Aura Health (CSE: BUZZ) announced this morning that it has signed its first supply agreement within Israel. The multi year supply agreement will see Northern-Israel based My Green Fields Ltd ship a minimum of 500 kilograms of cannabis per annum to Aura’s Germany-based Pharmadrug GmbH.
The multi year agreement, which is for a total term of five years upon commencement, will be initially focused on dry flower products but will later shift to oils and extracts. All products are to be sold under Aura’s newly launched brand Cannabion. The first year is to consist of 500 kilograms of dried cannabis purchased at a price of EUR4.00 per gram, while subsequent years will see that figure grow to up to 2,000 kilograms of dried cannabis and their equivalents.
The agreement provides that the products will all be of a high-THC variety, due to the high demand for such products in Germany. Additional areas of expansion within the agreement provide for the potential of high-CBD strains with trace amounts of THC being provided that are legal in other European jurisdictions.
We are excited to enter this strategic partnership with My Green Fields, providing our German distribution base with additional supply in a market that remains very tight with chronic shortages. Our access to oils and extracts will be extremely beneficial to the Company in serving German pharmacies as well to other European markets.
We are confident the launch of the Cannabion brand will serve Pharmadrug well as we grow our European distribution platform. Aura is in advanced discussions on further supply agreements that will enable Pharmadrug to expand the Cannabion brand and significantly increase its penetration into the nascent but fast-growing German medical cannabis market. Further, Pharmadrug intends to use this additional supply and capacity in Germany as a springboard to enter into new European markets.
Daniel Cohen, CEO of Aura Health
Product is expected to start arriving in Germany in the third quarter of 2020 as a result of the current regulatory framework in Israel. While the export of cannabis was legalized in January 2019, framework has yet to be provided by the government. The required framework is expected to be in place by the first half of 2020.
Pharmadrug is currently selling dried cannabis within Germany at a market rate of EUR9.50 per gram, making the newly announced supply agreement worth approximately EUR4.75 million on an annualized basis. Converted to Canadian Dollars, as of this morning the total value for the first year of the agreement is estimated to be $6.96 million.
Aura Health is currently trading at $0.06 on the Canadian Securities Exchange.
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