Medcan is hoping to raise up to A$7 million from investors as it prepares to expand cultivation at its Queensland facility.
The company is expected to approach its backers over the next few weeks with the aim of building on a strong 2021 which saw it pay a dividend to shareholders, a rare event in the cannabis sector.
Medcan claimed to be the first cannabis company to reward shareholders with a pay out, with its approximately two dozen investors sharing around $100,000.
“We had an excellent year. Investors have supported us from the get go so this is giving something back and looking after those who have looked after us,” managing director Craig Cochran said.
While the financial year finished at the end of June, Medcan underwent a self-imposed audit which delayed payment until the back end of the 2021 calendar year.
Cochran said the dividend followed a strong performance which saw revenue climb 490%, exceeding forecasts by more than a quarter.
The company is on track to achieve a 2022 revenue growth target of 260%, he said.
Cochran, who remains Medcan’s major shareholder, said the firm’s pragmatic approach under private ownership has provided solid foundations for growth.
Neither has Medcan participated in the “race to the bottom” on price, he said.
“We got into the industry to be a little bit different,” Cochran told Cannabiz. “We approached it in a different way. We came in as a private enterprise, focusing on short-term revenue, brand awareness and market penetration. We wanted to be different from the ASX guys who, in the Australian market, are renowned for raising money but not really delivering.”
Cochran said running a “tight ship” with carefully controlled expenditure and a focus on revenue and gross profit “seems to have been lost” in the sector, both in Australia and internationally.
“The hype caused the larger guys to raise massive amounts of money, but they have not actually done much with it. There are massive losses year in year out.
“Obviously a business starting up will run at a loss for a period of time, but you expect that to turn around at some point. Some of these guys are four to five years in and raising tens if not hundreds of millions of dollars and have yet to achieve anything from it.”
Cochran said Medcan will itself look to list “in the next couple of years”.
“It’s definitely on the horizon, but it goes back to the fundamentals of getting the business right. I’d prefer to go to the market with a credible business and list off the back of that than off the back of aspirations and dreams.”
The immediate target, however, is to raise up to $7 million from investors to fund ongoing operations and fit out more cultivation rooms, Cochran said.
Medcan, which has 10 products available for Australian patients — two locally manufactured and eight imported — has yet to reach capacity at its 6,500kg facility.
“If we can get additional grow rooms that adds biomass which adds revenue, we can scale up quite easily,” Cochran said.