Cannabis producer Little Green Pharma (LGP) (ASX:LGP) has received a boost in its production capabilities after securing an expanded medicinal cannabis licence from Australian regulators. 

An announcement on Thursday (March 12) states that thanks to the updated licence approved by the Office of Drug Control, LGP can now cultivate medical cannabis and make products with the drug.

The Western Australia-based producer can also step into the ancillary business at its newly expanded cultivation and production facility in its home state.

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In addition, the firm has obtained a manufacturing licence, granting it the ability to manufacture dry cannabis flower, extracts, tinctures and resins.

With the new licencing locked down, LGP expects planting at its cultivation facility to begin in Q2 2020.

“These licences mark an important step in expanding LGP’s cultivation and manufacturing capacity and achieving internal vertical integration and cost reduction,” Managing Director Fleta Solomon said.

At full operating capacity, the company’s facility will be able to produce cannabis flower and over 110,000 bottles of medicinal cannabis oil a year.

News of the operational increase comes less than a month after LGP made its public market debut on the Australian Securities Exchange in February. It raised AU$10 million in its initial public offering and issued approximately 22.2 million ordinary shares.

The new capacity will offer some relief to the demands of the company, which is aiming to serve the healthcare sector in Australia while angling for an expansion into international markets.

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Solomon said the expanded medicinal cannabis licence and the new manufacturing capabilities will give LGP more flexibility to fulfill purchase agreements signed with distributors in Germany and the UK.

LGP has steadily been building its reach into the nascent German medical cannabis space — a sector estimated to generate AU$12.5 billion by 2028, the company’s press release reads.

The firm was the first Australian producer to send locally grown medical cannabis to the European country back in September via a deal with German cannabis distributor and wholesaler Cansativa.

More recently, LGP has made ties with other European cannabis players, including via a purchase agreement with UK-based medicinal marijuana distributor Astral Health. It allows Astral to sell LGP’s line of medical cannabis oil formulations.

The company also fortified its presence in Germany after signing another purchase agreement with DEMECAN to sell its oils and dried flower across the country.

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Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.

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