Markets with Madison: Are cannabis companies cutting it?

It’s been more than three years since the first cannabis company listed on the New Zealand stock exchange and investors are still waiting to see green shoots of profitability.

Cannasouth has posted consecutive multi-million dollar losses since 2019, including its most recent $8.2m annual loss for the year to December 2022.

Its chief executive Mark Lucas told Markets with Madison gaining approval for medicinal products to sell was complex and costly.

“These businesses are expensive to establish. We are operating in a pharmaceutical regulatory environment. But the opportunity is massive as well.

“Now it’s about getting revenue in,” Lucas said.

Cannasouth Bioscience holds a medicinal cannabis licence issued by the Ministry of Health, which allows it to cultivate and supply cannabis, and be in possession of it for manufacturing activities.

The company’s share price was $0.28 on March 9 2023, down 24 per cent since listing, taking its total market value to $44.57m.

Competitor Rua Bioscience listed in 2020 and was priced at $0.20 a share, down 70 per cent since listing.

Rua posted a $719,000 profit for the six months to December, a lift of 129 per cent on the previous corresponding period. However, excluding a large fair value gain, the company made an operating loss of $3.4 million.

The world’s largest listed cannabis company by market capitalisation is Curaleaf, worth US$2.7 billion.

Stuart Wilcox was its chief operating offer and helped grow the company to its current status with 140 dispensaries across the US, 29 cultivation sites and 6000 employees.

Wilcox is now the chairman of New Zealand medicinal cannabis company and exporter Ora Pharm.

He shared his thoughts on how New Zealand’s medicinal cannabis market could evolve and avoid America’s mistakes on Markets with Madison.

Get investment analysis and insights from the experts on Markets with Madison every Monday and Friday on the NZ Herald.

Disclaimer: The information provided in this programme is of a general nature, and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.