At time of writing, the share price of Althea Group Holdings Ltd [ASX:AGH] is up 3.19%, trading at 48.5 cents.
The AGH share price got a lift today on the announcement of an expansion into Germany.
Medical cannabis is booming in the US and Canada, but will this trend reach our shores?
According to market research consultancy Prohibition Partners, the answer is yes.
By 2025, they say Australia is set to become the ‘largest legal cannabis market in the Oceania region.’
Source: Optuma
Althea Group expands on two fronts
Medicinal cannabis is a tightly regulated market, yet there seems to be new uses found for it all the time.
This could create a lot of opportunity for Althea Group on a global scale.
The company announced two new international agreements in Germany and Canada today.
According to the announcements, Germany’s health department has granted all necessary licences for the sale and distribution of Althea products in Germany.
Furthermore:
‘An initial order of 2,000 Althea products is expected to be delivered to German distribution partners, Nimbus Health GmbH, in December 2020 [and] Althea will become the first commercial supplier of Australian medicinal cannabis products sold in Germany.’
In Canada, Althea’s wholly-owned subsidiary Peak Processing Solutions recently entered into a licence agreement with Earth Kisses Sky and a manufacturing and distribution services agreement with cannabis beverage start-up, Electric Brands.
Will Althea keep growing?
Prohibition Partners believes the Australian cannabis market is expected to break through the barrier of US$1.5 billion by 2025.
Meanwhile, the global market is expected to grow to US$73.6 billion by 2027.
The huge potential of the global market gives Althea a lot of space to grow into.
A look into the AGH share price shows it has been moving sideways over the last 12 months.
Source: Optuma
The recent move up in the AGH share price happened on lower volume, indicating the buyers may not be committed to pushing it higher.
If the price falls back further, it may find support at the 37-cent level.
Should it turn to the upside, then the levels of 52 and 67 cents may become the future focus.
The global usage of cannabis looks like it’ll only get bigger in the coming years, making companies like Althea ones to watch.
While I don’t expect an immediate return to the heady days of 2018, the regulatory picture is beginning to become clearer and more accommodating around the world.
Regards,
Carl Wittkopp,
For Money Morning
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