Cannabis companies around the world are being valued more realistically since the Covid-19 pandemic, with New Zealand firms undervalued if anything, ICBC delegates have been told.

Speaking on a panel in Berlin, Helius Therapeutics chief executive Carmen Doran said the fact the medicinal cannabis industry started in New Zealand just as Covid hit and the country went into lockdown meant valuations were realistic from the beginning.

She added: “Then we went into a global financial crisis and depression so we probably haven’t seen the crash in valuations just because of the timing of when our industry came on. 

“We absolutely had some companies that were at higher valuations at the beginning, including Helius, that have now come down to more realistic [levels]. But there hasn’t been the crash that we’ve seen in other places.”

Doran said a number of cannabis companies are “quietly delivering down in New Zealand”, and that “for what they have delivered already and the potential they have to go to global markets, they are undervalued”.

Meanwhile, Hyde Advisory and Investments CEO David Hyde said he had seen a big difference in valuations globally in the last 12 months, with firms adopting a more realistic approach.

From left: Cannabis pioneer Hilary Black (moderator), Hyde Advisory and Investments CEO David Hyde, Helius Therapeutics CEO Carmen Doran and MCIA chair Peter Crock.

“A year ago we were still seeing really hyped-up valuations, particularly in the European market,” he said. “Some companies were basing their valuations on projections and forecasts that were frankly indefensible.”

Hyde said the investment community had become wise to some of the breathless commentary around the sector’s growth potential and is “learning from what’s happening around the world, particularly in Canada”.

He added companies looking to raise capital are having to adopt a more evidence-based approach as a result, but warned “there’s still a long way to go”, particularly among publicly listed firms.

Medicinal Cannabis Industry Australia (MCIA) chair Peter Crock told delegates the Australian industry had learned its lesson after initially being caught up in the hype when Canada legalised recreational use in 2018 and valuations soared.

He said: “We definitely got caught up in the Canadian bubble as it was inflating. The Australian [medicinal cannabis] system came into effect… when Canada was in full inflation mode and we had Canadian activity in our part of the world as well.

“So when the bubble burst it definitely had an effect and it meant we had to pull our horns in.”

But Crock said the regulatory framework in Australia meant the industry is now positioned for sustainable growth.

He added: “Because we’ve got such a good regulatory structure, we’ve gone through that rough patch and we’re in a really strong position to move forward without it being seen as another bubble. So it’s inflating carefully.”

However, Hyde had a warning for Australian and New Zealand firms looking to do business in international markets such as Germany, stressing the importance of consistent supply.

He said: “As a supplier into those markets, if you can’t latch onto reliable supply that is consistent, hits a similar mark and you can replenish those orders… we’ve seen other countries where once you lose the confidence of patients, you’ll be in a really sticky spot. 

“The key is to really educate yourself as you’re cultivating, distributing, wherever you are in the value chain. If you’re looking at the global market as a playground to do business in, you need to know where to play and how to win.”

Prior to launching Cannabiz, Martin was co-founder and CEO of Asia-Pac’s leading B2B media and marketing information brand Mumbrella, overseeing its sale to Diversified Communications in 2017. A journalist...

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