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The Valens Company strikes landmark deal with Australian Cannvalate giving it access to second largest cannabis market outside North America

Valens said it is targeting initial revenue from the deal as early as the third quarter of 2020

The Valens Company -
The Australian market is the fastest growing, pure-play medicinal cannabis market in the world

The Valens Company (CVE:VLNS) (OTCQX:VLNCF) has unveiled a landmark agreement, which sees it access Australia's potentially huge and fast-growing cannabis market.

The cannabinoid-product focused group has inked a distribution deal with Cannvalate Pty Ltd, the country's largest medicinal cannabis distributor and clinical research organization, which is said to have a near 50% market share of all cannabis prescriptions in Australia.

Valens said it was targeting initial revenue from the deal as early as the third quarter of 2020 from shipping a range of products from its Canadian facility to Australia.

READ: The Valens Company sees record revenues in fiscal Q1 as white label business expands

"The Australian market is the fastest-growing, pure-play medicinal cannabis market in the world and is unique in that oil-based derivatives represent over 95% of the total products sold," Dr Sud Agarwal, the chief executive of Cannvalate said in a statement.

"This opportunity provides the platform for The Valens Company to become the primary extractor and contract manufacturer for licensed producers throughout Australia and Asia-Pacific," he added.

Jeff Fallows, president at Valens commented: "The agreement allows us to maximize incremental revenue potential, while spending minimal capital upfront and scaling our operations as the opportunity expands.

"Australia's medical patient base, similar to the early stages of medical patient growth in Canada, offers an attractive return for our shareholders with potential upside as this also positions us strongly in a market that is expected to ease regulations around CBD products in early 2021."

Under the terms, Valens is also finalizing a long-term lease on a property in Australia with an independent third party. This is expected to be built out by the landlord as a small-sized extraction and manufacturing facility designed to be scalable and will form the hub of the group's operations in the country.

Construction is expected to begin on signing the lease and the facility is expected to be fully operational halfway through 2021.

The agreement with Cannvalate is a five-year, non-exclusive deal based on an asset-light, revenue-generating pay for performance model, providing Cannvalate achieves milestones based on certain financial targets and facility construction and licensing timelines, noted Valens.

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Price: 2.11 CAD

Market: TSX
Market Cap: $269.47 m

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