Cannasouth gets government funding as share price drops below 30c

Cannasouth shares have dropped from 50 to 29 cents since first listing on the NZX. Photo / Getty Images

Medicinal cannabis company Cannasouth will receive funding from Callaghan Innovation to support two of its research programmes.

The government agency will contribute up to $347,008 to the projects during the next three years, conditional on Cannasouth spending up to $566,172 to match the projects' funding. The grant is subject to completion of the formal contract.

Chief Operating Officer Nic Foreman says the research programmes are in the areas of neuropathic pain/drug discovery, and drug delivery systems and optimisation technology. The proposed funding is essential for the company's technical and commercialisation efforts.

"Securing capital to ensure we make timely progress in research is key to the commercial success of our therapeutic cannabinoids products," said Foreman.

The announcement comes after the company listed earlier this month after selling $10 million worth of shares at 50 cents each. It was the first share float on the New Zealand Stock Exchange in two years.

The stock first traded at 51 cents but last traded at 29 cents.

The latest funding is additional to three grants Cannasouth and its partners have already received for research already underway or already completed.

Foreman said that, with the funding in place, they will be able to apply to the Ministry of Health for the necessary licences to conduct the research and development projects specified in the grant application.

Plant material from Cannasouth's Waikato-based cultivation facility will be used in its Waikato Innovation Park laboratory to extract cannabinoid compounds for the proposed projects. The first harvest of plants growing in the facility is expected in the next two months, it said.

- BusinessDesk