Pot: Better late than never … AusCann seals supply deal from 2 years ago
Food & Agriculture
Food & Agriculture
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Pot stock AusCann (ASX:AC8) has sealed a deal with a Tasmanian marijuana grower that’s been two years in the making.
Poppy grower Tasmanian Alkaloids (TasAlk) will supply the Perth drug maker with cannabis resin, with AusCann promising to source 30 per cent of its raw marijuana needs from TasAlk for three years.
The resin will be available in early 2020. Resin is made from cannabis plants and used as a raw material from which oils, pills and other solutions can be made.
This deal replaces the version the two companies signed in May 2017 when they hoped to “jointly establish cultivation, manufacturing and distribution operations for medicinal cannabis”.
TasAlk would be awarded an R&D licence and a growing licence not long afterwards, and AusCann a manufacturing licence allowing it to start preparing to make pharmaceuticals.
In May this year, chairman Mal Washer told Stockhead the deal had been held up on Office of Drug Control approvals and had been pared back to just raw material supply.
Since last year AusCann has been repositioning itself as a cannabis pharmaceuticals manufacturer, rather than its original intent to be a grower and manufacturer.
To grow marijuana legally in Australia companies must first obtain an R&D, growing, and potentially also a manufacturing licence, and then permits for the latter two in order to start commercial activities.
Today’s announcement comes as the cannabis industry in Australia begins to show signs of maturity, as broad brush deals like the original AusCann/TasAlk one are pared back, foreign companies such as MediPharm make inroads as suppliers of quality resin, and companies narrow in on where they see the competitive advantage lying in Australia.
Pot picks-and-shovels seller RotoGro (ASX:RGI) has completely overturned its board, effective immediately.
Managing director Michael Carli is now chair, the new CEO is Adam Clode, Michael Di Tommaso joins as COO and a director, and Jamie Myers and Terry Gardiner have been appointed as directors.
David Palumbo and recently voted-in director Nathan Lude are out. No word on what is happening with Michael Slater and Julian Atkinson.
RotoGro sells hydroponics growing machines and the cannabis market is one of the company’s big targets.
And last week hemp wannabe CropLogic (ASX:CLI) released its annual report, showing that its CEO added over $40,000 to his pay packet in fiscal 2019, but overall took home less as performance payments slipped and equity payments were zero this year.
The company lifted revenue by 6 per cent to $2.2m but the full year loss blew out by 39 per cent to $4.5m.
Its cash holdings plunged 84 per cent to $474,694.
A $6.25m loan in May and $3m in equity funding in April gave CropLogic a $9m window with which to pay for a hemp farm trial in Oregon this year.
The loan must start being repaid from December this year but the company reckons it has that in the bag: if its first ever trial crop produces industry standard volumes of cannabidiol (CBD), and if CropLogic gets the crop yields it told investors it expected, and sells at prices observed earlier this year, the company could make $US36m ($51m).