Cronos and LGC Capital offered their investors an update on the development of the Australian ventures both companies are overseeing.
On Tuesday (June 19) two Canadian cannabis companies gave their shareholders a progress update on their respective expansions for Australian ventures.
The Australian cannabis market has grown at a remarkable pace so far in 2018 with multiple Canadian companies announcing expansions into the jurisdiction.
This market is currently only legal for medical cannabis with the patient population estimated at over 30,000 according to research firm Deloitte in 2016.
Cronos offers licensing update for Australian division
Cronos Group (NASDAQ:CRON,TSX:CRON) shared with its shareholders the Australian joint venture created earlier this year by the company, named Cronos Australia, obtained a manufacturing license from the Australian Office of Drug Control.
The license increased the offerings of Cronos Australia as the company can now legally manufacture cannabinoid-based products.
“This is a key step for expanding our research and product development while also allowing us to produce the full scope of cannabis products for the region,” Mike Gorenstein, CEO of Cronos Group said in a statement.
Rodney Cocks, CEO of the Australian division, said he sees the venture in a solid position to even expand its outreach and export cannabis product to New Zealand and the Southeast of Asia.
Cronos’ Canadian stock finished the day C$9.11 per share, a 2.13 percent increase from its previous close, while the company’s Nasdaq shares have risen 1.18 percent to reach a US$6.86 price per share.
On the analyst research aggregator site TipRanks, Cronos’ Canadian stock is currently split on opinions with one analyst, Matt Bottomley from Canaccord Genuity, recommending investors to sell, while Martin Landry’s latest report still has a “Buy” recommendation for investors.
A technical analysis summary on charting tool TradingView reveals a “Buy” recommendation as well.
Update from an Australian venture overseen by a Canadian operator stock
Investment company LGC Capital (TSXV:LG) announced Little Green Pharma, a private Australian company holding a license to grow medical cannabis, received a positive result from a mandatory inspection from a designated laboratory for medical cannabis tests.
This is one of the last steps before Little Green Pharma is allowed to sell its medical cannabis products. According to LGC, the products from the Australian producer will be tested for stability which the company estimates require close to a month and a half.
“The group to benefit most from this are patients and we are proud to be able to have our unique product offering available in August 2018,” Fleta Solomon, Little Green Pharma’s managing director said in a statement.
Little Green was also confirmed for a renewal of its medicinal cannabis license for the next two years by the Office of Drug Control (ODC) in the country, a development which John McMullen the CEO of LGC called a success. The new license will not expire until May 2020.
After completing its first ever harvest in April, the Australian producer is expecting its second harvest in eight to 10 weeks.
At the end of Tuesday’s trading session, LGC’s share price had increased 4.55 percent in value, reaching a price of C$0.12 per share.
The first half of 2018 has been volatile for LGC’s stock. Earlier in the year, the C$45.21 million market cap company reached some of its highest share price in years, hovering close to a C$1 price per share. However, since then the stock has seen a steady decrease up to its most recent closing price of C$0.11.
LGC increased its interest in the Australian venture to 14.99 percent by purchasing 2,283,495 shares of Little Green Pharma, at a price of AU$1.16398 per share. The total cost of the transaction, a little over C$2.6 million, was paid by way of issuing 5 million shares of LGC at a deemed price of C$0.53, the company’s closing price on January 19, 2018.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.