With revenue rising by 237 per cent and strategic partnerships made during the quarter, Creso is now in pole position to fully launch into the US.

Global medicinal cannabis company, Creso Pharma (ASX:CPH), has just released its quarterly update which includes several interesting highlights.

The company delivered a first-quarter FY21 revenue of $1.385 million, an increase of 237 per cent compared to the previous corresponding quarter.

The revenue comes ahead of its proposed dual listing on the OTCQB market in the US, which is earmarked for the second-quarter of this year.

The decision to dual list in the US follows growing interest from North American investors after its recent announcement on the proposed acquisition of Halucencex, as well as its plans to expand into the US cannabis market.

Cannabis legislation is spreading around the US, with 36 states now having legalised medical marijuana. This regulatory shift in the US and across the world could potentially unlock growth opportunities for the company.

Creso is well funded to take on these new opportunities, with $18.6 million cash in the bank at the end of the quarter.

Strong quarterly sales

Strong revenue during the quarter has highlighted a growing demand for Creso Pharma’s products.

Sales from its Mernova Medicinal division in Canada recorded $759k during the quarter, which represents a 340 per cent increase from the same quarter in FY20.

Demand for Mernova’s products was validated by repeat purchase orders, with a shift now underway towards a recurring revenue model.

Meanwhile, Creso’s Swiss division also performed equally strongly during the quarter, increasing by 1,600 per cent to $626k. Sales mainly came from its two products range, the cannaQIX  and anibidiol.

For anibidiol, a  deal has been agreed with Vermont-based CERES, which will provide a distribution pathway into the US.

“Transformational” acquisition of Halucencex

In March, Creso entered into an agreement to acquire Canada-based Halucencex Life Sciences. Halucencex is focused on developing novel psychedelic molecules to treat post-traumatic stress disorder (PTSD), depression, and other mental illnesses.

The company described the acquisition as “transformational”, which will see it enter the emerging $100 billion global market for psychedelic medicine.

The deal will also see Creso develop and commercialise a range of psychedelic-assisted psychotherapy treatment products.

Just two weeks ago, Halucencex also signed an agreement with a leading nanotechnology company, Sixth Wave, to further progress its research into hallucinogenic mushrooms.

However, shareholders will have to wait until the completion of due diligence on 28 July 2021 for the acquisition to be completed, with voting expected to be in June.

African footprint

During the quarter, Creso has  managed to stamp its footprints in Africa, signing a bilateral agreement with a pioneer South African company, Cannabis Queen, to distribute its cannabidiol tea products in the continent.

In the bilateral deal, Creso will market and distribute its tea range in African countries through Cannabis Queen, while in return distributing Cannabis Queen’s Anti-Aging Serum 30ml and Argan and Cannabis Hair Treatment 50ml products in Switzerland and Europe.

Looking ahead

The company believes that decriminalisation of cannabis and the passing of the MORE Act in the US will grain ground quickly, after the US Democratic party won the balance of power in the US Senate this quarter.

The MORE Act aims to remove cannabis from the US Controlled Substances Act, and erase certain federal convictions to essentially decriminalise cannabis on a national level.

Creso says it is well placed to expedite the scale-up of Mernova’s operations in Canada to service the US market, when these legislations are passed into law.

Closer to home, over-the-counter sales of low-dose CBD products in Australian pharmacies are now possible, after a new ruling by TGA.

The TGA decision allows CBD products containing up to a maximum of 150mg/day, for use in adults, to be sold by a pharmacist to customers without a prescription.

Creso says it is in a good position to take advantage of this major development in the Australian medicinal cannabis industry, which is expected to exceed over $200 million per annum.

The Creso stock price has surged by more than 185 per cent over the past twelve months.

This article was developed in collaboration with Creso Pharma, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.