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Ontario-based cannabis producer Canopy Growth Corporation (TSX: WEED) has signed a Memorandum of Understanding (MOU) with the Victorian State Government to develop research capabilities to produce medical cannabis in Australia. Victoria was the first state in Australia to legalize medical cannabis.

The work will focus on medical applications for cannabis genetics, strain development, cultivation, and processing. According to the parties, the partnership will create “a leadership position for Australia and Canopy Growth in the Asia Pacific geography.”

The stock was up 3% midday at CAD $30.11. The company is now trading at 121 times sales and 9 times book value.

Mark Zekulin, President of Canopy Growth, said, “… we hope to increase innovation and institutional understanding in the Australian medical cannabis market to ensure that our globally recognized genetics are available in Australia …” Cannabis genetics from Canopy Growth’s Canadian operations have already been successfully imported into the country and are growing healthily in the state of Victoria.

Specific capabilities include genome sequencing, comprehensive metabolome analysis and chemo-typing, and technologies for accelerated precision breeding.

Canopy Growth, which operates in seven countries, is one of the world’s largest cannabis and hemp companies, offering brands in dried, oil and Softgel capsule forms. It serves over a third of the medical cannabis patients in the Canada, exceeding 69,000 people.

Its network includes a partnership with partly-owned Australian cannabis company, AusCann, based in Western Australia. AusCann will directly benefit by being able to readily access Canopy’s base of genetics to advance its medical research initiatives and development.