How have cannabis stocks done so far in 2020? A Look at CAN, AGH, AC8

In 2019, the Australian cannabis sector got a boost as Australian Capital Territory legalised the use of cannabis for recreation and all over Australia, medicinal marijuana prescriptions demand increased by leaps & bounds. This will benefit the ASX-listed cannabis companies, and they might witness a rise in 2020. Australia is currently well-positioned to become a leading player across the globe for exporting cannabis on the back of Australia’s agricultural expertise in the plant and the suitable climate required to grow cannabis. The global cannabis export market is projected to be approximately $55 billion by 2025, with Australia expected to be a big part of it.

The number of active Authorised Prescribers have risen from 22 in December 2019 to 33 in January 2020. Driven by the removal of State-level restrictions in New South Wales, the doctors are attracted to have AP status in the State. The Australian medicinal cannabis market has risen at its fourth-highest rate in January 2020, as it had added 3,151 Therapeutic Good Administration (TGA) Special Access Scheme Category B (SAS B) approvals. According to a research firm, there will be ~30,000-50,000 active patients in Australia by the end of 2020, though the number is likely to be near the lower end of the range. However, in Australia, there is limited use of medical cannabis as the doctors must apply to the TGA’s Special Access Scheme, including the clinical reasoning for prescribing cannabis-based products. Further, Medicinal cannabis is not backed by Pharmaceutical Benefits Scheme or PBS, and therefore, it is extremely costly. Cannabis products generally cost users approximately $200 to $600 per month.

Let us look at three cannabis stocks that expect 2020 to be a robust year as they project to accomplish significant milestones:

Cann Group Limited (ASX:CAN)

Cann Group Limited is into the production and distribution of medicinal cannabis products all over the world. The Federal government has awarded CAN the licence and permitted them to develop medicinal cannabis in Australia. The company has recently raised ~$8 million through the issue of convertible notes. The company will use this fund to meet working capital requirements.

Expects to commission Stage 1A in late 2020: The company plans to commission Stage 1A for the annual production of 12,500 kg of the dry flower (medicinal cannabis) from facilities near Mildura in late 2020, after getting all requisite funding and regulatory approvals, licences and permits.

The timing for the completion of Stage 1B for the annual production of the balance of the 12,500kg of dry flower depends upon the volume demand growth. The company is currently finalising the funding package for the first stage of works at Mildura, which is expected to be in the range of $65 million and $75 million and is preparing to re-start work at this site. The company expects stage 1A funding package to be finalised before the end of Q1 CY2020.

Stock Performance

The company’s stock was trading at $1.115 on 17 February 2020 (at AEDT 02:51 PM), an increase of 17.989% compared to the previous day’s closing price. CAN has a market capitalisation of $134.59 million and ~142.42 million outstanding shares. The 52-week high and low price was noted at $2.570 and $0.375, respectively. CAN has generated a return of 51.20% on a YTD basis.

Althea Group Holdings Limited (ASX:AGH)

Althea Group Holdings Limited is a company which is engaged in the cultivation, production, and distribution of cannabis-based products all through Australia, Canada, Germany, and the UK. The company has received the complete set of licenses from the ODC (Office of Drug Control) as well as Agriculture Victoria, which allows the company to provide the patients a full range of medicinal cannabis products.

Added 572 new patients in January 2020: The company had added 572 new patients in January 2020. At the end of January 2020, the company had prescribed its medicinal cannabis products to 4,590 Australian patients, through 459 Healthcare Professionals (HCP’s).

Financial Outlook (Source: Althea’s Investor Presentation)

Stock Performance

The company’s stock was trading at $0.370 on 17 February 2020 (at AEDT 02:51 PM), in line with the previous day’s closing price. AGH has a market capitalisation of $86.32 million and ~233.31 million outstanding shares. The 52-week high and low price was noted at $1.445 and $0.315, respectively. AGH has generated a return of -3.90% on a YTD basis.

Auscann Group Holdings Ltd (ASX:AC8)

Auscann Group Holdings Ltd, through its subsidiaries, is into the development of medical cannabis products to be used for to be applied in anti-convulsion, anti-nausea, anti-inflammatory, neuroprotectant, appetite stimulation areas, glaucoma, and pain management.

AC8’s the capsules expected to be commercially available in the first half of calendar the year 2020: The company, in December quarter, had finalized the development, manufacturing and testing of its cannabinoid-based hard-shell capsules for clinical evaluation. The company intends to make the capsules commercially available to doctors for prescription in the first half of the CY2020. Moreover, AC8 has completed the construction of the Perth-based product development facility on time and within the budget. The new facility will help the company in research & development to build a product pipeline of cannabinoid-based medicines.

Stock Performance

The company’s stock was trading at $0.265 on 17 February 2020 (at AEDT 02:51 PM), in line with the previous day’s closing price. AC8 has a market capitalisation of $84.02 million and ~317.05 million outstanding shares. The 52-week high and low price was noted at $0.530 and $0.170, respectively. AC8 has generated a return of -11.67% on a YTD basis.