ECS Botanics (ASX:ECS) - Managing Director & Founder, Alex Keach
Managing Director & Founder, Alex Keach
Sourced: The Examiner
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  • Hemp oil company ECS Botanics (ECS) has signed a collaboration deal with Essential Oils of Tasmania (EOT)
  • Though non-binding, the contract will see the companies combine their expertise to gain a further reach into the hemp and medicinal cannabis markets
  • ECS Managing Director Alex Keach said especially as COVID-19 rages on, demand for hygiene products is on the rise
  • Thus, the combination of hemp oil and essential oils products is a complementary deal
  • Nevertheless, shares in ECS are trading roughly nine per cent lower today, currently worth three cents each.

Tasmanian hemp oil specialist ECS Botanics (ECS) is teaming up with Essential Oils of Tasmania (EOT) to tap into the hemp and medicinal cannabis market.

The two companies have inked up a non-binding collaboration agreement to fast-track development and capitalise on emerging opportunities in the hemp seed oil, cannabis, and terpene sectors.

The companies will also research ways to combine ECS’ Tasmanian hemp products with EOT’s essential oils products.

EOT has been in the essential oils business since 1983. According to ECS, the company is one of the country’s leading plant extraction and distillation businesses that services a global client base.

Given ECS’ speciality in hemp seed oil for health and wellbeing, Managing Director Alex Keach said the two companies offer complementary products.

“We are in the midst of a huge consumer shift toward using botanical extracts, including cannabis, for nutrition, medicine, supplements, cosmetics, flavouring, sanitiser and cleaning applications,” Alex explained.

He said the company has started seeing strong growth in both the cannabis extract market as well as the US$8 billion essential oils market.

Moreover, Alex touted the ongoing COVID-19 crisis as a key market opportunity as consumers have a stronger focus in hygiene in home and workplaces.

“Essential oils, as well as hemp seed oil, are known for their strong anti-microbial and anti-bacterial properties,” he said.

“We expect to see greater emphasis on the use of plant extracts in cleaning products to take advantage of these properties, as well as complementing hand sanitisers and hygiene products in order to provide a softer and less drying impact on the skin.”

EOT’s CEO, Simon Wells, spoke highly of the business partnership, too.

“We really do feel our agronomy, extraction and chemical analysis expertise is highly complementary to the development of a cannabis industry in Tasmania and we look forward to working with ECS as they grow their business into the future,” Simon said.

Of course, today’s deal is non-binding and comes with no direct promise of future revenue for either party.

Nevertheless, ECS said according to Grandview Research, the essential oil industry is expected to expand at a compound annual growth rate (CAGR) of 8.6 per cent between 2019 and 2025. The cannabis extract market is expected to grow at a CAGR of 16.6 per cent between 2020 and 2027.

Thus, if today’s agreement can materialise into a binding contract, there could be some major revenue on the way to both ECS and EOT.

Nevertheless, shareholders don’t seem convinced just yet, given the nature of the deal. Shares in ECS are trading 9.09 per cent lower today, currently worth three cents each.

ECS by the numbers
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