Cannabis stock Althea Group (ASX:AGH) has risen 8 per cent on Friday, after announcing a deal struck in Canada.
Althea said its wholly-owned subsidiary, Peak Processing Solutions, had signed a contract manufacturing agreement with Collective Project, a leading cannabis-infused beverage brand in Canada.
The contract term is three years, with an estimated volume of at least 700,000 cannabis beverage units per annum with a retail sales value of approximately $C6.5 million.
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Under the deal, Peak will manufacture six cannabis-infused beverage products on a contract manufacturing basis for Collective Project for three years, to serve the Canadian adult-use market.
These beverages are a rapidly growing segment within the cannabis industry, currently representing 2.1 per cent of the Canadian adult-use cannabis market.
The overall market is worth approximately $C135 million, and Collective Project holds an estimated 9.6 per cent market share.
The company sells about 700,000 cannabis beverage units a year, equating to annualised retail sales of around $C6.5 million (excluding future growth).
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Peak estimates that by the end of Q1 2024, it will produce about 40 per cent of all cannabis-infused beverages available in Canada.
“This new agreement with Collective Project shows that Peak is best in market, evidenced by the signing of previous, existing and new customers apace,” said Althea CEO, Joshua Fegan.
“As the demand for high-quality cannabis infused beverages surges, our collaboration with Collective Project will ensure that consumers receive products of the utmost quality and innovation.
“This partnership further cements our position as industry leaders in the Canadian market.”
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The cannabis-infused beverage market Collective Project has been recognised for its artisanal approach to cannabis-infused beverages, creating a fusion of unique flavour profiles.
The company’s Blood Orange Yuzu in the Canadian market deserves special mention, as it has become the best-selling single SKU in Canada, commanding an impressive 5.1 per cent market lead in Ontario.
According to experts, unlike smoking, in which cannabinoids are inhaled into the lungs and pass rapidly into the bloodstream, cannabis-infused drinks may peak two to three hours after consumption and persist for around six hours.
Althea’s foray into the cannabis-infused beverage market in Canada began three years ago when Peak’s Standard Processing license was granted by Canadian Health authorities.
Peak has since been producing cannabis drinks out of its facility in Tecumseh, Ontario.
This content first appeared on stockhead.com.au
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Originally published as ASX Health Stocks: Althea strikes deal to make 40pc of cannabis-infused drinks in Canada
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