Cannasouth seeks full ownership of cultivation and manufacturing

Cannasouth chief executive Mark Lucas. Photo / NZME

By RNZ

Medicinal cannabis company Cannasouth will use funds generated in a capital raising to take full ownership of its cultivation and manufacturing businesses.

The company says it has signed a $3.54 million deal to buy the remaining 50 per cent of shares in Cannasouth Cultivation, currently a joint venture with Aaron Craig and his family interests.

Cannasouth Cultivation owns a growing and processing facility for medicinal cannabis, which has reached the stage of having its equipment installed and checked.

"There is strong global demand for premium pharmaceutical quality cannabis flower," said Cannasouth chief executive Mark Lucas.

"The timing of the acquisition will bring all future revenues to be derived from the cultivation facility into the Cannasouth Group's P&L. It also enables the company to control all aspects of the cultivation operation."

In a separate deal, Cannasouth is taking over the remaining 40 per cent stake in Hawke's Bay-based product manufacturer Midwest Pharmaceuticals it does not already own.

The $1.026m purchase price also includes Cannasouth aquiring all shareholder loans made by the vendors, Mark Balchin and Greenmeadows Health, to the company.

"The Midwest acquisition provides Cannasouth with the opportunity to streamline operations and generate additional revenues from existing operations while positioning the business for GMP (Good Manufacturing Practices) certified medicinal cannabis manufacturing," Lucas said.

Cannasouth said it would undertake a capital raising in the near term to pay for the acquisitions. It had appointed CM Partners to advise on both deals and on the capital raising.

- RNZ