A partnership deal between Canada’s The Valens Company and Australia’s Epsilon Healthcare Limited has kicked in.
The Valens Company provides proprietary cannabis processing, product development, manufacturing and cannabis consumer packaged goods services. Epsilon Healthcare Limited, formerly THC Global Group Limited, has multiple medicinal cannabis assets, including the largest GMP cannabis manufacturing facility in the Southern Hemisphere located at Southport in Queensland. Among its other assets are health clinics and a turn-key cannabis cultivation solutions provider.
Under the deal between Valens and Epsilon, Valens will fund all mutually budgeted operational and capital expenditure at Epsilon subsidiary THC Pharma’s Southport Facility in return for preferential access for up to 85% of the facility over the next five years. Epsilon will be paid a royalty of 2.5% – 4% of Valens’s sales revenue on all medical cannabis products manufactured for the company at the facility for the duration of the agreement, and Epsilon will pay Valens a management fee on products for its own customers.
The arrangement will enable Valens to deliver GMP grade products to Latin America, Europe and Asia-Pacific. However, it will not sell or supply any medicinal cannabis products in Australia or New Zealand other than through THC Pharma, where THC Pharma has the capability to manufacture and supply that product.
Further details on the rather complex arrangement can be found here.
At times it can become quite challenging keeping up with who is doing what with whom, how and where in the cannabis industry – and the lines between companies can get a little blurred. But all the activity in Australia is encouraging.
And there’s a lot to encourage players, both in terms of local and foreign markets. We recently mentioned Australia’s medical cannabis market is expected to grow to US $1.2 billion by 2027 according to one estimate, becoming the 5th largest in the world. It’s a big jump from the estimated ~$31 million in revenues in 2020-21.
A report from October last year indicated approximately 670,000 patients may be seeking access to medicinal cannabis in Australia by 2030, requiring approximately 79 tonnes of dried plant matter – and the global market will be worth an AUD $80 billion (US$62.6 billion at the time of the report) by 2024.