ECS Botanics (ASX:ECS) has secured a $24 million offtake agreement to supply medicinal cannabis dried flower over the next 5 years to Perth-based MediCann Health.
ECS Botanics, which has a $27.66 million market capitalisation, says supply will begin in January 2024, with over 4 tonnes of dried cannabis flowers to be delivered over the 5-year term.
ECS reports this new agreement follows 2 binding offtake agreements secured in June this year, underscoring the company’s ‘strong’ presence in the business-to-business (B2B) sector and highlighting the positive outcomes stemming from its recent capacity and production enhancements.
Under the MediCann agreement, if MediCann does not purchase the stipulated annual volumes of each ECS-developed strain to be supplied exclusively by ECS, the buyer will be liable for 80% of such volume not purchased in any calendar year.
Both parties expect the volumes ordered under the offtake agreement to exceed the minimum annual volumes.
Commenting on the agreement, ECS Botanics Managing Director Nan-Maree Schoerie says: “We are excited to announce the expansion of our partnership with MediCann through this newly extended, long-term supply agreement. MediCann’s dedication to putting patients at the forefront of their business aligns perfectly with our own commitment to delivering top-tier medicinal cannabis.
Our expertise in cultivating and manufacturing cannabis, combined with our shared focus on patient well-being, inspires us to continue to provide outstanding medicine to companies such as MediCann. This agreement not only reinforces our dedication to meeting the growing demand for affordable, accessible, and effective medicinal cannabis products but also marks another milestone following our June 2023 agreements, totalling $11.9 million.
“These partnerships … provide ECS with a solid foundation to continue to deliver profitable growth”
These partnerships highlight the strong local demand for our GMP-certified, pharmaceutical-grade cannabis and provide ECS with a solid foundation to continue to deliver profitable growth.”
ECS notes new protective cropping enclosures and production enhancements have been aimed at bolstering crop yields across additional outdoor fields and extending growing seasons through improvements to protective cropping enclosures.
ECS Botanics is an Australian medicinal cannabis cultivator and manufacturer located in northwest Victoria.
MediCann Health provides its patients with access to local specialist doctors and pharmacists who have experience prescribing cannabis-based medication.
ECS Botanics had $2.54 million cash and cash equivalents and $2 million in unused finance facilities at hand as of 30 June 2023, according to its latest quarterly report.
Write to Adam Drought at Mining.com.au
Images: ECS Botanics