Althea Group Holdings Ltd (ASX: AGH) shares are rocketing higher today after the company announced a wholesale supply agreement with a South African company. At the time of writing, the Althea share price has risen by 10% to 55 cents on news of the deal.
The agreement will enable the medicinal cannabis company to expand into the growing South African market.
What was in the agreement?
Althea reported today it has signed a deal with South Africa-based company, AfriCann Ltd. Under the wholesale supply agreement, and following receipt of all required licenses and permits, AfriCann will import a range of Althea branded finished products for sale and distribution within South Africa.
Althea says the agreement represents a forecast revenue amount of approximately $650,000 over the initial term of 2.5 years. The first shipment is expected to be delivered to AfriCann in the second quarter of 2021.
The deal represents a significant opportunity, according to Althea, with the South African legal medicinal cannabis industry estimated to be worth approximately USD$667 million by 2023.
Commenting on the agreement, Althea CEO, Josh Fegan, said:
We continue to build the Althea brand in highly regulated medicinal cannabis markets across the globe, with South Africa adding to a growing list of territories including Australia, the United Kingdom, and Germany.
The agreement with AfriCann is an exciting development for the company and reinforces our position as one of the world’s leading medicinal cannabis brands.
What does Althea do?
Althea is an Australian licensed supplier and exporter of pharmaceutical grade, medicinal cannabis.
In November, the company became the the first commercial supplier of Australian-made medicinal cannabis products in Germany, after obtaining approvals from the country’s health department.
The German medicinal cannabis market is said to be worth $2.4 billion, and an initial order of 2,000 products will be delivered by Althea to Germany this month.
Two days ago, Althea also announced that it has made inroads into the Canadian market, after sealing an agreement to manufacture United States cannabis brand Tinley’s products in Canada.
How has the Althea share performed in 2020?
The Althea share price has gained 45% in 2020 so far. The share price started the year at 38 cents, but dropped to as low as 15 cents in March at the height of the pandemic-led selloff.
The Althea share price reached a 52-week high of 67 cents in September and commands a current market capitalisation of $123 million.
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