Cannasouth raises $6m to accelerate growth plans

Cannasouth chief executive Mark Lucas. Photo / Alan Gibson

Cannasouth has raised $6 million from its share purchase plan to accelerate its growth plans, including a new supply deal for 'white label' cannabis.

The biopharmaceutical research and development company sold 15.8 million shares 38 cents apiece, a 20.7 per cent discount to the five-day volume weighted average price. The shares rose 8.7 per cent to 50 cents in early trading today.

The original SPP, announced on 15 April, aimed to raise up to $5m from existing Australian and New Zealand shareholders who could apply for up to $50,000 of new shares each. In the event, it raised $5.69m and another $334,839 from several wholesale investors.

Chairman Tony Ho said the company was delighted with the positive support, given the challenging environment as "testament to the belief shareholders have in Cannasouth and a reflection of the sound progress Cannasouth has made to date in implementing its business strategy."

The company also announced it has entered into a supply agreement with MediParm Labs Australia, a subsidiary of Canadian company MediPharm Labs, for the supply of white label medicinal cannabis products into the local market under the newly announced New Zealand Medicinal Cannabis Scheme.

Cannasouth chief executive Mark Lucas said the agreement was and a "great first step in entering the market by supplying prescribers and patients with a range of affordable, quality pharmaceutical-grade medicinal cannabis products."

The agreement gives Cannasouth exclusive rights to the formulation and dosage forms set out by MediPharm for the next two years.

Cannasouth said the arrangement remained conditional on regulatory approvals and insurance.

At this early stage, the company said it was "unable to provide revenue estimates" for products sales.

The new shares are expected to be allotted on Thursday.