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Why the Creso Pharma (ASX:CPH) share price is tumbling 5% lower

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The Creso Pharma Ltd (ASX: CPH) share price has been a poor performer on Monday.

At one stage today the cannabis company’s shares were down almost 5% to 20 cents.

The Creso Pharma share price has since recovered a touch but is still down 2.5% to 20.5 cents at the time of writing.

Why is the Creso Pharma share price sinking 5%?

Today’s decline appears to be in relation to an announcement out of Creso Pharma this morning.

According to the release, the company has brought the marketing and sales function of its cannaQIX product inhouse in Switzerland. Creso will be taking over from its commercial partner Doetsch Grether.

Management revealed that it made the move following a growing trend of direct inbound sales enquiries and interest in cannaQIX.

The release explains that cannaQIX is listed with key wholesalers reaching over 2,100 point of sales to consumers. This includes through pharmacies, pharmacy networks, drugstores, health nutrition shops, and bigger retail shops such as Manor. Today’s decision means that Creso will now be directly supplying all major wholesalers in the country.

In addition to this, the company notes that by bringing this function inhouse, Creso is able to improve its profit margins for cannaQIX substantially. It also believes that it sets the stage for further product extensions and new product launches such as cannaDOL in Switzerland.

However, judging by the Creso share price performance, some investors don’t appear overly convinced by the move.

Though, management seems to think it is the right thing to do. The company’s Commercial Director, Dr. Gian Trepp, said: “We are implementing phase 3 of Creso’s operational launch plan by bringing the marketing & sales function of our products inhouse. While we are thankful of having benefitted from our partnership with Doetsch Grether, our direct sales model will give Creso the opportunity to expand its profit margins as it enters a new phase of growth.”

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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