DURBAN – Nutritional Holdings said on Wednesday that it was positioning itself to enter the Asian market after it concluded a R780 million off-take agreement to supply cannabidiol (CBD) products in Japan, together with Ukusekela Holdings, for two years.
The group advised its shareholders that it has reached an agreement to supply CBD products into the highly regulated and strictly governed market in Japan.
“Nutritional Holdings, in conjunction with Ukusekela Holdings, have concluded an off-take agreement of $2 million (R31m) a month for 24 months, equating to R780m, in the next two years. This is in line with the business model and five year growth plan of Nutritional Holdings,” the group said.
Nutritional Holdings has set itself a target of a tenfold growth in revenue.
Last month, the group said it experienced exponential demand and resultant growth in the sale of cannabis-associated products during the year to the end of February.
The group reversed a R5.4m loss reported a year earlier to a profit of R5.94m in the current year.
Nutritional Holdings said Japan was one of the leading markets in Asia and one of the most advanced globally in terms of the laws and regulations around CBD.
“The principles of integrity are deeply rooted in Japanese tradition, and laws around CBD require companies to implement meticulous quality and safety standards,” it said. “Japan allows the import of pure CBD oil and has strict conditions on quality and compliance. Historically, cannabis has held immense significance in Japan. Unlike many countries that used cannabis for recreation purposes, Japan treats it as a sacred plant.”
The group said it planned to acquire Ukusekela after an interim management agreement between the companies raised its earnings during the year.
Ukusekela, which is involved in the research and development of the cannabis and herbal market, signed an agreement for the supply of The Ultimate Immune Booster to a leading manufacturing and distribution company in Germany in September.
The three-year contract was expected to start in the middle of last month, with an initial volume of 50 000 units a month for the first year which will ultimately grow to 200 000 units a month by year three, totalling a contract value in excess of R1 billion.
Nutritional Holdings said the global trend for cannabis sector companies has achieved triple-digit growth.
It said the achievement further illustrated that the company was on track to mirror its global counterparts in delivering impressive profits in the short term and the medium term.
Nutritional Holdings’ shares closed unchanged at R0.01 on the JSE on Wednesday.
BUSINESS REPORT