Listed Australian medical cannabis stocks have fallen from grace in the past six months, following suit from global industry leaders in North America such as Canopy Growth Corp, Aphria Inc and Aurora Cannabis.
Despite strong prescription growth in Australia and inroads in many jurisdictions abroad, not to mention recreational cannabis legalisation in Canberra which paradoxically may be a threat to the sector, weak investor sentiment has been a tough pill to swallow for medicinal cannabis companies on the ASX.
It is no surprise then that emerging players are now looking to other forms of funding to support their efforts, including Sydney-based Greenfield MC Global which recently launched a crowdsourced funding (CSF) offer to raise up to $1.5 million.
The offer opened on 28 October with a minimum subscription level of $500,000, building on Series B investments of $1.74 million this month and a $250,000 Series A investment this February.
In the offer document, the group has also indicated plans to list on the ASX in 2021.
The company was only founded in February 2018 but has been expanding rapidly, now with operations in New South Wales, Victoria, Queensland, New Zealand, South Korea and the Philippines.
“Greenfield envisions a new era in patient care – one that offers natural cannabinoid-based medicines as a potential alternative to synthetic and opiate-based drugs,” says the company’s chief medical officer, associate professor Dr Sree Appu.
“There is considerable patient demand for medicinal cannabis, coinciding with growing and substantial evidence based research on its efficacy in multiple disease areas, including neurology, pain, oncology, auto-immune and mental health.”
“There has been terrific interest from investors; by adopting CSF for this round of capital raising, the many smaller investors who’ve previously expressed interest will be able to participate,” adds the company’s president Arjun Chhabra.
The funding will be hosted online and run by Capital Labs, a member of The iQ Group Global, an authorised and Australian-licensed CSF platform.
Capital Labs provides curated investment opportunities in innovative businesses that will have a positive impact on the world.
The platform offers retail investors access to early-stage investment opportunities that have been carefully researched and vetted.
“We’re delighted to have Greenfield MC as our partner for the launch of their next investment phase and to be able to provide Australians with the opportunity to join them on their mission to improve patient care,” said Capital Labs head of marketing Joseph Barry.
Greenfield highlights patient growth continues at an exponential rate with an additional 15,000 to 20,000 new patients expected to enter the medicinal cannabis market in Australia in the next 12 months, according to research from FreshLeaf Analytics.
In its offer, the company notes that even though the Australian market only had a modest size of $25 million in 2018, Frontiers Data suggests the total addressable market if the environment were deregulated would be worth approximately $5.5 billion.
“Greenfield MC Australia is licenced to import and distribute medicinal cannabis products,” the group says in the offer document.
“We hold strategic alliances and supply arrangements with companies located in Canada, the USA, the UK and Colombia.
“Those arrangements include private label formulations and a diverse product range, for example, oil tinctures, sublingual sprays and soft gel capsules.”
Through its joint venture with EPHS Holdings Inc (STNN:US), Greenfield MC Cultivation has “imminent” plans to cultivate on the Sunshine Coast in Queensland. Meanwhile, the global company is optimistic for good sales opportunities in Australia, New Zealand and South Korea.
“New Zealand will hold a referendum in 2020 whetherto fully legalise adult cannabis use. It is anticipated the referendum will result in total legalisation,” said the company.
“Greenfield MC New Zealand will be positioned to tap into the nutraceutical, cosmeceutical, wellness and adult-use product segments that will inevitably emerge.”
The New Zealand arm of the business is a joint venture between Greenfield MC Australia and EPHS, as well as a local team of pharmacists, clinical researchers, and agriculturalists.
“Our New Zealand partners are active in Maori healthcare as well as the development of clinics and community-based initiatives.”
In South Korea, where medicinal cannabis was legalised in November 2018 making it the first East Asian country do so, Greenfield MC Australia has a local registered branch.
“South Korea is also a global capital for cosmeceuticals and beauty products. We anticipate it is only a matter of time before the country’s developing medicinal cannabis industry merges with its world-leading skincare, dermatology and beauty industry.
“Greenfield MC Global will have an early-mover advantage in this promising new market,” the company said, noting a trajectory towards a US$210.7 million medicinal cannabis market value by 2024.
Like in New Zealand, Greenfield’s Philippines business is waiting on regulatory change.
“It is anticipated that the Philippines will introduce a medicinal cannabis regime in the not too distant future,” the company said.
“A Bill implementing a medicinal use regime was passed through the House of Representatives in 2018 and the Philippine Drug Enforcement Agency (PDEA) has commenced research into proposed medical consumption.
“Greenfield MC Philippines has the potential opportunity to help design and supply to the first ever medicinal cannabis study in the Philippines, currently being spearheaded by our joint venture partners.”
Greenfield MC Global ran at a loss of $230,482 last year and it estimates a total team remuneration of $865,000 for FY20, although it believes only a small portion of crowdsourced funding will go towards this expenditure.