MGC Pharma is about to become Australia’s highest paid cannabis supplier under a deal with Korean cosmetics manufacturer Varm Cosmo.

The medicinal cannabis producer’s (ASX:MXC) shares jumped 97 per cent to 7.5c on Friday after the announcement.

MGC will supply a minimum of 15,000kg a month of cannabidiol cosmetic products to Varm Cosmo.

The deal will pay $3.3 million a month, which would make MGC the highest-earning Australian cannabis company so far, the company says.

The products, including Cannabidiol facial creams and masks, will be branded and distributed by Varm Cosmo and will deliver a minimum of $40 million in annual revenue to MGC Derma, 51 per cent owned by the company.

MGC chief Roby Zomer said the deal was transformational for the company.

“It marks the culmination of much work in building our operations and our brand within this emerging market, as well as development work for our proprietary formulations by our MGC Pharmaceuticals research team in Europe,” he said.

$16.5 billion South Korean beauty market

The South Korean beauty market is estimated to be worth about $16.5 billion, making it one of the most lucrative in the world, according to Mintel Global New Products Database.

Facial skincare products account for more than half the market.

Varm Cosmo chief executive JungYoon Hwang said MGC was a perfect fit with his company.

“We produce the most honest cosmetics on the market,” he said.

“Our partnership with MGC Pharmaceuticals gives us the opportunity to enhance our product line while remaining true to our core beliefs.”

Work is underway at MGC’s Slovenia genetic research program and Czech Republic harvesting operation

Genetic research program underway

The announcement comes as MGC prepares for harvest at its Czech Republic operations with more 450 plants now at the flowering phase.

This is in addition to the first stage of MGC’s genetic research program to begin at the University of Ljubljana.

MGC and the University are collaborating on the creation on genetic strains of cannabis with high levels of cannabidiol for the treatment of disease symptoms including those associated with epilepsy and cancer side effects.


This special report is brought to you by MGC Pharma.

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