- Coronavirus has cast a huge dent across the globe economic and industrial growth, but the cannabis sector seems to be relatively less impacted.
- The global supply chain remains a major concern in the future as it has been severely disrupted.
- Due to relatively unaffected demand, some of the cannabis companies have even been able to infact double the revenue, as reflected in their latest numbers.
- Although there is still uncertainty hovering around, the companies are apparently not in a panic and seems to be well prepared for the upcoming challenges.
Before the Coronavirus pandemic swept the world off its feet giving a pretty hard hit to every industry and economy across the globe, the cannabis industry was already working and researching on the magical benefits of cannabis in the field of therapeutics. A lot of favourable regulations had been introduced to develop further and expand the growing demand for medical based products.
Surprisingly the sector has not been hit as hard by the pandemic as the other businesses and the demand for hemp-based products has apparently not subdued.
However, there are some concerns for the global players in the future concerning the global supply chain which has been disrupted massively. Initially, when China shut down its businesses, the global cannabis companies had to go the extra mile to find some local alternatives.
Although things seem to be gradually coming back to normal, the global supply chain may take some time to come back to normal or to operate at pre-covid levels.
Creso Pharma Going Strong on Demand Side
Creso Pharma Limited (ASX: CPH) is one of the major pharmaceutical players of the Cannabis industry having a wide portfolio of cannabis and hemp-based therapeutic and lifestyle products for both the humans and animals.
Recently the company’s Canadian Subsidiary Mernova received a first purchase order of C$180,000 from Nova Scotia Liquor Corporation which is the only distributor of retail cannabis in Nova Scotia and operated by Government of Nova Scotia.
Mernova would be launching its high-quality cannabis products under the brand name “Ritual Green”. Initially, two strains of Mernova’s high quality dried flower (HPG13 and Lemon Haze) will be made available in its natural form.
TGA’s Regulation Amendment: Creso Set to Unlock New Demand Potential
There has also been a recent change in the regulations in the domestic market, which can prove as a catalyst for the demand of cannabidiol products.
Therapeutic Goods Administration (TGA) is the regulatory authority for therapeutic goods and constantly keeps a close eye on the quality, safety and availability of therapeutic goods. TGA in September 2020 made an interim decision to reclassify CBD products from schedule 4 to schedule 3 medicine which essentially would allow the consumers to directly purchase the medicines from pharmacies without the need of the prescription.
Creso is all set to capitalise this new unlocked potential for CBD and hemp products which the company estimates to be around A$200 Million.
Creso’s Dedicated Response to Covid-19 impact
During the pandemic, Creso adopted strict measures like social distancing, which allowed it to continue its operations at a high capacity. It is also canalizing on R&D work in the future, as it had entered the remaining half year with a strong financial position. The management is still keeping a close eye on the global scenario and is well prepared for any further uncertainty.
In the recent half-year result filing for the period ended 30th June 2020, the revenue stood at A$1,462k, compared to A$960k for H1 2019 with A$3.28m of cash balance. The company is also positive for future revenue growth through new hemp-based developments and stepping into newer markets.
Cann Global Under the Spotlight with Deep Integration of Supply Chain
Cann Global Limited (ASX: CGB) is another company in the cannabis space that is under investors’ radar who are looking for virus-immune attractive themes. It is operating in many countries including USA, Australia, Canada etc. on the foundation of strategic partnerships in these geographies.
With deep vertical integration of supply chain from cultivation to manufacturing to distribution, the company has been able to expand its cannabis and hemp-based product portfolio including food, medicine and skincare products.
With the recent acquisition of T12 Holdings Pty Ltd last year, it has positioned itself well in the hem-based nutritional food market with brands including Super Foods products, Australian Grown Naturals. The products include Chia Seeds, Cacao, Green Leaf Stevia and other healthy foods.
After the 50/50 joint venture Canntab Therapeutics, it’s the first time the company is planning to release a suite of hard pill cannabinoid formulations in the Australian market amid necessary approvals.
The company is also in talks with Medcan Australia and other manufacturing partners for manufacturing a new range of skincare products for selling in both the domestic market and foreign markets.
Covid-19 Impact on Cann’s recent numbers
Cann Global reported record revenue of $1,805k which is a massive increase of 275% over FY1 number of $481k. This increase was majorly contributed by their T12 Holdings for plant-based business which alone delivered 1,630k of the total revenue. These numbers clearly state that the company remained almost unimpacted by the coronavirus due to timely and stringent measures applied to overcome operational challenges.
Although the company reported a net loss of $8,050k but it’s better than the previously reported loss of $9,234k, especially considering the coronavirus pandemic. The loss was also on account of operating cost base for the company as it continued to innovate and strengthen its distribution channels through the year.
Cann Global’s Future Plans
As far as the future prospects are concerned, Cann Global is planning to remain flexible to adapt to the coming changes and uncertainty. For the short term, the company has extra attention on growing its food-based and driving extra sales for the business which has done quite well this year. It is also focusing on the expansion of sales and operations in Asia.
With the pandemic continuing to affect the globe, healthcare companies are evaluating their lead compounds for COVID-19 treatment. Future revenue for these stocks depends on the probability of launching an approved treatment in the market.