Cann Global back on ASX as Laos partner claims $US6.1m in dispute
Health & Biotech
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It’s a case of one step forward, one step back for hemp seller Cann Global (ASX:CGB) after it released good news on Multiple Sclerosis research but also admitted it is embroiled in a $US6.1m dispute in Laos.
The company launched a Laos hemp cultivation plan in October last year, but the three proposed projects are in disarray after its partner, a company called Sun Agriculture Promotion Industry And Commercial Co, filed a claim for $US6.1m against the ASX business’ subsidiary Cann Global Asia.
“Cann Global Asia view the claim to be vexatious and baseless. CGA does not consider that any money is owing to SUN at all under the arrangements and CGA is currently procuring confirmatory legal advice to that effect,” the ASX parent said in a statement today.
The root of the problem is that Cann was supposed to start work in Laos on three projects from April 1, but COVID-19 border closures put a stop to that.
So the Cann Global Asia directors raised the possibility with Sun that it might provide some of its staff to man the crops. But unexpectedly, the Laotian company began making “unreasonable and uncommercial demands for money” so Cann decided to wait until the borders opened to kick off.
According to the ASX parent, Sun demanded even more money, Cann said that was a breach of the deal, and the Laotians promptly took the Australians to a local court for $US6.1m.
The company says it’s in talks with other contractors in Laos to run its projects.
Sun had provided the hemp licences Cann Global needed to operate in Laos, but managing director Sholom Feldman said its Laotian operations would now be covered by a new deal with Thai company AA Bio.
Laos is ranked at 130 of 180 countries in Transparency International’s corruption index. The country appears to have contained COVID-19 infections at a total of 19, but experts have long been worried the government is burying the real figures.
Cann Global came out of a four-week trading suspension today to open up 57 per cent, or 0.4c, higher at 1.3c. It has since slipped back to 0.8c.
Shareholders were initially buoyed by the news that a corporate research partner in Israel had found a link between cannabis and Multiple Sclerosis (MS).
The research out of the Technion (the Israel Institute of Technology) found two strains of marijuana — the company declined to say which — could stop the proliferation of a cell, CD4, which is one of a number of white blood cells that studies have held responsible for bringing on MS.
MS is caused by immune cells that activate a cascade of chemicals, called cytokines, in the brain. Those chemicals attack the protective coverings of the nerves, which drive inflammation which then stirs up more immune activity.
Research so far has been in test tube studies and in mice.
Technion and Cann Global are discussing possible clinical trials in humans, saying the usual toxicology studies are unnecessary because cannabis is already approved to be used by humans in Israel for medical purposes.
Cann Global has a long history on the ASX dating back to 2008, but is unusual in that it’s remained in the hands of the Feldman family — Sholom Feldman is the managing director and his mother Pnina is the executive chair, a position she has held since the earliest days of the company’s ASX legacy.
The company listed as a gold explorer, switched into bauxite in 2010, and changed its modus operandi again in 2017 to marijuana and hemp.
Cann Global’s shares were halted in July 2018 when the ASX required it to re-comply with listed rules after the change of activity. It issued 14 supplementary prospectuses and was finally reinstated more than a year later in August 2019.
The company made $428,000 in cash receipts in the March quarter from selling hemp food products and cosmetics, and spent a whopping $623,000 on administrative and corporate costs, more than double what it spent on staff and production.
Cann Global had $7m in cash at the end of the quarter.
THC Global Group (ASX:THC) has signed a deal with Cannatrek to buy marijuana from the latter and turn it into products for both companies.