Australian grower receives order from Demecan, sets to acquire land for expansion

Little Green Pharma Ltd (ASX: LGP, “LGP” or the “Company”) is pleased to announce that it has received a firm purchase order from German pharmaceutical wholesaler Deutsche Medizinalcannabis Gmbh (“DEMECAN”) and has also entered into a binding Terms Sheet (“Agreement”) to acquire the freehold properties on which its South West WA cultivation and manufacturing facilities are situated, as well as two adjacent freehold properties.

DEMECAN purchase order The DEMECAN purchase order comprises 9,000 x 15g units of cannabis flower medicines to be delivered in Q2 CY2021 and follows the first commercial shipment of cannabis flower (500 x 15g units) made to Germany in February 2021 (see ASX announcement dated 5 February 2021).

LGP has a medicinal cannabis purchase agreement with DEMECAN, under which LGP will sell and export to DEMECAN up to 1,000kg of LGP-cultivated dried cannabis flower per annum (see ASX announcement dated 27 February 2020).

Acquisition of expansion capacity land
LGP has agreed to acquire the two properties underlying its South West WA cultivation and manufacturing facilities as well as two adjacent properties (“Properties”). The Properties have a total land area of approximately 16,000 sqm.

The purchase is intended to help service higher-than-expected international market demand for LGP cannabis flower medicines as well as the continued strong growth in demand for LGP’s cannabis medicines in domestic markets and to meet demand in new markets for cannabis flower medicines.

LGP has the ability to double its indoor cultivation capacity with 3,000 square meters available within its existing high-security fencing line. LGP will shortly commence planning this doubling of cultivation capacity, with construction anticipated to begin in H2 CY2021. The two adjacent properties give LGP the option to again double cultivation capacity should there be a need to do so.

In addition to securing the Properties and growing its GACP and GMP capacity, the acquisition will eliminate annual rental expenses of $170,000 and gives the Company tangible assets against which to obtain financing.

LGP currently leases the properties that underlie its cultivation and manufacturing facilities under 20-year leases. The Company has spent over $6 million constructing its cultivation and manufacturing facilities, investing in the fit-out of existing warehouse structures, and making other capital improvements to these properties.