A couple of pot stocks have announced cap raisings today, with the aim to expand their operations off the back of market demand.

It’s not surprising considering Aussie medicinal cannabis use is at an all time high with the TGA approving 13,666 prescriptions last month alone.

ECS Botanics (ASX:ECS) announced a $6.6 million placement, via the issue of 200 million shares at 3.3c per share.

The company says the funds will be used to “rapidly accelerate” its growth strategy to meet surging demand for its medicinal cannabis and hemp products.

ECS will again progress the purchase and installation of additional protected cropping enclosures for premium dry flower — and this increase in production capacity is expected to significantly boost revenue.

ECS will also utilise capital to expand its drying room capacity from 1,500kg to 4,000kg during FY2022 and incorporate automation processes, leading to reduction in cost and increase overall profit margin, and an anticipated yield of 4,000kg this financial year.

The company also says its well capitalised to fast-track its regenerative farming ESG strategy via the acquisition of Murray Meds.

Plus, its gearing up to transition to a carbon-neutral company utilising 100% renewable energy with a production model that uses fifty-five times less energy than typical indoor cannabis cultivation.

Increasing market demand means it’s time to scale up

“ECS has witnessed a significant increase in demand for its products from the Australian market and large international groups and this capital will allow the company to significantly scale up operations to meet the growing sales pipeline,” managing director Alex Keach said.

“The company will deploy a large amount of the funds raised into expanding our growing operations and we anticipate that this investment will provide a significant return to our revenue profile.

“This will be undertaken with a consistent focus on our ESG principles and regenerative farming in mind as we continue to push our operations towards net zero emissions.

“Additional funds will be used to invest in automating both trimming and packaging, provided a large saving in staff costs and increase profit margin.

“This will allow the company to further increase revenue and track closer towards a cashflow positive position.”

Not the only one raising money in the cannabis space

Cann Global (ASX:CGB) also announced it had raised money today with a $1.8 million share placement issuing 600 million shares at 30c per share.

“We had been approached by 180 Markets saying they had large professional investors who had been following the company’s development and had expressed strong interest to take a meaningful shareholding in Cann Global to support the company’s expansion operations,” managing director Sholom Feldman said.

While the company didn’t specify exactly what its expansion plans are, its cosmeceuticals range Fuss Pot during the September quarter in France, and is planning to launch the brand in Australia at the Hemp, Health and Innovation Expo on November 6.

At Stockhead we tell it like it is. While ECS Botanics is a Stockhead advertiser, it did not sponsor this article.

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