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Cannasouth to seek new funding ahead of listing on NZX
Another cannabis research company is lining up for investor money ahead of anticipated liberalisation of the law over the next two years.
Cannasouth is likely to benefit from the enthusiasm surrounding fundraising for such ventures, and the backing of former Federated Farmers chief executive, Conor English, who will soon join the board.
Cannasouth’s director of operations Mark Lucas said the company intends to list its shares on the New Zealand Stock Exchange (NZX) in mid-2019 after one more round of capital raising.
The granting of the license represents a major milestone for Cannasouth, whose management team has been involved in the cultivation and research of industrial hemp, and now medicinal cannabis, since 2002.
Cannasouth’s director of operations Mark Lucas says the company’s IPO will open more doors for future research into the development of advanced cannabinoid medicines and health-related products.
Cannasouth is currently planning construction of cultivation and production facilities in Waikato, in anticipation of legislation changes that will allow the manufacture and sale of medicinal cannabis in New Zealand.
The announcement of Cannasouth’s IPO comes after securing first round capital investment from the CMP Growth Capital Fund, a fund that provides growth capital to emerging New Zealand businesses.
It is anticipated that a further, modest pre-IPO round of capital raising will be undertaken before the end of this year.
Lucas said the potential legalisation of cannabis for recreational purposes wouldn’t affect the business case of Cannasouth because of the specific compounds that could be developed for different medical conditions.
“Some people who aren’t used to the effects of psychoactive compound THC don’t necessarily want a big dose of it. There are about 100 other compounds that can be combined for different effects to be either low THC or without THC.
“It can be used to treat seizures that come with some medical conditions, or anxiety disorders. It’s also considered by some people with terminal illnesses to be a much better palliative than drugs like morphine which have major side effects,” Lucas said.
Cannasouth is chaired by Australia-based director Tony Ho, who has listed company experience, and the board will include Conor English and Professor Alistair Wilkins from the University of Waikato.
Lucas, and Cannasouth’s director of research, Nicholas Foreman, hold 40 per cent each of the shares, with CMP Growth Fund holding 20 per cent.
Lucas and Foreman received funding in 2016 from the Agricultural and Marketing Research and Development Trust and Callaghan Innovation to undertake research projects with the University of Waikato.
Cannasouth’s focus is on furthering medicinal cannabinoid research, specifically the extraction and refining of cannabidiol (CBD).
CBD is a non-psychoactive compound in cannabis and has been associated with managing a range of medical conditions, including cancer-related symptoms and neurological disorders such as epilepsy and multiple sclerosis.
Lucas said CBD, alongside THC, were two of the more well-known compounds in medicinal cannabis that have been shown to relieve patients’ suffering from a wide range of conditions, but there was significant potential to learn more about the properties of other rarer compounds and how they can assist in treating medical conditions.