Australian Cannabis Space – Green Signal From Investors?

Cannabis was once synonymous with drugs, marijuana, ill-health and the scourges of our society. Presently, cannabis is associated with medication, business and legalisation. This proves that we have come a long way in the cannabis space, and with the developments and advancements being made currently, we have a longer way to go.

Cannabis and Australia

The cannabinoid drug, cannabis is extracted from the cannabis sativa plant, which constitutes of the psychoactive cannabinoid THC and the non-psychoactive cannabidiol (CBD). The subject is so vast that the exact number of different cannabinoids in the cannabis sativa plant is undergoing research even now.

In Australia, Cannabis is used for recreational and medicinal purposes. The country has one of the highest cannabis prevalence rates across the globe and joined the bandwagon of legalised cannabis countries in February 2016. After Uruguay, Canada, Alaska, Germany, Greece and Norway, to name a few; Australia and New Zealand have recently lifted the bars from the use of cannabis for medicinal purposes. However, the debate about legalisation of recreational cannabis remains to be a heated matter of discussion in the country.

Cannabis Consumption

Cannabis is either eaten, smoked or vaporized. The recreational and unwatched usage of cannabis like marijuana and hash oil could have an adverse impact on human health, if the safe levels of its usage is not adhered with. However, with research and experiments over time, the medicinal purposes of cannabis have sparked it into the positive zone, as it is believed to cure dire diseases like cancer, epilepsy, nasal disorders and psychological issues like anxiety and depression.

Current Cannabis Situation In Australia

Australia has been aspiring to be a prime exporter of medicinal cannabis since 2018, and the scope is broad, as the global market for medicinal cannabis would possibly outshine A$70 billion by 2025. Let us look at few recent developments in the Cannabis space in Australia:

  • The ACT Legislative Assembly might modify the definition of an offence pertaining to the use of cannabis in the ‘Drugs of Dependence Act 1989’, which would be like de-listing the drug from the section of prohibited substances.
  • Greenfield MC, a distributor and importer of medicinal cannabis, would become a cultivator, as per a deal with Emerald Plants Health Source, a US-Canadian player.
  • Elixinol Global Limited (ASX: EXL) invested almost $10 million in the state in February 2019 and bought sixty acres of cannabis growing land in NSW for over 2 million.
  • The Victorian government has been leading Australia’s industry development and has been supporting research initiatives pertaining to medicinal cannabis products.
Investor Sentiments Driving Cannabis space

The cannabis space has been successful in becoming one of the hottest investment sectors in the Australian market, and despite Australia’s legal restrictions, the Australian Securities Exchange has seen a broad spell of pot stocks float, especially in the last two years.

With the cannabis market anticipated to be in a state of green rush in the coming years, experts believe that the cannabis market in Australia could be valued at approximately A$6.3 billion, with a growth of up to A$8.8 billion per annum in a decade if the recreational market is legalised soon. The patient market would likely grow at a rate of about 9% per month to new patients in 2019.

The growth of cannabis companies on the ASX is a direct indication that investors have not been rigid with the taboos surrounding cannabis and have been exploring their stock decisions in the space.

Interesting Fact!

According to Australian pharma player Zelda Therapeutics Limited (ASX: ZLD), with medicinal cannabis legal in more than 34 countries, the market is forecasted to grow to $40-55 billion by 2028 with a 18% CAGR.

In this context, let us look at the recent updates with 5 Pot Stocks, listed and trading on the ASX:

BOD’s MediCabilis™ depicts 95% increase on July 2019 sales

Global health and wellness business player, focussed on exploration, development and creation of health and beauty products via plant-based mediums, BOD Australia Limited (ASX: BDA) has expertise in the cannabis and hemp sector. Pleasingly, on 3 September 2019, the company notified about an upsurge in the sales of its 5% CBD MediCabilis™ product across Australia. The product, prescribed for medicinal purposes, depicted a continued increase in prescription volumes in August 2019, representing a 95% and 467% increase on the July 2019 and June 2019 figures, respectively.

The partnership with Burleigh Heads Cannabis and Cannabis Doctors Australia has been a hit, with repeated month-on-month upsurges. Besides this, the company is paving its way to expand its international footprint.

Zelda’s Results for FY19

Australian bio-pharma player, focussed on the development of proprietary cannabinoid formulations to cure medical conditions, Zelda Therapeutics Limited (ASX: ZLD) reported a Loss after tax of $3,567,802, representing a 106% increase on pcp. The net cash outflow from operating activities was $3,344,223, representing a 27% increase on pcp.

ZLD is presently conducting Human clinical trials to study insomnia, autism and opioid reduction. Besides this, it is also conducting pre-clinical research to study the impact of cannabinoids in brain, breast and pancreatic cancer along with diabetes-associated cognitive decline. ZLD has support from world-leading researchers and organisations like Curtin University in Perth, HAPA Medical BV, St. Vincent’s Hospital in Melbourne and Complutense University in Madrid, to name a few. These partnerships provide a global access to registered medicinal cannabis patients (more than 110,000) for ZLD’s products.

Creso Pharma’s Business Update

Bringing pharma expertise and methodological consistency to the cannabis world, Creso Pharma Limited (ASX: CPH) develops cannabis and hemp derived therapeutic, nutraceutical, and lifestyle products via the Good Manufacturing Practice development and manufacturing standards. In June 2019, the company announced that it had received an acquisition offer from PharmaCielo Ltd, which would be voted by the shareholders and option holders, expected at the end of FY19. The acquisition synergy was cemented when CPH received its first commercial CBD export of CBD isolate from PharmaCielo’s operations in Colombia, in August 2019.

The company is well-funded to continue expansion, and PharmaCielo agreed to advance a loan of up to A$3.85 million, to pursue CPH’s expansion and strategic growth plan.

The Company witnessed an increase in the commercialized cannaQIX® and anibidiol® range of products, with revenues from sales of products up by 240% to $907,017 for 1H19. The company has been making significant progress in its R&D program and developing technologies that could maximise absorption and enhance the bioavailability of cannabis-based supplements. CPH commenced sales from its Nova Scotiabased Mernova Medical facility, and signed multi-year agreements, which would see revenue from Mernova rise to C$5 million by the end of 2019. CPH had also entered the South African market via a commercial agreement with Pharma Dynamics.

Althea Group In FY19

Authorised importer, cultivator, producer and supplier of medicinal cannabis in Australia, Althea Group Holdings Limited (ASX: AGH) had completed its A$19.65 million IPO, heavily oversubscribed, in September 2018. The company reached the 100, 300, 650 and 1,000 patient milestones in October 2018, January 2019, April 2019 and June 2019, respectively. The company held the full complement of required licences by November 2018. In February 2019, the company announced its expansion into the UK and launched its sponsored online portal which provides RACGP and ACRRM accredited educational content. Recently in June 2019, AHG was granted a Hemp Cultivation Licence allowing the cultivation and processing of low-THC (Hemp) cannabis for commercial purposes relating to non-therapeutic use.

AusCann Group’s Unaudited Financial Report

Cultivator, manufacturer and supplier of medicinal cannabis products, AusCann Group Holdings Limited (ASX: AC8) made substantial progress during FY19. It completed a capital raising of $33.4 million via a share placement in July 2018, followed by a further $1.9 million via a SPP in August 2018. The company made a significant R&D breakthrough with the successful completion of the product development of its final dose cannabinoid capsules. For the production of its capsules, AGH appointed TGA licensed PCI Pharma to produce and release its proprietary solid hard-shell capsules to cure chronic pain.

Besides this, AC8 purchased a dedicated 7,300m2 R&D facility in Perth, which was acquired for $5.25 million. The company also released a series of online courses for Australian health professionals to support medical practitioners in Australia.

Stock performance

Let us conclude by browsing through the stock performance of the discussed stocks after the close of trading hours on the ASX on 3rd September 2019:


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6 Cannabis Stocks under Investor’s Limelight…

Cannabis companies that sell both medicinal weed and recreational pot. Marijuana stocks to look at. Marijuana mergers and acquisitions. Dispensary data analytics. Upcoming marijuana IPO’s Those phrases have become increasingly common as marijuana legalization spreads.

Global spending on legal cannabis is expected to grow 230% to $32 billion in 2020 as compared to $9.5 in 2017, according to Arcview Market Research and BDS Analytics. As of June 29, 2018 the United States Marijuana Index, despite a lot of uncertainty around regulations, has over the past 1 year gained 71.49%, as compared to about 12% gain seen by the S&P 500.

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