Venn Brown sat down with Nan-Maree Schoerie, Managing Director and Alex Keach, founder of ECS Botanics, to discuss the expansion, new product development, profitability, cost management, market growth and margin expansion.

Company background: ECS Botanics is a cultivator and manufacturer of medicinal cannabis products. The group is primarily a wholesaler of flowers and oils and has customers in Australia, New Zealand, the UK and Europe. 95% of its product is white-labelled to suppliers and distributors, and it is one of the largest cultivators and producers in the Australian. ECS currently only sells one compassionate brand through a B2C model but is working on expanding this part of the business.

Cost management: ECS’s cultivation is 20x less energy-intensive than most other producers. Leveraging the natural climate benefits of its growing region, the group cultivates its product using open acreage and natural greenhouses.

Market Size: The Australian market is estimated to generate more than $590 million a year, with the number of patients growing exponentially from fewer than 20 thousand in late 2019 to more than 105 thousand in early 2022. Local Australian suppliers can’t keep up with the growing demand. In Europe, the medicinal cannabis market is currently valued at around $8 billion a year and is expected to grow to more than $21 billion by 2027. The UK market is estimated to be around $2 billion in 2024. These figures represent just the medicinal market. As more countries legalise cannabis for recreational use, these figures will increase by an order of magnitude.

Production expansion: ECS is launching a new consumer product in Australia with 4x the absorption rate of existing products on the market. The company announced a $24 million, five-year supply contract with MediCann Health in October, boosting the more than $26 million in contracted product at the start of 2023, most of which is for delivery over the next three years.

Outlook: Despite producing a premium product, ECS is already the lowest-cost producer that has entered its next phase of growth and profitability. Global demand continues to outpace supply, positioning ECS to continue building on it’ strong profitable market position.