Creso Pharma Future Seems Bright After The Legalization Of Recreational Cannabis In Canada

  • Oct 18, 2018 AEDT
  • Team Kalkine
Creso Pharma Future Seems Bright After The Legalization Of Recreational Cannabis In Canada

Creso Pharma Ltd.(ASX: CPH) is a leader in cannabidiol (CBD) innovation and it is involved in the operations of developing medical cannabis products. Creso’s products have wide-ranging applications in both human and animal health. In July 2017, the Company successfully expanded its business into the Canadian market through the acquisition of Mernova Medicinal Inc, for a total consideration of A$10.2 million.

On 17 October 2018, Creso Pharma Ltd (ASX: CPH) made an announcement on ASX in which the company welcomes the decision of Canada of becoming the second country in the world and the first G7 nation to legalize the recreational use of cannabis nationwide. According to the Canadian Prime Minister Justin Trudeau, this bill will help in bringing regulation in the black market and taxation system.

Creso is the only company listed on the ASX that owns a cannabis facility in Canada.  Mernova Medicinal Inc is a subsidiary of Creso Pharma Ltd in Canada and Mernova facility can produce 3-4 tonnes of its premium brand “Ritual Green” brand of dry cannabis annually. Recently, Mernova Medicinal Inc application for Cultivation License was accepted in the month of October 2018. Mernova is well positioned to reap the benefits of being able to supply its premium brand Ritual Green in this growing market. Creso is in talks with other licensed producers in Canada for an Off-take supply agreement for the products of Mernova Facility. 

By becoming first of the G7 countries to fully legalize cannabis for recreational use, Canada has opened the doors for sales and distribution of cannabis product for domestic as well as international markets. As per the research by Canada’s biggest banks CIBC, it is expected that Cannabis will be a US $6.5 billion industry by 2020 in Canada. Cannabis companies in Canada have raised more equity capital than anywhere else in the world. In the first quarter of 2018, Canadian companies have raised more than US$1.35 billion which reflects that there will be a significant growth and demand in the Cannabis market in the future.

In the first half of FY 2018, the revenues of the Creso Pharma increased by 1805 percent to $183,654 as compared to the corresponding figure of the last year. The net loss of the company increased by 115 percent to $7.58 million as compared to the loss of $3.53 million in the corresponding previous period. The basic and diluted loss per share increased from 4.86 cents as on 30 June 2017 to 6.93 cents as on 30 June 2018.

In the last six months, the share price of the company decreased by 10.77 percent from $0.650 to $0.580 as on 17 October 2018. CPH’s shares traded at $0.585 with a market capitalization of circa $67.12 million as on 18 October 2018 (AEST 3:12 PM).

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