Shares of Cann Global Ltd [ASX:CGB] managed to climb over 7% within the first couple of hours of trading this morning, after releasing an update on their latest distribution venture.
Cann Global focuses in legally growing and cultivating hemp — a strand of cannabis plant — in order to develop and research medicinal cannabis solutions to fit its increasing global market.
The group has a 100% shareholding in Medical Cannabis Ltd, as well as a management agreement with Medcan Australia, who plan to soon be distributing medicinal cannabis products throughout Australia.
Cann Global also have a Natural Food division, which includes the T12 collective of natural food brands and bulk produce. It is currently developing a hemp seed food range for Cann Global.
Last week, the company board announced an exclusive distributorship contract for the T12 Food Division with Vietnam’s EPCO Foods Co, comprising a monthly order of 20 metric tonnes of produce.
Today, Cann Global provided an update on the distributorship, saying it now involves the ‘complete range of T12’s Hemp Seed Food products’.
It’s positive news for the company, and investors are acknowledging it.
At time of writing, shares are sitting at 4.4 cents apiece.
Getting the goods on the shelves
Cann Global’s Food Division Head, Eli Levy, says the company had been working for years to build a strong business relationship with EPCO.
‘Vietnam is experiencing an unprecedented growth in its economy and is one of the most dynamic emerging countries in the East Asia region with very high standards and expectations on importer foods.
‘This exclusive distributorship…continues to be a perfect fit for T12’s business model which includes Australia and Asia’.
Executive Chairperson of Cann Global, Pnina Feldman, says the agreement ‘will ensure that Cann Global Ltd fulfils its business goals of becoming an Australian world leader in global cannabis products, and Hemp and Natural Food products’.
At the end of August, the company announced it had become an official supplier to Costco Australia, one of Australia’s largest food retailers.
They also acquired a 50/50 partnership agreement with Israel’s leading cannabis company, Pharmocann, to produce and sell cannabis-based treatment products.
Do the figures show potential?
With distribution only just now coming into play, Cann Global are yet to deliver on adequate revenue building from their manufactured products.
As per their June quarterly update, the company had net cash outflow of over $1 million, due to administration, corporate and development costs.
However, Cann Global have managed to acquire sensible partnerships within their areas of market focus, rather than relying on promise alone to deliver.
And we here at Money Morning believe the cannabis boom isn’t just a passing fad, and that those companies with a strong foothold in the industry have the potential to soar.
It includes a ‘left of field’ pot play that doesn’t even make their own products, but are instead doing something completely different to secure their piece of the market. Download now to find out more.
For Money Morning