Creso Pharma (ASX: CPH)
Creso Pharma (ASX:CPH) is set to acquire 100% of Canadian-based Mernova Medicinal Inc., an acquisition that would position CPH as a Canadian producer of legal cannabis in a market valued at C$4.9 (AU$4.9) to C$8.7 billion in sales.
Importantly for CPH, Mernova is completing the construction of a highly scalable, licensed and fully compliant growing facility up to 200,000 sq. ft with the capacity to produce ~2 million grams of cannabis per annum.
The production yield is thus in the same league as fellow North American listed peers such as Canopy Growth, which is worth 40 times that of CPH, but only has a growing facility five times the size.
Through the acquisition, CPH is looking to fast track its growth, and significantly enhance its revenue potential.
Mernova is looking to complete construction of the growing facility as soon as possible. Once complete, the first crop will be planted and the company will look to secure the final licensing under Health Canada’s Access to Cannabis for Medical Purposes Regulations (ACMPR).
With an ACMPR license, Mernova and thus CPH would be able to begin to produce product that meets the need of both the medicinal and recreational markets and scale production to match increasing consumer demand as a legalised recreational market comes into existence.
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The acquisition is a strategic move for CPH as it looks to create a vertically integrated company that combines a growing IP portfolio, R&D and ample production capacity.
The upside will be a company with extensive pharmaceutical industry expertise, global sales and distribution channels and a strategic location for CPH to leverage.