Special Report:  ECS Botanics (ASX:ECS) says its medicinal cannabis project in Tasmania is on track, and regulatory changes mean it is well-positioned to become a major production hub in Australia.

Construction of the main processing shed for ECS Botanics’s landmark outdoor medicinal cannabis facility is finished and the internal fit out has commenced, including construction of a storage vault.

ECS plans to embark on a major commercial grow next season at a larger scale than first planned.

The company is also working to develop its extracting capability and expects to sign offtake agreements for both THC and CBD soon.

Favourable regulatory changes

ECS says that new guidance from the Office of Drug Control will be a positive for the company. The ODC is downgrading the cultivation security framework for low THC medicinal cannabis such as hemp, referring to state hemp licenses for cultivation security requirements.

The regulatory changes will allow the Australian industry to compete better on a global scale by reducing the cost of production.

It may also allow ECS to work to a cannabis production system that uses more of the plant, providing additional revenue opportunities and reducing wastage.

The company is looking to sell its secondary material such as terpenes, waxes, hurd and fibre.

ECS was already forecasting to be Australias largest producer of medicinal cannabis, the changes will enable ECS to scale production well beyond its initial forecasts and operate in a fashion similar to the Tasmanian poppy industry.

“These are the common-sense regulatory changes we positioned the business for two years ago, and now it is exciting that the regulatory environment and opportunity is coming down the pipe to meet ECS’s long stated business plan,” said ECS Botanics managing director Alex Keach.

“It also allows us to reduce capex and drive down the cost per gram, an outcome which is good for patients and ECS to build market share in Australia and via export, especially via our first mover advantage.

“As previously stated, our business was not accepting the status quo, we are skating to where the industry is headed, and from our base in Tasmania we aim to become a formidable force in the global cannabis market.”

This article was developed in collaboration with ECS Botanics, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.