Cannasouth needs to raise capital, job losses coming

Cannasouth chief executive Mark Lucas. Photo / Alan Gibson

Medicinal cannabis provider Cannasouth says it needs to raise capital due to its “constrained cash position”.

The Waikato-based firm has struggled to make money as it waits for its medicinal cannabis products to be verified by relevant agencies.

It last posted a loss of $3.5 million for the six months to June 30, 2023, up from $2.5 in the prior period.

Chief executive Mark Lucas told BusinessDesk that although verification for its cannabis flower product could come within weeks, it needs money to operate until that and other products can be sold.

”The industry and demand is only getting bigger; the only barrier for us is the regulatory barrier. We are perfectly positioned.”

He said the company would be revenue-generating before the end of the year.

Job losses

Lucas would not be drawn on how much cash the firm burns through in the meantime. Still, Cannasouth’s annual operating and investing cash outflows stood at almost $5.7m in calendar 2022, while merger partner Eqalis burned through nearly $5.3m of cash on its operations and investments in the March 2022 year.

In an update to the New Zealand stock exchange on Tuesday, the company said it was able to reduce its monthly cash burn by $400,000 a month since it had merged with Eqalis.

Lucas would not be drawn on how many job losses there would be.

”We are restructuring our business to factor in delays to products reaching the market. Unfortunately, this means regional jobs will be lost in the medium term.”

Cannasouth had announced it would dual list by the end of this year but now says this will take place in 2024.