Creso Pharma Ltd (ASX:CPH, OTCQB:COPHF) continues to make good progress in North America via its wholly owned, Canadian subsidiary Mernova Medicinal Inc.
Much of its progress lately has been in product development, 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.
The launch of the Ritual Gold vaporiser products will mark several milestones in a global cannabis vaporiser market anticipated to reach a value of over US15.77 billion ($A21.98BN) by 2028.
CPH will be hoping it can quickly crack this market, with signs so far pointing to a positive outcome.
Mernova recently reached a record weekly retail market share in Nova Scotia of 4.8% with weekly sales over C$95,000 (A$104,429) during the weeks of January 17 and January 31.
Driving these figures was strong demand from several provincial partners with sustained high performance in Nova Scotia.
Further to this Mernova entered Saskatchewan via purchase order totalling C$57,000 (A$62,657).
Saskatchewan is now the fifth province in which Mernova has commenced sales of its leading, high-THC Ritual brands and is considered a lucrative market, with no cap on the number of cannabis retail stores and monthly cannabis sales of upwards of C$13.4 million.
Additional province expansion is expected in coming months, further broadening Mernova and by extension CPH’s footprint.
“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,” CPH CEO and managing director William Lay said.
“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.”
Strong sales throughout Canada
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.
The company’s weekly sales in Nova Scotia for the weeks of January 17 and January 31, equated to a 4.8% market share.
The incremental increase in total market share highlights a record for Mernova up from the previous record of 4.5%.
Mernova continues to work with its established provincial partners and licensed wholesale groups to drive recreational cannabis sales. Additional purchase orders are anticipated in the coming weeks from all five provinces.
Mernova vaporiser range
Mernova is preparing to launch its new handheld vaporiser product, which will be sold under the Ritual Gold (or similar) brand and will provide CPH with an entry point into the global cannabis vaporiser market.
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 150 kilograms of biomass of its leading Lemon Haze strain for shipment to its specialised 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 and CPH expects to be able to begin sale of the new range during the second half of this year.
Creso Pharma is encouraged by discussions with potential provincial customers regarding the new range.
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.