Australian cannabis industry is all set to become a significant player in the global hemp or cannabis export market. The industry is anticipated to account for approximately $55 billion by 2025 in the cannabis export market, backed by its agricultural expertise and cannabis-conducive atmosphere, according to some media and research reports.
The Narcotic Drugs Act 1967 allows the Office of Drug Control (ODC) to issue four types of licences-
According to the Office of Drug Control, cultivators need to hold either a medicinal cannabis licence or a cannabis research licence granted by the ODC and for manufacturers, it is necessary to have a manufacturing licence granted by ODC.
In this article, we are discussing one ASX-listed cannabis player, which has three key cannabis licences- one cannabis research licence, one licence for cultivation and two licences for manufacturing.
Let us zoom lens on THC Global Group Limited (ASX:THC), which is counted amongst Australia’s leading medicinal cannabis companies. In Southern Hemisphere, the Southport manufacturing facility of THC is one of the most extensive pharmaceutical bio-floral extraction facilities. The facility is licenced for both production and supply of clinical trial material.
The Company has a significant presence in Canada, in addition to Australian medicinal cannabis assets. THC Global is in a prime position to instigate medicinal cannabis manufacturing to benefit both domestic patients as well as the international export market.
THC Commences Production of High-Quality Medicinal Cannabis Medicines
THC Global has become the first ASX-listed company to have achieved aims of Narcotic Drugs Act with 100% in-house capability.
According to an ASX announcement dated 03 March 2020 by THC, the Office of Drug Control (ODC) of Australia has awarded an expanded commercial cultivation licence to the Company, which also started production towards the supply of medicinal cannabis medicines. Initially, the Company intends to supply its products to 6k patients in its home market.
The Company will implement its expanded commercial cultivation license for its Bundaberg cultivation facility and associated research permits and licence amendments for supporting a minimum of 3,000 patients initially with completely Australia-based medicinal cannabis medicines.
Simultaneously, THC Global is finalising crude cannabis extract import for the production of medicines as well as contract negotiations for the supply of cannabis from Australian licensed cannabis cultivators.
THC Global will supply cannabis-based medicines under the Canndeo brand. The Company will provide these medicines directly to pharmacies, hospitals and clinics that meet the requirements of the Narcotic Drugs Act and Regulations.
THC Unveils CanndeoCareTM for Prescription Information
The Company revealed to have established CanndeoCareTM to support doctors as well as health care practitioners. Via CanndeoCareTM, a team involving qualified health care professionals will deliver information on prescribing in line with permits from the TGA (Therapeutic Goods Act). The team will focus on aiding prescribing of cannabis derived products in a responsible and legal way.
To have valid data generation in study and clinical trials, q commercial cultivation permit, manufacturing permit and pharmaceutical GMP licence are prerequisites for Australian cannabis medicines. Currently, THC Global is in discussion and expects commencing trials from the third quarter of 2020. The first trial would include patient groups (Australia) with high CBD dose requirements.
Australian and International Medicine Supply under Canndeo Brand
THC Global’s medicines range under the Canndeo brand is due for launch by the end of the first quarter of 2020 and initially, the Company will launch four products, including a full spectrum cannabidiol medicine.
Under the Special Access Schemes (SAS), clinics and prescribers (existing) will get access to an alternative that is of high quality when compared with the existing products available for prescription.
Additionally, the Company has rolled out a portal to cater health care professionals with information and support the brand.
THC to Foray into Canada with Medicine Supply
Moreover, the Company has submitted applications for licences, enabling it to be a supplier under medicinal cannabis regulations in Canada to patients with valid prescriptions for cannabis medication. Canndeo Canada is the brand under which the Company plans to supply its products. It plans to target 369k + medical client registrations in the country, with authorisation to medicinal cannabis access as part of existing valid authorities.
Subsequent to the new guidance release by ODC in early January 2020, the Company is now initiating crude cannabis extract import from Canada into its domestic market. Further processing of the extract will be carried out at the Southport Facility of the Company.
CMP Revenue Up 80% in FY19
On 02 March 2020, the Company updated the market with its preliminary final report for the year ended 31 December 2019.
- THC Global mentioned that revenue of CMP went up by 80% year-on-year, backed by a broadening product offering and expansion across the Canadian market;
- Cost of goods increased in proportion to revenues due to sales mix;
- Gross margin reduced by 5% to 24% from the financial year 2018;
- Expenses in employee benefits increased to $2.37 million, up 50% as compared to the fiscal year 2018, due to commissioning of Canndeo and THC Pharma operations;
- The Company had cash and cash equivalents of around $3.55 million at the end of December 2019.
On 03 March 2020, stock of THC settled the day’s trade at $0.350, edging up by 12.903%. The market capitalisation of the Company stood at around $43.64 million, with nearly 140.77 million shares outstanding. The 52 weeks high and low price of the stock was noted at $0.630 and $0.300, respectively. The THC stock has generated a negative return of 20.51% on a year to date basis.