Cronos (CRON) - Get Cronos Group Inc. Report shares were rising more than 3% in trading Tuesday to $14.77 after the company announced that it has entered into a multi-year private label cannabis concentrate supply agreement MediPharm Labs (MEDIF) .
MediPharm will supply Cronos with about $30 million of high-quality private label cannabis concentrate over the next 18 months. The deal has a provision for that total to increase to $60 million over 24 months.
Cronos will also use MediPharm Labs' extraction facility in Ontario to fulfill certain processing needs under a separate agreement.
"As the industry develops and matures, we see opportunity to work with companies like MediPharm Labs that provide specialized, high-quality services and inputs for our products," said Mike Gorenstein, CEO of Cronos Group. "Along with our internal capabilities, we are pleased to be working with MediPharm Labs to bring great products to consumers in anticipation of the derivative market launching in Canada this fall."
Cronos' Peace Naturals subsidiary will be developing the new products spawned from the agreement.
"With the continued evolution of the Canadian cannabis industry, we are excited to partner with Cronos Group in their journey to launch new products and secure MediPharm Labs' high-quality private label supply of concentrates," said Patrick McCutcheon, CEO of MediPharm Labs. "We look forward to supporting the team at Cronos Group with our specialized extraction capabilities and expertise to address a rapidly expanding cannabis market and growing consumer demand."
Cronos was trading at $14.70.