Australia has made a groundbreaking decision by becoming the first country to legalise the clinical prescribing of MDMA (ecstasy) and psilocybin (magic mushrooms) for the treatment of specific mental health disorders, including PTSD and treatment-resistant depression. Setting Australia apart as the pioneer in adopting psychoactive-based treatments for mental health, as of 1 July, authorised psychiatrists can prescribe these drugs to patients. Outside of medical purposes and authorised prescriptions, both MDMA and psilocybin remain illegal in Australia.
Increasing de-classification of those previously dubbed ‘hippie drugs’ as a result of more relaxed attitudes amongst regulators towards psychoactive drugs may bode well for companies like Cann Group (ASX: CAN), which are benefiting from the growing market. Following medical cannabis legalisation in Australia in 2016, Cann Group was the first company to be issued with a Cannabis Research Licence and Medicinal Cannabis Cultivation Licence, allowing them to research and produce cannabis for medicinal purposes.
Quickly rising to stardom within the cannabis producing and manufacturing industry, Cann Group now owns R&D and cultivation facilities in Australia and is currently pursuing a fully-integrated business model on plant genetics, breeding, cultivation, production, manufacturing, and clinical evaluation to supply medicinal cannabis for different diseases and medical conditions.
Cann Group expects FY23 product sales revenue of approximately $13.5 million (unaudited) ultimately representing a 111% increase from a loss of ($6.4m) in FY22. Market demand has grown stronger, indicated by revenue from the sale of dried flower products increasing by approximately 500% compared to FY22 and is the base for continued growth as the company scales up production.
FY23 positive performance was primarily fueled by the domestic market, with robust sales momentum attributed to new clients signing supply agreements and existing clients placing repeat orders. The company’s ability to consistently deliver high-quality, Good Manufacturing Practice (GMP) products from its flagship facility in Mildura has strengthened customer acquisition. Cann Group also managed to increase Mildura facility production in FY23 to approximately 2.2 tonnes. In May 2023, Cann planted the largest crop in the Company’s history, representing 8 tonnes annualised yield. This crop will be harvested in July 2023.
Commenting on the unaudited results, Cann Group CEO, Peter Koetsier said, “The growth in revenue shows that we are building sales momentum that helps underpin the confidence we have in our ambitious growth targets. Scaling production to meet customer demand is core to our strategy.”
“With production output increasing at an impressive rate, we have the unique ability in Australia to scale to big volumes right now, and capitalise on the rapidly growing demand for quality, locally grown and manufactured products.
Koetsier also unveiled plans to ramp up production scale within the next 18 months. This strategy aims to achieve significant efficiencies, improved profit margins, and strong operating leverage, ultimately leading the company towards EBITDA profitability.
Established in 2014, Cann Group is both a domestic and global supplier of a range of dried flower and oil products, also active pharmaceutical ingredients and extracts. Cann Group also owns Europe-based medicinal and wellbeing cannabinoid company Satipharm and its patent-protected capsule technology. Cann has established R&D and cultivation facilities in Australia and is pursuing a fully-integrated business model with collaboration agreements, resources and capabilities that will enable it to establish a leading position in plant genetics, breeding, cultivation, production, manufacturing, and clinical evaluation to facilitate the supply of medicinal cannabis for a range of diseases and medical conditions.
In late June, Cann Group secured a new agreement with sports science company Levin Health to supply medicinal cannabis products, including oils, from July 2023 to December 2023. The agreement, valued at approximately $880,000, will cater to Levin’s production schedule during this period. Cann Group’s Mildura facility will fulfil the supply of dried flower and oil products as required.
Cann Group is currently undergoing a non-renounceable pro rata entitlement issue of approximately 97 million New Shares at an Offer Price of $0.12 each to raise up to approximately $11.7 million (before costs), which is expected to close on 18 July 2023.
Clara is a Business Reporter for The Sentiment.
Latest posts by Clara Venisha (see all)
- IPO Watch: The Australian Wealth Advisory Group set for ASX entrance - December 15, 2023
- Harris Technology gears up for Christmas as consumer electronics and household tipped to be among most popular purchases - November 27, 2023
- Linius Technologies sprints into the US college sports with automated game highlight technology - November 23, 2023
Leave a Comment
You must be logged in to post a comment.