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Waikato cannabis firm seeking investment
Casting aside social stigma and opening up investment opportunities in medicinal cannabis production has a Waikato firm making the first public offering on the NZX for two years.
Cannasouth co-founder Mark Lucas is optimistic the upcoming Misuse of Drugs (Medicinal Cannabis) Amendment Bill will deliver regulations that enable companies like his to develop and grow a range of products that cover multiple ailments and diseases.
“We understand the draft comes out in July so there is a bit of water to go under the bridge but we feel confident about what will pass. The intention is there.”
It is based at the Waikato Innovation Centre, which is fast becoming a hub for biotech innovation by companies including award winning Quantec, Analytica Laboratories and CRV Ambreed.
Lucas said the company wants to raise $5 million from invited investors and another $5m in a public offer, selling up to 20m shares at 50c each.
The company has secured licences to cultivate, extract, import and purify medicinal cannabis and cannabinoids for research purposes. It also has two licences required to import cannabis products to sell.
The company claims having the licences puts it on a faster track to commercialisation than competing companies.
Lucas has a long history dating back to the nineties importing hemp products and was involved in early trials of hemp growing in Canterbury in the early 2000s.
He is loath to specify exactly what medicinal cannabis crop type the company will be cultivating here, with that very dependent on the regulations the new law will cover when finalised.
Another medicinal cannabis company, Helius, has disclosed plans to grow the plant with the cannabinoid compound THC in high-security warehouse hydroponic operations in Auckland.
“To be grown cannabis with high THC content requires tight security and that dictates the cultivation method. But cannabis with the non-psychoactive compounds, including industrial hemp varieties, could be grown outdoors. It all depends on the product you are making from it.”
Last year authorities granted approval for the sale of low-THC hemp seed for human consumption and Lucas said the plant is starting to lend itself to multiple uses including fibre, food and medicinal production.
“More people are waking up to plant-based remedies. It has really only been the social stigma attached to cannabis that has held it back for so many years.”
Other plant-based medicinal products include powerful opioids from poppies, a major crop grown for pharmaceutical companies in Tasmania supplying about half the legal global opiate production.
“We know that farmers should be left to do what farmers do best, producing quality products efficiently and for the low THC varieties we hope we will partner up with farmers to produce the cannabis.”
The medicinal extracts from cannabis are proving to have some human health benefits in the treatment of arthritis, skin conditions and epilepsy and final application of cannabinoids will be determined by the regulations.
“We also expect to see some of the non-psychoactive extracts apply to the rapidly growing wellness market where they do not require regulatory approval. It could be that over time consumers start to seek out products based on their provenance and possibly even organic sourced cannabis could play a role.”
He says much of the research is still in its early trial stages and the company bases its product range on scientific results and regulatory guidelines.
The Cannasouth offer opens on May 27, closing on June 14 and the shares are expected to list on June 19. The legal cannabis market attracted more than $15 billion in investment globally last year and the United States market is estimated to be worth US$24b this year.
The company is the third in NZ to raise money publicly, with Greenfern from Taranaki and East Coast’s Hikurangi raising funds through crowd funding last year.