The Little Green Pharma Ltd (ASX: LGP) share price avoided the market selloff on Thursday.
The vertically integrated medicinal cannabis company's shares jumped 23% to 40 cents.
Why did the Little Green Pharma share price rocket higher?
Investors were bidding the Little Green Pharma share price today after the cannabis company released a positive update.
According to the release, the company has entered into a two-and-a-half year take-or-pay contract with new distribution partner, Four 20 Pharma, for the exclusive supply of the high-THC (25% THC) SMS strain into Germany.
The release notes that the agreement represents a minimum take-or-payment commitment of at least $7.5 million over 30 months. It also includes the payment of a development fee to help defray strain development costs.
Management isn't resting on its laurels, though. The company revealed that it now intends to seek similar agreements for other new strains, as well as roll out the SMS strain into other jurisdictions.
Management commentary
Little Green Pharma's Chief Executive Officer, Fleta Solomon, was pleased with the agreement. Solomon commented:
We are very excited by our new SMS strain as well as the opportunity to be partnering with Four 20 Pharma, one of the largest medicinal cannabis operators in Germany and with a highly successful track record of supplying its 420 Natural brand cannabis products into the German market.
The Agreement represents another significant milestone in LGP's continued growth of its Danish Facility, as well as an exciting development in LGP's supply processes that promises to dramatically shorten LGP's supply timelines for future key strains.
We look forward to working closely with Four 20 Pharma to bring this highly-prospective new strain to market as quickly as possible.
Despite today's strong gain, the Little Green Pharma share price has still lost a third of its value in 2022.
