Canada House Wellness (CSE: CHV) and Pharmadrug (CSE: BUZZ) jointly announced today a five year supply agreement that will see Canada House’s product exported to Germany. The agreement, which will see annual minimum exports of 250 KG in the first year, is set to commence in 2020 upon regulatory approval.
The supply agreement is structured over a period of five years, with the first year seeing Pharmadrug purchase a minimum of 250 kilograms of dried cannabis or oil equivalent from Canada House Wellness’ subsidiary Abba Medix. Provisions are in place for up to an additional 250 KG being supplied within the first year, subject to demand. The flower, which is to be purchased by Pharmadrug for EUR$4.00 per gram, will be sold under the Cannabion brand. Pharmadrug is currently distributing cannabis in Germany to pharmacies at EUR$9.50 per gram, providing an estimated margin of approximately 57.9% per gram.
Current exchange rates peg the value of the contract at approximately CAD$1.5 million at a minimum during the first year.
Subsequent years will see Pharmadrug up its minimum purchase quantities to 500 KG, while maintaining an option on an additional 500 KG. The product itself may be subject to a price reduction, if the average wholesale price of cannabis in Germany falls by more than EUR$1.50 per gram. Pharmadrug will also have right of first refusal for any additional product to be sold by Abba Medix to the German market.
Discussions are also currently underway for the importation of high-CBD / trace-THC strains to other Eurozone regions that currently only permit CBD-only cannabis.
Under the current supply agreement, Pharmadrug will sponsor Abba Medix for the receipt of its EU-GMP certification. Product shipments are expected to begin as early as March 31, 2020.
Pharmadrug Inc is currently trading at $0.04 on the Canadian Securities Exchange.
FULL DISCLOSURE: Pharmadrug is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Pharmadrug on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
Information for this briefing was found via Sedar and Canada House Wellness. The author has no securities or affiliations related to Canada House Wellness. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.