Althea takes aim at the UK market to kick off its global pot strategy
Food & Agriculture
Food & Agriculture
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Listed pot stock Althea Global is going global with its distribution strategy for medicinal cannabis.
The company’s core operation is as a supplier of medicinal cannabis products to registered healthcare professionals, who then prescribe them to patients.
Since launching in May 2018, Althea (ASX: AGH) has gained traction in Australia where it’s sold over 1,000 medicinal cannabis products via an expanding network which now totals 93 doctors.
And it’s flagged the UK market, which has a well-regulated framework for medicinal cannabis sales, as a sound platform for its global growth strategy.
Next stop, London
Althea’s UK strategy gathered steam following new legislation last November, which gave doctors the go-ahead to prescribe medicinal cannabis.
To gain access to the UK customers, Althea has established a subsidiary company, Althea MMJ UK Ltd (Althea UK).
The company’s growth strategy is formed around what the company calls a “three-phased” business model.
Right now, the company is focused on the first two steps; source the product, then build and expand a distribution network of registered medical professionals.
Althea UK has done a deal with the Toronto-listed Aphria Inc, a supplier of medicinal cannabis products.
The company is still waiting for UK regulators to approve imports for medicinal cannabis, which it expects will happen in mid-February.
Having locked in its supply agreement, Althea UK will be able to direct its focus towards “patient access and product sales”.
Scaling up supply
But ultimately, Althea wants to move to its third phase: vertically integrating the supply chain.
“Thanks to the Health Minister Greg Hunt’s decision last year to legalise medicinal cannabis exports from Australia, when our Australian production facility is operational – projected for 2020 – we plan to then export our Australian grown and manufactured products to the UK,” CEO Josh Fegan told Stockhead.
“We’re in the process of building a state-of-the-art growing facility in Skye, Victoria which is projected to be in operation next year, the exports of which to the UK will create a second significant distribution channel for us.”
The company isn’t cashflow positive — it had net operating outflows of $1.164 million in the December quarter.
But thanks to a 2018 capital raising, Althea still has about $20m in the bank.
On the sales front, Althea wants to take what it has learnt from Australia and provide a “Concierge” service to build its customer base.
“The Concierge platform will provide comprehensive medical education for healthcare professionals, including clinical evidence, in support of Althea UK products,” Fegan said.
“The platform will streamline the registration process and facilitate patient referrals from primary care doctors to Althea UK specialist prescribers.”
More broadly, Althea’s strategy to distribute and sell ready-made cannabis products via a doctor network has gained some traction with investors.
The stock is off from its all-time high of 60 cents, but markets responded positively to this morning’s news with the stock up to 36 cents, an intra-day gain of more than seven per cent.