution agreement

Neal Joseph, the Managing Director and CEO of APH commented-

Little Green Pharma enters into a distribution agreement with Balancial

Little Green Pharma Ltd announced a non-exclusive distribution agreement with Balancial Danmark ApS to sell and distribute LGP-branded cannabis oil and flower medicines in Denmark.

The agreement signifies the achievement of a new milestone in LGP’s strategy of growing market share in key European medicinal cannabis markets. The entry of Little Green Pharma into the Danish market follows Germany, the UK, and France as key European jurisdictions. The Company has materially progressed the establishment of distribution pathways in these jurisdictions.  

DO READ: Little Green Pharma (ASX:LGP) ships first order to Germany

Agreement details:

  • The agreement is a non-exclusive agreement for the supply and distribution of LGP products in Denmark.
  • With this agreement, the Company will distribute its products for five years commencing on the delivery of the first shipment of Products.
  • LGP will supply and export the products to Balancial in Denmark on a CIF delivery basis.
  • The Company stated that the agreement is subject to some conditions, including requiring LGP to hold all approvals to export the products into Denmark and enter into a Good Manufacturing Practice (GMP) Quality Agreement with Balancial.

Fleta Solomon, LGP’s Managing Director commented:

ALSO READ: How are these 3 ASX cannabis penny shares performing - CAN, LGP, MXC?

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