“Unlike Coles and Woolies that have an antagonist relationship with their vendors, we love our vendors and know we wouldn’t be anywhere without them, so we want to do deals that enhance ours and their position. Equity gives us a stronger incentive to make it work.”
The deal is similar to the one signed between Chemist Warehouse and baby formula and food maker Bubs Australia in 2019, which led to Chemist Warehouse amassing a 10 per cent shareholding as various milestones were met. It also has an equity deal with buy now pay, later player Fu.
The terms of the Cannatrek agreement were not disclosed, but it also involves a small chunk of upfront equity being given to Chemist Warehouse and additional slices dependent on certain targets being met.
A recent legislative change means CBD products can be dispensed by pharmacists. Tash Sorensen
Cannatrek will work with Chemist Warehouse to develop and bring to market new CBD products on an exclusive basis and these will be sold under one of the Chemist Warehouse brands. Both parties hope the products are available to the general public quickly.
Chemist Warehouse also already dispenses Cannatrek’s THC cannabis products.
Under Australia’s rules, people can only access Schedule 8 (controlled drugs) and Schedule 4 (prescription only) medicinal products through a script from a doctor or specialist under the SAS-B approval system.
But thanks to a recent decision by the TGA to downgrade certain low-dose CBD products to Schedule 3 from Schedule 4, some will now be available over the counter to the public this year.
Founded by CEO Tommy Huppert in 2015, Canntrek began building up its local farming and development operations as soon as medical cannabis was legalised in Australia in 2016.
It operates a farm in Queensland and is also setting up an operation in Shepparton.
Last year it secured an export agreement with Astral Health in the UK.
“In the US and the UK it’s like vitamin C over the counter. This new change in legislation [in Australia] is extremely exciting for the industry,” he said.
“We’re just four years in. The first year was licensing and compliance, then companies like us started building farms. This year you’ll see the supply chain mature considerably.
“In the immediate future it will be far more mainstream. And we’ve got thousands of doctors in Australia prescribing it now.”
Cannatrek’s agreement with Chemist Warehouse covers Australia and New Zealand, but may be expanded to include stores in China, Ireland and other countries where Chemist Warehouse operates.
Cannatrek intends to install tablets in Chemist Warehouse stores to provide instant touch points for consumers’ enquiries about their eligibility to access medicinal cannabis. The company will also become Chemist Warehouse’s exclusive telehealth partner for medicinal cannabis via their partnership with online doctor service Instant Consult.
Mr Gance was introduced to CBD products at trade shows in the US years ago and his wife has previously used a CBD cream to treat neck pain.
“I see this as the beginning of a wave of new products that could have really good benefits to consumers,” he said. “CBD is growing because it works.”