The share price of medical cannabis company Zelira Therapeutics Ltd [ASX:ZLD] has rocketed today thanks to a distribution agreement in the Washington DC area, US.
At time of writing the ZLD share price is up 36.36% or 3.6 cents to trade at 13.5 cent per share.
The latest agreement has moved ZLD’s share price to its highest point since May 2018, as cannabis stocks hint at a resurgence in late 2020.
Why is this big news?
Today, the medical cannabis producer announced it had entered into a binding licensing agreement with Alternative Solutions LLC to manufacture and distribute Zelira’s ‘HOPE’ products.
Its HOPE products targets Autism Spectrum Disorder and is already launched and generating revenues in Pennsylvania, Louisiana, and Australia.
So, why are we seeing share price action from an agreement in just one state?
Washington DC has reciprocity with 32 other states in the US with approved medical cannabis programs.
Meaning ZLD’s latest deal will expand access to patients registered in all the 32 states as they can legally purchase medical cannabis products at an approved dispensary in Washington DC.
Quite a large increase in its consumer market.
Under the terms of the licensing agreement, ZLD will receive an upfront fee and ongoing royalties from HOPE product sales in Washington DC.
The company said its focus is now on expanding the distribution of HOPE through licensing agreements in each approved market across the US next year, as the COVID-19 pandemic gets under control.
CEO Dr Oludare Odumosu commented:
‘Our partnership with Alternative Solution, a leader in the Washington DC market, is a strategic move in line with our mission of working with market leaders in approved markets to expand access to HOPE across the USA.
‘We are particularly excited about this partnership because Washington DC is a gateway state with over 24 million visitors passing though the US capital in a year. Washington DC’s reciprocity is a strategic move that allows approved patients from 32 states to legally access HOPE™ in DC.’
Will we see a resurgence in the Zelira share price next year?
ZLD shares are nearly back to their 2018 peak having returned 123% in the past 12 months.
The COVID-19 virus has seen plenty of interest return to medical stocks, even those that are not directly related to battling the pandemic.
With a more health-conscious population emerging from the current pandemic, we could see stocks like ZLD enjoy a nice uplift in price.
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For Money Morning