Recreational cannabis use has been a global topic for debate in the past few years but cannabinoids, a naturally occurring compound in cannabis, are now gaining momentum as a treatment for managing pain, inflammation and various mental health conditions like depression and PTSD.

For the past several months, Melodiol Global Health’s (ASX: ME1) subsidiary, Health House Australia, has been actively preparing to open its medicinal cannabis clinic, which started in Q2 CY24. During Q1 CY24, Health House Australia reported an expansion of its supplier base with the inclusion of Botanitech, Chemovar, Endoca, and Quantum. The Company also announced a partnership with MedTEC Pharma, serving as their lead launch partner for introducing Australian-grown medicinal products in Q2 CY24.

Earlier in 2024, queries were raised by the ASX regarding its corporate governance and financial disclosures, continuing a long-running theme for the Company previously known as Creso Pharma (ASX:CPH). In its correspondence dated 23 May 2024, Melodiol addresses several key points including Adam Blumenthal’s role at Oakley Capital Partners after his previous EverBlu Capital offices were raided by the AFP in 2021. With Melodiol’s ongoing financial restructuring, the Company expressed their confidence in its ability to meet debt obligations.

In their trading update that flagged financial expectations for the June quarter, Melodiol reported unaudited revenue of $4.8 million, marking a 9% increase from the previous quarter’s $4.4 million. This performance contributed to a strong first half of the year, with total unaudited revenues reaching $9.2 million, a 31% increase compared to the first half of CY23.

The growth was primarily driven by results from Mernova, Melodiol’s subsidiary specialising in recreational cannabis. Mernova confirmed purchase orders totaling $2.0 million (C$1.8 million) during Q2 2024, representing a 25% increase from Q1 2024 and a 33% increase from Q2 2023. Looking ahead, Mernova has already secured purchase orders amounting to $452k (C$411k) for Q3 2024, providing a solid foundation for continued growth.

CEO and Managing Director, William Lay said: “We are very pleased to demonstrate quarter on quarter growth for Melodiol as a group. During the last year, the Company has completed a step change in terms of revenue size, and we are sharply focused on Mernova and HHI as our core business units. 

By focusing on these business units, and rationalising non-core business units, all of our teams are working hard to achieve group profitability as quickly as possible.”

Health House International (HHI), Melodiol’s subsidiary focused on medical cannabis distribution in Australia and the UK, contributed $2.8 million in sales during Q2 2024. This performance aligns with Melodiol’s previously announced focus on optimising core business units.

Despite facing some hurdles in corporate governance and financial disclosures in May 2024, Melodiol Global Health has charted a path forward but will remain under investors’ and stakeholders’ radar. With this heightened scrutiny of investors and stakeholders following the ASX concerns, will Melodiol’s successful plan implementation be the key to achieve profitability in the competitive cannabis market?