The whiff of weed is in the air again, and this time it’s all about deal-making and consolidation. Joint ventures (JV) are the order of the day between listed cannabis companies and unlisted applicants.
With that said, there are now a number of new players who have hung out their shingles and wasted no time in advising the market of such.
Let’s head back into the greenhouse to unearth these new cannabis companies, some of with which you may not be familiar:
• BOD Australia Limited
• Chapmans Limited
• CannPal Animal Therapeutics Limited
• Roots Sustainable Agricultural Technologies
• LeafCann Group
Atlas Pearls and Perfumes Limited (ATP.ASX)
When you think pearls and perfumes, you think cannabis. No? OK, we’re not alone then.
According to the asx announcement, the company describes itself to investors as having earned an enviable reputation as a world-leading pearl producer of “nature’s most precious gift”, the South Sea pearl.
Shareholders, however, have spent far longer than six months on a leaky boat, the SP currently sitting near the bottom of the ocean.
Atlas now have their fingers firmly in the pot pie with the company’s 50% owned subsidiary Essential Oils of Tasmania (EOT) nutting out a joint venture with LeafCann and looking to license up so they can start growing weed down on the Apple Isle3
Tassie has great wines. If grapes can grow there then so can weed.
The deal is structured like this: Cannabinoid Extracts Australia (CEA) is the new JV entity between EOT and LeafCann. Which Atlas owns some of – got it?
A pearler (Aussie slang: impressive) of an investment? We’re not convinced yet.
CannPal Animal Therapeutics Limited (CP1.ASX)
CannPal’s core strategy is to commercialise pharmaceutical products developed for companion animals to treat various conditions, using medicinal cannabis compounds.
We can all agree that people love their pets, but we’re not sold on the idea of the masses spending large on CBD therapeutics for their furry friends. When times are tuff Fido tends to be weaned off the filet mignon in favour of something more affordable. Will generous owners still ensure their pooch has a decent supply of pot? Yes, according to the LA Times, who say pot for pets is a big business.
Market-wise, those are big numbers. Is the animal health market recession-proof?
Listing on 26th October 2017, CP1 raised 6 million issuing shares at $0.20 a piece. Hasn’t moved much and is now trading bang on the IPO price.
Looks like they are a single-product company (think Crocs), and will be in direct competition with Creso Pharma, who recently inked a distribution deal with Virbac (ranked in 9th place – see graphic above).
Against Creso, CP1 is a definite underdog. The market seems to agree, given the lacklustre price action since hitting the boards.
Right now we can’t get excited about this name. One to watch for possible rotation within the sector as money is moved around.
Chapmans Limited (CHP.ASX)
Chapmans, a diversified investment company whose letterhead proclaims “High Conviction Investment and Finance”, recently completed a strategic investment in MJ Life Sciences Pty Ltd (MJLS), stumping up USD 500K for a 50% equity share.
MJLS, an Australian special-purpose company established with the aim of becoming a leading global medicinal cannabis holding and investment company5, is a direct investor in Caziwell Inc., owner of the established North American medicinal cannabis brand and business, Aunt Zelda’s, a medical cannabis provider that creates infused olive oils, strain-specific extracts and cannabis topicals.
Like we said at the opening, it’s all about cutting a deal with someone at the moment. The MJLS board includes Harry Karelis, who is linked with Zelda Therapeutics (ZLD.ASX) and Auscann (AC8.ASX).
A witches broth full of Zelda’s, it seems. The chart is spookier than Halloween.
BOD Australia Limited (BDA.ASX)
As it stands, the easiest way to double your share price is to announce your intention to enter the CBD space. That’s exactly what happened to BOD over the last few weeks with this skincare-market player.
BOD has cemented a partnership with Swiss herbal extracts company Linnea SA and is in the process of developing a range of cannabis-based cosmetic products.
Having recently been granted their medicinal cannabis import license, BOD shareholders are enjoying the blue sky which comes with your share price being at an all-time high.
Roots Sustainable Agricultural Technologies (ROO.ASX)
Only a few days old as a listed entity, ROO enjoyed a healthy debut against its IPO price of $0.20 and has delivered anyone lucky enough to score an allocation with an easy double.
According to Raisebook Roots is “an agricultural technology company focused on developing, producing and commercialising disruptive precision technologies that address severe weather conditions, water shortages and improved crop yield, and do so in a cost-effective and environmentally sustainable manner.”
In a recent interview, Boaz Wachtel explains the technology as such:
We have a two in one solution. We both heat and cool the roots, rather than heating or cooling the canopy, as currently being done in agriculture.
Incorporated in Israel, Roots are listed as a Chess Depositary Interest (CDI), an instrument allowing international companies to trade on the ASX.
As the IPO was handled by EverBlu Capital, ROO is firmly in the Blumenthal stable and being touted by the financial wunderkind Assad Tannous of Assena Wealth Solutions.
The stock is here because if nothing else it is guilty by association. Buy the dips and wait for a highly probable hookup with a cannabis company which would see the stock soar.
LeafCann Group (Unlisted)
LeafCann is a privately held company who have cut a number of deals with ASX-listed names in the medicinal cannabis sector.
According to their website, “LeafCann Medical Cannabis is striving to be the first triple P (People, Planet, Profit) medical cannabis grower in Australia.”
There’s also an excellent Resources section with all the applicable Australian state legislation and various cannabis whitepapers. Worth a look.
They have already struck a few agreements with other CBD players this year, including:
• An LOI with Creso Pharma whereby LeafCann is to supply GMP-standard cannabis and hemp-derived materials to Creso for use in its pharmaceutical-grade therapeutic products.
• The JV with Atlas Pearls covered above.
More from finfeed:
“We are very excited to venture into the LOI with Creso,” LeafCann Co-Founder and Chief Strategic Officer Elisabetta Faenza said. “We have all of our ducks in a row, which is why Creso has been keen to partner with us and likewise us with them.
The same names keep surfacing.
Always keep your eyes peeled for market announcements signalling shares being released from escrow.
The terrain gets a little trickier. Hey, we just report it!
–// Craig Amos
FULL DISCLOSURE: None of the companies mentioned in this article are Equity Guru clients. The author holds Creso Pharma stock.
1. + associated graphic: Source : https://www.businessnews.com.au/article/Performance-shares-deliver-windfall
2. Charts: Google Finance
3. Tasmania – https://en.wiktionary.org/wiki/Apple_Isle
4. Twitter graphic: https://twitter.com/blumenthaladam1