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Joint agreement: Cannabis contract lifts Creso share price 7%

Creso Pharma Ltd (ASX: CPH) announced this morning that it has signed a three-year supply agreement for its cannabis product with TerrAscend Canada, a subsidiary of TerrAscend Corp. (CSE: TER). Creso shares are up 6.7% to $0.56.

The agreement will involve TerrAscend purchasing from Creso a minimum of 100 kilograms of cannabis flower a month. Creso says this commitment will tie up a ‘large portion’ of its production capacity.

Underpinning the agreement is a surge in demand driven by Canada’s legalisation of cannabis in October 2018.

Pricing will be dependent upon the grade of the cannabis and whether it has been grown to Goods Manufacturing Processes (GMP) standards. According to Creso, its ‘state-of-the-art GMP facility, staffed with experienced growers, will propagate the highest quality product demanding premium pricing’.

Creso CEO, John Griese said Creso is ‘quietly building a diverse global enterprise’.

‘Few cannabis companies are currently commercial in countries across Europe and even less have established proprietary branded products such as Creso’s CBD-based Nutraceuticals cannaQIX®and anibidiol® in human and animal health.’

Creso is one of many cannabis companies hoping to capture the growth of the global legal cannabis market following a trend of gradual legalisation. The company supplies cannabis products for the full spectrum of applications, from therapeutics to recreational use.

Last month, hemp was permanently removed from the Controlled Substances Act (CSA) in the US, opening the market for CBD products.

There is an increasing number of significant ASX cannabis players including Auscann Group Holdings Ltd (ASX: AC8) and Cann Group Ltd (ASX:CAN).

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Motley Fool contributor Cale Kalinowski has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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