Financial Review January 5 2018 - 11:00PM
Former Liberal MP Mal Washer says AusCann, the ASX-listed medical cannabis company he chairs, is "light years" ahead of its competitors, some of whom do not have the manufacturing plants or licences needed take advantage of new export reforms.
Shares in companies associated with medicinal cannabis soared on Thursday after the federal government said it would allow the exportation of their products for the first time.
AusCann CEO Elaine Darby and her father, former MP and Chairman Dr Mal Washer. Photo: TREVOR COLLENS
The two largest cannabis companies by market value, Cann Group and AusCann, closed up 35.42 per cent and 53.66 per cent respectively on Thursday. But by market close on Friday, Cann's surged slowed, finishing the day up 2.82 per cent at a record price of $4.01.
Meanwhile, AusCann powered on, with shares in the company co-founded by the former Western Australia MP and his daughter Elaine Darby, finishing up 26.19 per cent on Friday at $1.59.
Speaking to AFR Weekend after federal Health Minister Greg Hunt's announcement, Mr Washer said AusCann was now "number one in the race in Australia" having acquired the separate growing and manufacturing licenses and Therapeutic Goods Administration (TGA) approved production plant needed to export products.
"We're light years in front of everyone else because they've got to build plants and get TGA approval for the plants they build," he said.
"That's complex and time-consuming. So we're ready to go tomorrow."
AusCann – which is backed by the largest legal cannabis grower in the world, Canada's Canopy Growth, and also has a partnership with global poppy grower and processor Tasmanian Alkaloids – is readying to bring in "the genetics" it needs, in the form of plant cuttings, so it can start growing and manufacturing.
"We get all the genetics and have all the know how and it's all just go, go, go," said Mr Washer.
"Our major priority is to sell to the Australian market and this [the government's announcement] is value add for us, as it gives us economies of scale and helps us to create a cheaper product."
Chairman of hemp company Ecofibre, and Australian Financial Review rich lister, Barry Lambert on Thursday slammed the government reforms as "fake news," questioning whether Australian companies could compete internationally with more established overseas competitors.
Cann was the first company to receive a licence for research and cultivation and raised $13.5 million in an initial public offering, but it's chief executive Peter Crock told the Financial Review it was still in the process of getting a manufacturing licence for its planned 16,000 square metre manufacturing facility.
The Melbourne-based company in December commissioned a second 600 square metre cultivation site, and has completed three harvests of medicinal cannabis material so far.
Tribeca Investment Partners, which owns shares in Cann via its small caps fund, said its taken a bet on the $387 million company because it was an "early mover" in the space.
"It's the closest to having actual revenue and profitability. [In regards to] its facility, they will be ready for large scale production pretty soon," said Tribeca chief executive and small caps portfolio manager David Aylward.
Other ASX-listed medicinal cannabis companies are also in various stages of getting the required licensing.
The Hydroponics Company, which also saw its shares spike on Thursday, is waiting on licensing so that it can kick off a pilot cannabis growing program and production of medicinal cannabis at its Queensland facilities.
ASX-listed European based biopharma company MGC Pharmaceuticals said it would fast track plans for a cultivation and manufacturing strategy in Australia.
"An Australian operational base has always been part of the company's longer-term strategy, but not until Federal legislative changes made it commercially viable to access key export markets," it said in a statement.
But for the domestic industry as a whole, which some experts speculate could be worth $1 billion a year, Mr Aylward sees a positive future.
"We're comfortable this will be a very large market. We're getting well beyond it being something that seemed like a bit of a folly, a fringe idea, to it being important for doctors to use… in terms of pain management," he said.
"That said, we're still early in terms of what it will be be and [knowing] the key determinants of who wins the market.
"What we saw yesterday was what we were hoping for. It makes sense and certainly de-risks the development of the business model for all of the companies.
Auscann's Mr Washer said the "wise investor" would now be looking to see what companies medicinal cannabis companies are "capable of."
"See if they are taking advantage of this opportunity and are also in the position to get into the marketplace in the most efficient and rapid manner by having all the facilities – which we have."
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