ECS Botanics Holdings Ltd (ASX: ECS) share price is trading lower in mid-afternoon trade. This comes despite the company announcing that Murray Meds has signed a Memorandum of Understanding (MoU) with an Australian-based cannabis group.
When news broke out this morning, the ECS share price rose to an intraday high of 7.5 cents. However, some profit-taking has contributed to its shares falling to 6.9 cents, down 2.8% at the time of writing.
What did ECS announce?
The ECS share price is softening regardless of the positive announcement made earlier today.
According to its release, ECS advised that Murray Meds entered a MoU with an undisclosed subsidiary of a large medical cannabis company.
In January this year, ECS signed a binding term sheet to acquire 100% of Victoria-based medical cannabis cultivator, Murray Meds.
Located on the Murray River in North Western Victoria, Murray Meds operates a licenced medical cannabis cultivation and manufacturing facility. The company produces around 3,500kg of medicinal cannabis per year consisting of dried flower, oils, and tinctures.
Terms of the MoU
Under the conditions of MoU, Murray Meds and the contracting party will meet throughout the 12-month term to discuss the potential cultivation and supply of cannabis. This will include a review of Murray Meds production capacity in servicing the contracting party's needs.
It is believed that the MoU will eventually be replaced with a production plan and quality contract in the long-term.
ECS stated that it's too early to grasp quantities, specifications, and pricing of the cannabis products from the MoU. In light of this, no financial figures could be provided in the release.
About the ECS share price
The ECS share price has accelerated over the last year, jumping to more than 90%. The company's shares hit a low of 1.5 cents in March 2020, before strongly rebounding from December onwards.
Based on the current share price, ECS has a market capitalisation of around $30 million.
