Growth forecasts for the cannabis industry are often inflated, audacious even.

And Cann Global’s projection was right up there.

It was the final question of its first investor webcast to discuss the company’s interim financial results.

Asked where he saw the company and the industry in five years, chief executive Sholom Feldman didn’t hold back.

After acknowledging the regulatory changes that will trigger opportunities in Australia and across the globe, Feldman suggested the industry would move from a “small growth industry into a massive, accepted general industry”.

“We believe it is going to be a multi, multi-billion dollar industry all over the world so there is plenty of room for plenty of companies to become very successful,” he said.

“So where do we see ourselves in five years? Well, I’ll put it very simply, if there’s a multi, multi-billion dollar industry, I don’t see any reason why we shouldn’t be a multi-billion dollar company in five years’ time. That’s not to give investment advice, that’s just where I see it.”

After generating revenue of less than $1m in the first six months of the 2021 financial year, such lofty forecasts may seem a stretch.

Yet two years after changing its name from Queensland Bauxite Limited, the pieces may be falling into place for the ASX-listed firm, even if painfully slowly.

Having ditched its mining heritage, Cann Global is positioning itself for growth on four fronts; medicinal cannabis, plant-based food, hemp cultivation and processing in Thailand and skincare.

“I’ll put it very simply. If it’s a multi, multi-billion dollar industry, I don’t see any reason why we shouldn’t be a multi-billion dollar company in five years.”

sholom feldman, cann global ceo

As it stands, food is virtually the sole cash driver, accounting for $810,000 of the $900,000 revenue generated in the six months to December 31. Both figures showed growth on the same period in 2019, with overall revenue rising 29% and food sales up 22%.

A greater control on expenses, which fell 43%, helped the firm report a smaller loss of $2.1m, a performance described as “positive” when compared with the $5.5m loss in the first half of FY20.

Cann Global’s debt-free financial position also appears more robust, after a $7.9m capital raise and rights issue swelled its cash reserves to $12.4m as of the end of 2020. The manufacture and roll-out of new product and the associated marketing costs do not come cheap, however, an undisputed reality recognised by Feldman.

Sholom Feldman

“We will need every single dollar we can to generate the inventory and the kind of sales that our shareholders are looking for,” he told investors.

Asked the pertinent question of how long the cash reserves would last, Feldman suggested they would last “as long as possible”, before explaining the intention was to generate income “that would last forever”.

“We would like to see our company not lasting for a year or two, but lasting for generations,” Feldman added.

Future revenue – medicinal cannabis

Clearly, Cann Global can’t rely on its food division to prop up the rest of the company for too long. And over the course of the next 12-18 months, management is expecting greater revenue diversification as non-food products – medicinal cannabis included – reach the local and international market.

Under its JV with Canada-based Canntab, and through its management partnership with Medcan Australia, Cann Global is planning to ship six hard-pill formulations to Australia for distribution through the Special Access and Authorised Prescriber Schemes.

But delays at the North American end have frustrated Cann Global, with Health Canada seemingly dragging its feet over granting an export licence to Canntab.

Feldman was at a loss to explain the delay, but was optimistic that a conclusion to the protracted process was in sight.

“I wish I could clarify the delay… but our understanding is that it should be coming any day,” he said. “We’ve been working on that for a while now, and have everything ready in Australia. We have our import permits, we’ve been preparing the marketplace, we’ve been preparing our sales and marketing teams and we have approached various doctors to distribute the product.

“What we’re waiting for is for Canntab to get its export permit, but we are told that should be happening any day now.”

So imminent is the permit that chief operating officer Marion Lesaffre said it hoped to receive the products – two THC, two CBD-only and two blended medicines – by the end of March.

According to Cann Global, the wait will be worth it.

Feldman claimed the hard pill formulation will set it apart as being the only medicinal cannabis delivery mechanism of its kind in Australia.

He told investors it was in line with the company’s philosophy of focusing on product that “has a point of difference”.

“We are not aware of any other product that compares to the Canntab product with regard to it being a pharmaceutical grade, hard pill that can be taken like any other medication,” Feldman said. “It has unique IP and a unique delivery system that we believe the market, consumers and doctors are going to prefer.”

The company will also join the growing list of those exploring the prospect of registering a CBD formulation with the Therapeutic Goods Administration, to sell over-the-counter as a Schedule 3 medicine.

Feldman described the regulatory change as a “large step forward” that provided opportunities for the industry.

But he also warned the process of registering a medicine would not be straightforward, with the company still operating in a “difficult regulatory environment”.

MS research shifts to Australia

In addition to the impending arrival of Canntab products, Cann Global confirmed it will conduct further research into treatments for Multiple Sclerosis (MS), a project which began last year under Professor Dedi Meiri at renowned Israeli university Technion.

The research unearthed a unique strain of cannabis that, in-vitro and in-vivo, not only appeared to slow down the progression of MS, but in some cases reversed the damage.

Feldman revealed the next stage of the research – human trials – will shift from Israel to Australia, citing the financial support offered by the Australian Government as a key reason, along with the belief that locally held trials may streamline any future drug registration.

Recognising the “significant cost” of such an undertaking, Feldman said the firm looked at “where we could save as much as possible and where we could get as much bang for our buck”.

Australia was “financially and operationally” the right choice, he said, with 50c in the dollar often returned by the Australian Government for research projects.

Hemp skincare products

While any potential cannabis drug registration is clearly way down the track, a three-month trial of the company’s hemp seed oil skincare range, developed in collaboration with Israeli JV partner Pharmocann, is imminent.

Following the trial, consumer testing will take place ahead of large-scale production and official product launch before the end of 2021. Australia will be the first market to receive the products, with Cann Global exploring distribution agreements in Japan, China, South Korea, Europe and the US.

According to COO Lesaffre, the worldwide plant-based cosmetic market is worth a “huge” $19b. And while Cann Global’s entry into the market will not generate income during the current 2021 financial year, “a lot of revenue” should flow in FY22.

“We truly believe we are very well placed to enter this market as a premium range,” Lesaffre said.

Together with its Thailand-based hemp cultivation and processing division, which is also benefitting from regulatory reform, Cann Global believes it is well-positioned for growth.

The ducks are moving into rows. Whether they stay in formation remains to be seen.

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