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Special Report: ASX listed stocks are in high spirits as recreational marijuana became legal in Canada this week.

It’s only the second country in the world and the first G7 country to do so, opening up new sale and distribution opportunities to domestic and international markets.

Creso Pharma is one ASX-listed company that actively welcomed the legalisation.

In fact, it’s the only ASX-listed company that owns a cannabis facility in Canada, via its subsidiary Mernova Medicinal.

Mernova had its application for a Cultivation License accepted in October this year, under the Access to Cannabis for Medical Purposes Regulations (ACMPR) administered by Health Canada.

Once approved, the Mernova License will be one of a very few licenses issued to local companies in Nova Scotia and once in hand, Mernova can plant its first cannabis crop in the new, 24,000 square foot (2,200 square metre) purpose-built, indoor growing facility.

Constructed to full GMP standards, the facility is designed to produce three to four tonnes of its “Ritual Green” brand of dry cannabis annually and positions Mernova to leverage a huge market opportunity driven by a shortage of supply.

Cannabis demand is expected to outstrip capacity immediately as licensed suppliers are building out supply.

Creso Pharma’s facility in Windsor, Nova Scotia

Opportunities growing around the world

The landmark bill marks a major social shift bring the black market into a regulated, taxed system after nearly a century of prohibition and opens up a variety of new commercial opportunities.

One of Canada’s biggest banks – CIBC, has estimated that cannabis will be a US$6.5 billion (AUD $8.7 billion) industry by 2020 in Canada.

That’s more than the US$5.1 billion Canadians spent on alcoholic spirits in 2017.

But it is difficult to predict the full extent of opportunities created by future product development.

Ontario researcher C.D. Howe Institute estimate current production might meet about 30 – 60 per cent of total demand, but says that could be anywhere between 384 tonnes to 800 tonnes a year.

Creso says it is in discussions for off-take supply agreements for products from its Mernova facility from other Licensed Producers in Canada.

Meanwhile, Mernova plans to bring its Swiss food engineering capabilities and technologies to its new “Canadian Institute for Research and Development of Human and Pet Edible Cannabis Products”.

Creso CEO Dr. Miri Halperin Wernli called the legislation a “historic milestone for progressive policy in Canada and one that will change the global debate on drug policy.”

“Canada has set the stage for a movement that will be followed by other countries.”

While more equity capital has been raised in Canada for cannabis companies than anywhere else in the world, eleven other countries around the world have also decriminalised small amounts of cannabis for recreational use.

 

Creso Pharma is a Stockhead advertiser.

This advice has been prepared without taking into account your objectives, financial situation or needs. You should, therefore, consider the appropriateness of the advice, in light of your own objectives, financial situation or needs, before acting on the advice. If this advice relates to the acquisition, or possible acquisition, of a particular financial product, the recipient should obtain a disclosure document, a Product Disclosure Statement or an offer document (PDS) relating to the product and consider the PDS before making any decision about whether to acquire the product.