Althea Group’s focus turns to THC drinks after selling pharmaceutical assets to Tasmanian Botanics

Althea Group Holdings (ASX: AGH) has sold its pharmaceutical assets to Tasmanian Botanics for $1 million as the cannabis products developer turns its focus to the fast-growing global THC-infused beverage market.

The latest sale follows the $1 million divestment of its MyAccess Clinics business in the UK and Ireland last year as part of a cost-cutting drive by the company which posted a full-year loss of $32 million in FY24.

Through the deal negotiated with Tasmanian Botanics, a licensed medicinal cannabis producer based in Hobart, Althea will receive $1 million upfront and a share of revenue from any residual pharmaceutical inventory sold by the purchaser.

The deal frees up Althea to focus on the THC-infused beverage market through its Peak Processing Solutions subsidiary in Canada which saw a 20 per cent increase in cash receipts totalling $6.25 million in the second quarter of FY25.

“The medicinal cannabis landscape in Australia has shifted in recent years, and this transaction represents a thoughtful and strategic response to those changes,” says Althea Group CEO Joshua Fegan.

“We're immensely proud of Althea's accomplishments, and under the stewardship of a trusted domestic cultivator like Tasmanian Botanics, the Althea pharmaceutical brand is set to thrive with consistent supply and exceptional quality for patients and prescribers.

“For AGH, this marks a pivotal moment as we turn our full attention to North America, where Peak is well positioned to lead the growing legal THC beverage market. We’re excited about what lies ahead.”

In the wake of the sale, Althea Group has withdrawn its revenue and EBITDA guidance for FY25. When announcing its half-year results in February, Althea had been targeting full-year revenue of between $26 million and $33 million, with adjusted positive EBITDA of between $800,000 and $1.1 million.

This compares with revenue of $30.36 million in FY24 and an adjusted EBITDA loss of $6.07 million.

Althea Group says its decision to sell the pharmaceutical assets is part of a long-term growth strategy that will still allow patients to access Althea-branded products.

The company says that Tasmanian Botanics’ vertically integrated capabilities will enhance product reliability and domestic manufacturing expertise.

“Althea has earned the trust of healthcare professionals and patients across Australia, and we are honoured to bring this respected brand into the Tasmanian Botanics portfolio,” says Tasmanian Botanics CEO Dan Howard.

“Our team is dedicated to building on the Althea legacy with the same high quality Australian made standards that have made Tasmanian Botanics a leader in the Australian medicinal cannabis industry.”

Althea Group’s decision to sell the pharmaceutical division follows a tough March quarter for the company's global cannabis-based medicines business which posted an 81 per cent fall in cash receipts to $802,000 from a year earlier.

Despite managing to cut annual costs by $3.9 million in FY25, Althea says the “pace and scale of revenue decline has outpaced AGH’s rightsizing efforts”.

The sale to Tasmanian Botanics is expected to be completed in mid-May.

Meanwhile, Althea Group is ramping up its THC beverage operations after last year securing a joint venture between its Peak USA subsidiary and Flora Growth Corporation to enter the US cannabis beverages market.

Through Peak USA, the company has ambitions to replicate the success of Peak in Canada by manufacturing its proprietary cannabis emulsion Envision from locally sourced hemp in the US.

In February, the company raised $4 million via a share placement to boost its North American and Canadian infrastructure and help scale commercial production at Peak USA.

Althea Group’s March quarterly update revealed that its subsidiary Peak Canada had achieved $4.2 million in customer receipts during the period and that its US subsidiary Peak USA had begun commercial production with more than 550,000 units produced or shipped within weeks of the launch.