In February, the Australian government issued its first license for cultivation of medical cannabis. It also expedited importation of cannabis from countries where it is already approved (mainly Canada). This is great news for AusCann and other medical marijuana companies based in Australia.
AusCann went pubilc very recently in a reverse takeover with TW Holdings (no relation to Tweed). Months before the company had negotiated a deal with Canopy Growth Corp (OTC:TWMJF) - parent of Bedrocan and Tweed - to exchange equity for Canopy's expertise. Canopy initially had about 15% of AusCann, but it has been diluted to 10% in the reverse takeover.
This deal should help AusCann in two ways. One is Canopy will lend their knowledge and expertise in regards to everything from licensing to growing to branding. The second benefit will be that Canopy can supply AusCann with product in the interim period between when Australia starts to allow for importation and when AusCann's first harvest is ready for sale. It will also lend them an air of legitimacy in the market place.
AusCann's other significant differentiator is their 50/50 joint-venture agreement with the Daya Foundation in Chile. Daya was the first company in Chile legally allowed to grow medical cannabis. Chile also allows for exportation, giving AusCann a foothold in the South American market. When combined Chile and Australia's population is about equal to the population of Canada, meaning ACNNF has a sizeable domestic market they can address.
Although the company does not have a timeline to start domestic production, expect to see companies start to get their licenses in the coming weeks and months. In the meantime AusCann does have other projects already started and a relationship with Canopy Growth Corp. that will benefit them while they wait licensing.
Given these circumstances and Canopy Growth’s recent buying spree it would not be surprising if they make an offer for AusCann. Canopy has recently bought two Canadian licensed producers including Mettrum.
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