Queensland Bauxite’s new acquisition target MedCan Australia may have hit a roadblock, after social media users pointed out strong similarities between a potential new employee and a man who was reportedly charged with drugs and weapons offences in the US.

MedCan is looking to hire an American for their grow operations.

After MedCan posted the man’s photo to its Facebook page on Thursday, investors pointed out the physical similarities with a man who had been arrested in South Carolina in 2013. The photo has since been deleted.

MedCan director Craig Cochrane told Stockhead he was still carrying out background checks on the potential hire.

Queensland Bauxite (ASX:QBL) director Shalom Feldman said to the best of their knowledge the charges were dropped.

“Every person is entitled to be given a fair go. If charges were never laid and if something like that never happened then that shouldn’t be something that should disqualify him from ever working again,” he told Stockhead.

The federal government’s Office of Drug Control has strict guidelines for who can work in medical cannabis companies, and says “A person is considered unsuitable if they:… for a period of 5 years prior to the application, have a history of illicit drug use or had a conviction for an illicit drug related offence.”

Divided investors

Queensland Bauxite is a company which has divided investors.

Sceptics consider its move away from bauxite and into medical cannabis as well as its related party commercial arrangements to be highly problematic.

Its backers believe the combination of bauxite and cannabis is a long term winner.

The company’s shares are worth 3.9c. They are down from a peak of 11.5c at the height of the cannabis craze in December but up from 1c levels before that.

The company says it is seeing revenues coming in from the Medical Cannabis Ltd hemp business.

It is planning a $5 million capital raising at 8c in the near future to pay for the MedCan acquisition, and the buyout of the remaining 45 per cent of Medical Cannabis Ltd that it doesn’t own.

In the last quarterly the company had $7.4 million in cash and $952,000 in outgoings — two thirds of which was on corporate costs and admin.

Hemp sales

On Friday, the company began to unveil some of the data around where its money is coming from: the hemp business.

It harvested 80 tonnes of hemp seeds from 20 tonnes plants.

In December last year the company confidently said it was expecting a 500 tonne harvest from their four contract farmers based in Victoria, NSW and Tasmania.

Mr Feldman said the basis for that estimate was “what’s known in general around the world in the industry”, which suggested a 25 times yield.

“It was a little bit of a learning curve that the farmers were going through but we are very comfortable that we are dealing with highly experienced farmers. We believe they are using the best technology, the best in the industry.”

Storms and a drought disrupted the growing season, as did farmers’ inexperience with the crop.

Hemp became legal to grow industrially in November last year. The first ever crops in Australia were in over the summer.

Stockhead understands from other hemp farmers that a first crop would usually be a test case as growers work out which genetics work best in this country.

Potential acquisition

Queensland Bauxite’s potential acquisition of MedCan comes with a medical cannabis growing licence, granted in November.

Mr Feldman believes they will have a permit — the document that allows companies to start growing medical cannabis — and be growing plants by the end of the year.

The Office of Drug Control’s turnaround time for cultivation licence applications is about 12 months — only five have been granted since November. As of last week 18 had been issued.

Growers also need a separate permit which involves a facility inspection and specifies things like which strains a licence holder can grow and the number and weight of its plants.

Only a small handful of companies have gained a permit — it’s not clear how they are taking to clear.

MedCan is planning to grow and manufacture all of its own plants and medications.

But it does not yet have a manufacturing licence.

Mr Feldman could not say what the status of that application was. Mr Cochrane did not wish to comment.

Queensland Bauxite does have access to an import licence via an agreement struck in April with a company called Burleigh Heads — through which it plans to import medical cannabis drugs from Canadian company CannTab Therapeutics.

The CannTab deal was announced in January.

Mr Feldman says they’re waiting on Canadian export paperwork in order to bring the CannTab pills in for clinical trials around chronic pain.

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