Australian pot stocks cultivating commercial progress in Canada

Australian pot stocks cannabis Canada Creso Pharma MMJ CPH ASX

The onset of softening legislation towards cannabis in Canada and in other jurisdictions such as the US and Australia – both medicinally and recreationally – is providing a series of commercial opportunities for ASX-listed pot stock hopefuls such as Creso Pharma (ASX: CPH) and MMJ (ASX: MMJ).

Both companies announced commercially encouraging news regarding their respective pathways to monetising medical cannabis products.

With the recreational component still on the backburner in Australia, it is slowly generating more commercial hype in Canada as legislators look to create a fully legalised market in the country.

As an indicator of the raised pulses in the cannabis sector in the country and the spill-over effects onto Australian shores, Cann Group (ASX: CAN) put out a statement this morning attempting to cool speculation of an impending takeover bid from Aurora, a Canadian pot stock giant already worth around C$4 billion and Cann Group’s largest shareholder.

Cann Groups’ shares were off to the races this morning, up almost 17%, following an article in the Financial Review speculating about a takeover offer valued at around A$500 million.

Creso Pharma’s global ambitions

Creso Pharma is looking to commercialise and distribute anibidiol, its CBD-based complimentary animal feed product following a successful launch in Switzerland.

The launch of anibidiol in Switzerland in November 2017, with Swiss-based animal pharmaceutical giant Virbac, has generated early revenue for the company as well as very encouraging feedback for the product from customers and veterinarians.

Creso is now planning to commercialise its anibidiol range across global markets starting with Canada.

The global animal health market is valued at US$30 billion and is projected to continue to grow rapidly. According to Koncept Analytics, a business research provider, 41% of pet owners have considered or tried various alternative therapies including nutritional supplements and herbal remedies.

Creso intends to use the animal healthcare market to springboard into the “international market arena” according to Creso chief executive officer Dr Miri Wernli.

Over to MMJ

Meanwhile, freshly revamped MMJ (having shed its Phytotech nomenclature) has just received news that one of its key investments in Canada – Weed Me – has obtained a cultivation licence under the Access to Cannabis for Medical Purposes Regulations (ACMPR) from Health Canada.

The license to cultivate medicinal cannabis in Canada means MMJ’s presence in the country is expanding on multiple fronts given its existing 59% interest in Harvest Once Cannabis (TSXV: HVST), another Canadian pot stock that is revelling in a newly-established market based on a plant that has been long-forgotten by both regulator and legislators worldwide.

This marks a significant development milestone and allows Weed Me to move to apply for a sales licence under the ACMPR ahead of the federal legalisation of recreational cannabis expected in Canada later this year.

According to Weed Me chief executive officer Terry Kulaga, the company will begin growing cannabis at its 20,000 square foot facility in Pickering, Ontario later this year. The state-of-the-art 3-acre facility could potentially be expanded to enable 220,000sq ft of indoor growing if and when required.

The facility is strategically located adjacent to Ontario Highway 401 with the aim of taking advantage of the major transportation corridor of the Greater Toronto Area as well as having direct highway access to the Quebec market.

In a recent interview, Weed Me co-founder  Benny Presman said, “We have already secured our initial plant genetics and look forward to planting in the upcoming weeks. Our goal is to apply to Health Canada for a sales license within four months.”

When the sales licence is obtained, MMJ will take a significant minority ordinary equity stake in Weed Me through its C$2 million investment completed late last year. With Weed Me gradually becoming a “significant cannabis market participant” in Canada, MMJ will potentially be generating sales revenues on both the medicinal and recreational market fronts in the foreseeable future.

Although this creates a superb commercial opportunity, it does pose difficult questions for Australian authorities where drug legislation remains a patchwork of inconsistencies, although far more stringent than in Canada.

In Australia, use of medicinal cannabis is strictly regulated and is only done on a case-by-case basis through a prescribed treatment plan in association with medical professionals including qualified doctors, physicians and authorities such as the Therapeutic Goods Administration.

Recreational use is completely prohibited with cannabis classified as an illegal substance by all Australian states, for now. This status quo is gradually changing with calls for huge amendments to legislation being proposed by the Greens Party, whilst being supported by multiple lobby groups and widespread public acceptance of cannabis.

Cannabis companies listed on the ASX will be watching closely for potential legislative changes.

George is an award-winning market analyst who has authored articles and editorial opinion pieces for multiple publications around the world. He has written about a wide variety of topics including financial markets, stocks, trading, politics and economics.