Phyto Extractions Inc (CSE:XTRX, FRA:D2EA) announced that it has submitted a license amendment to Health Canada that, if approved, will enable Phyto to sell dried cannabis flowers to provincially authorized distributors and retailers and registered medical patients.
The Canadian cannabis concentrates company already holds a federal licence to process and sell cannabis extract products, edibles, and topicals under the Cannabis Act. The license amendment would allow its wholly-owned Health Canada licensed subsidiary, Adastra Labs Inc, to leverage its agricultural product fulfillment capabilities to package, produce and sell dried flower-based products across Canada, which would open the pathway to higher profit margins by eliminating the necessity to sell to other licence holders.
"The ability to sell dried cannabis products directly to provincial distributors and retailers represents a major milestone in the development of Phyto's growth-oriented business plan,” Phyto CEO and director Michael Forbes said in a statement.
“Direct sales will increase margins and provide critical access to retail space as flower and pre-rolls represent the largest cannabis market segments in Canada while bringing more eyes to our brands,” he added.
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Phyto noted that dried cannabis products are in high demand from provincial distributors and medical clients.
Sales continue to dominate the legal Canadian recreational market, accounting for roughly three-quarters of all sales and totaling over $2 billion in 2020.
"We intend to leverage Phyto's brand awareness and sales momentum in the concentrates space to commercialize dried cannabis products under the brand to drive topline revenue with these high gross margin products,” Donald Dinsmore, Phyto’s chief operating officer, corporate secretary and director said.
Contact the author at stephen.gunnion@proactiveinvestors.com