Little Green Pharma Posts Record Revenues and Nears Cannatrek Merger Completion

Record Revenue Growth Fueled by European Expansion

Little Green Pharma (ASX:LGP) reported its highest-ever annual revenue of $42.4 million (unaudited), marking a more than 15% increase on the previous year and sustaining a compound annual growth rate exceeding 30% over the past four years. The March 2026 quarter alone saw revenue hit $12.5 million, up over 15% on the prior quarter, with March monthly sales reaching a record $5.7 million. This growth was underpinned by a remarkable 70% quarterly jump in European sales to $6.4 million, driven predominantly by strong demand in Germany, where sales hit $5.5 million. For the first time, European sales outpaced Australian sales, which declined 10% to $6.1 million amid regulatory headwinds and seasonal weakness.

Flower sales dominated product categories, with quarterly flower revenue hitting $10 million, up over 40% from the previous quarter. Conversely, oil sales fell 35% to $1.5 million, primarily due to a large shipment to France in the prior quarter. Other product lines such as vaporisers and edibles remained subdued, each declining around 10% from low bases.

Improved Cashflow and Debt Position Strengthen Financials

The company achieved positive operating cashflow of $1.1 million for the quarter, a significant turnaround from a negative $1.0 million in the previous period. This improvement came despite minimal changes in production costs and the incurrence of merger-related expenses. Cash receipts reached a record $13.3 million, up over 20% quarter-on-quarter, supporting a $1.1 million repayment of borrowings and boosting unused debt facilities to $5.6 million from $4.0 million.

At quarter-end, LGP held $1.4 million in cash with net tangible assets substantially exceeding its enterprise value, which stood at just 0.75 times revenue and 0.4 times net tangible assets. The company’s debt remains modest at $2.6 million, supported by various secured and unsecured facilities, including loans from National Australia Bank and Danish authorities.

Cannatrek Merger Nears Completion Amid Synergy Prospects

The proposed merger with Cannatrek Ltd, set to create one of Australia’s largest medicinal cannabis entities, is progressing smoothly. Shareholders have approved key conditions precedent, with the scheme implementation now expected on 1 June 2026 following a shareholder meeting on 22 May and Federal Court approval on 25 May. The combination aims to leverage Cannatrek’s latent GMP manufacturing capacity in Australia and LGP’s in Denmark for Europe, while consolidating clinic and distribution networks and optimising costs.

This strategic move is anticipated to accelerate LGP’s European growth and provide a platform for further international expansion through acquisitions and investments. The merger timeline revision and shareholder approvals have been detailed in recent announcements, including the postponement of key shareholder votes to May and updated court dates. These developments build on the company’s earlier Cannatrek shareholder approval and rescheduling of court dates reported in April.

Regulatory Shifts and Market Dynamics in Europe and the US

Europe remains a focal point, with Germany’s medical cannabis imports soaring 176% in 2025 to 201 tonnes, despite a slight quarterly dip linked to temporary import permit suspensions. Regulatory proposals in Germany to ban mail-order dispensing and require in-person prescriptions face pushback amid constitutional and EU law concerns. LGP is advancing product registrations, including irradiation licenses for its CherryCo brand expected by July 2026.

Other European markets show varied dynamics: the UK’s medical cannabis market more than doubled in 2025, driven by telemedicine clinics; Poland recovered from a telemedicine ban with a shift to professional clinics; France extended its transition period for cannabis prescriptions, with LGP preparing for early supplier status under new regulations; and Spain is implementing a restrictive registration process limited to oil products for specific conditions.

On the regulatory front, the US Justice Department’s rescheduling of medicinal cannabis from Schedule I to Schedule III under the Controlled Substances Act marks a historic shift, potentially boosting global sector prospects. LGP highlighted that this change could make Australian and European GMP-grade medicinal cannabis operators more attractive to US investors and enable US companies to pursue international acquisitions with improved cash flows. This development adds a fresh dimension to LGP’s international growth strategy.

Operational and Market Challenges Amid Growth

While LGP’s growth story is compelling, challenges linger. Australian sales declined amid regulatory reforms impacting prescribing practices, and certain product categories like oils and vaporisers experienced softness. The geopolitical backdrop, including the Iran war, has had limited operational impact but contributed to moderate transportation cost increases. The company’s ability to maintain positive cashflow despite these headwinds and merger costs is notable.

Furthermore, ongoing regulatory consultations by the Therapeutic Goods Administration (TGA) in Australia have revealed strong sector engagement, with calls for tighter controls on high-THC products and dosage forms. These evolving frameworks could influence prescribing patterns and product offerings in key markets.