Creso Pharma’s wholly-owned Canadian subsidiary, Mernova Medicinal Inc. progressing new product development, ongoing sales growth, and Canadian expansion opportunities
Highlights:
Launch of Ritual Gold – Mernova’s new vaporiser products:
- New one gram vaporiser product is expected to be sold to new and existing provincial partners in Canada during H2 CY2022
- Product utilises cannabis flower trim inventory and other biomass which are not optimal for retail sale – providing opportunity to increase sales across the division on an attractive margin basis
- 150kg of biomass prepared and ready to be sent to specialized manufacturer – will result in approximately 15,000 1g vape units
- Preparation for product registration and regulatory approval to begin concurrently to support expedited sales
- Global cannabis vaporiser market anticipated to reach a value of over US15.77Bn by 2028i
Ongoing sales growth in Nova Scotia:
- Mernova recently reached a record weekly retail market share in Nova Scotia of 4.8% with weekly sales over C$95,000 (A$104,429ii) during the weeks of both of 17 January and 3 January
- Strong demand witnessed from several provincial partners with sustained high performance in Nova Scotia
Expansion into a new province to broaden footprint:
- Mernova enters Saskatchewan via purchase order totalling C$57,000 (A$62,657iii). Saskatchewan is the fifth province in which Mernova has commenced sales of its leading, high-THC Ritual brands
- Saskatchewan is a lucrative market, with no cap on the number of cannabis retail stores and monthly cannabis sales of upwards of C$13.4miv
- Additional province expansion anticipated in coming months
Creso Pharma Limited (ASX:CPH, OTC:COPHF, FRA:1X8) (‘Creso Pharma’ or ‘the Company’) is pleased to provide the following update on progress made through wholly-owned, Canadian subsidiary Mernova Medicinal Inc. (“Mernova”), including product development initiatives through the preparation for a launch of a new range of vaporisers which is expected to drive increased revenue and incremental gross margin, as well as ongoing sales growth and provincial expansion in Canada.
Mernova vaporiser range:
The Company advises that it is preparing the launch of a new handheld vaporiser product, which will be sold under the Ritual Gold (or similar) brand. This will provide Creso Pharma with an entry point into the global cannabis vaporiser market, which is expected to reach a value of over US$15.77Bn by 2031v.
The new range will utilise Mernova’s top-quality, indoor grown, hand trimmed, hang dried, cured, artisanal, high-THC, craft cannabis flower which will be manufactured into one gram vape cartridges.
The range will use cannabis trim and other biomass which are not optimal for retail sale, resulting in potentially increased revenue from unused inventory. Mernova’s production process produces trim as a by-product, therefore providing a consistent supply of high-quality material for future vape production runs.
Mernova has prepared an initial 150kg of biomass of its leading Lemon Haze strain for shipment to its specialized vape manufacturer, which will equate to approximately 15,000 one gram vape cartridges.
Product registration with the provinces and Health Canada regulatory approval initiatives will occur concurrently with production; the Company expects to be able to commence sale of the new range during H2 CY2022.
Creso Pharma has been in discussions with potential provincial customers regarding the new range and early-stage interest is very encouraging. Mernova will leverage its leading brand and existing market footprint to initiate and drive sales growth of Ritual Gold once regulatory milestones have been achieved.
Ongoing sales growth in Nova Scotia:
Mernova has continued to witness strong sales through its established provincial groups which include the Yukon, New Brunswick and Ontario, as well as Nova Scotia. Most recently, the Company has achieved weekly sales of greater than C$95,000 (A$104,429vi) in Nova Scotia for the weeks of 17 January and 31 January, which equated to a 4.8% market share. The incremental increase in total market share highlights a record for the Company up from the previous record of 4.5% (refer ASX announcement: 31 January 2022).
Mernova continues to work with its established provincial partners and licenced wholesale groups to drive recreational cannabis sales. Additional purchase orders are anticipated in the coming weeks from all five provinces.
New province entry increases Canadian footprint:
Mernova advises that it has secured a purchase order from Saskatchewan totalling C$57,000 (A$62,657vii), highlighting the group’s entry into this market. Saskatchewan marks the fifth Canadian province into which Mernova has progressed sales of its Ritual
Green and Ritual Sticks product range. The new province is a lucrative market, with no cap on the number of cannabis retail stores and monthly cannabis sales upwards of C$13.4mviii.
Mernova is progressing multiple initiatives to grow market share in Saskatchewan and establish a presence with new customers and cannabis retailers in the region. Additionally, the company is currently pursuing new additional provinces for near term expansion.
Commentary:
CEO and Managing Director Mr William Lay said: “Mernova continues to progress, leveraging industry leading cannabis quality, and we anticipate that the launch of the Ritual Gold range will provide another revenue generating activity for the group.
“Importantly, the Ritual Gold range will utilise cannabis inventory and production by-products which are not optimal in their pre-processed form for retail channels. This will allow the Company to introduce a new product category that is expected to provide incremental revenue at high gross margins.
“Our recent progress in Nova Scotia highlights the ongoing demand we are witnessing for our high-THC products. and we are also excited to have entered the Saskatchewan market.
The Company is in well progressed discussions with further provincial partners, which would allow Mernova to further expand its distribution channels.”