Melodiol is making good progress on securing the key European Good Manufacturing Practice  (EU GMP) licence that will allow it to export cannabis to the lucrative markets of Australia and Europe.

The company is working with leading North American regulatory and scientific cannabis consulting agency CannDelta to advance the licensing process, which it describes as “well progressed”, for EU GMP – a minimum standard that a medicines manufacturer must meet in its production processes before it can export to several major global markets.

To date, Melodiol Global Health’s (ASX:ME1) wholly-owned subsidiary Mernova Medicinal has completed and submitted its site analysis plan for its manufacturing facility in Nova Scotia, Canada.

The Good Manufacturing Practices (GMP) site quality risk evaluation had highlighted that minimal additional infrastructure upgrades will be required during the application process – a positive finding that is expected to minimise any major expenditure ahead of scale-up.

It has also completed and passed the Good Agricultural and Collection Practices site quality risk assessment, which is a major milestone in the application process.

Access to rich markets

Securing the EU GMP licence, which the company expects in the first quarter of 2024, has the potential to unlock major sales opportunities in Australia and Europe.

Melodiol is especially keen to access the Australian market as it offers considerably higher pricing than Canada on a per gram sales basis providing opportunity for increased revenues and higher margins.

This will allow the company to leverage Mernova’s underutilised grow rooms, which are currently operating at about 60% capacity.

“The company’s progress in its EU GMP licence application has highlighted the exceptional quality standards that Mernova’s facility already operates at. We are very pleased to have achieved such strong progress in a short time period,” chief executive officer William Lay said.

“The strategic decision to pursue an EU GMP license for Mernova will allow Melodiol to significantly scale operations and expand our international footprint outside of Mernova’s national market.

“This also has the potential to lead to a significant growth in revenue which will underpin group profitability.”

During the June 2023 quarter, Mernova delivered a 42% increase in sales on the previous corresponding quarter to round-out record half-year CY2023 sales of $3.095 million.

This article was developed in collaboration with Melodiol Global Health, 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.