Shares in Creso Pharma have soared after the Australian cannabis company announced an expansion into China's $40b health food market.
Creso says it has signed a commercial partnership with Chinese hemp producer Zhejiang Kingdom Creative, which will purchase and import the company's animal and human health hemp- and cannabis-derived products into the local Chinese market.
The announcement of the deal sparked a sharp rise in Creso shares, which were up 12 cents, or 14.6 per cent to 94 cents at 1031 AEDT on Monday.
Kingdom Creative, which is primarily a hemp and flax-based linen production company, will also build a health food, nutraceuticals, body care and cosmetic company, allowing Creso further access and scale in China.
Under the move, the two companies will collaborate on research and development as well as the distribution of hemp- and cannabis-based nutraceutical, cosmetics and body care products across China, Creso said.
The medicinal cannabis company has opened four offices across China to build a sales and marketing presence and further local distribution options in China for its products.
"It will also enable Creso to rapidly expand into other Asian markets," the company said in a statement on Monday.
The Chinese health food market - which includes vitamins, dietary supplements, animal and herbal extracts and traditional Chinese medicine, is currently valued at $39.6 billion and is projected to grow by 10 per cent every year between now and 2025.
Creso said sales for medical cannabis in China are expected to grow with the country progressively opening up legislation to allow hemp-based and medical cannabis products to be available to patients.
Chief executive and co-founder Dr Miri Halperin Wernli said the partnership was a great opportunity to work with a well-established organisation in the market and would give Creso a strategic foothold in China and Asia.
The company also said it was in "advanced discussions" with other Asian pharmaceutical and cosmetic groups to make its products available to Asian consumers and patients.