Wanna get high on profits? Try the latest ASX pot stock
CANNABIS is going corporate in Australia with the news that yet another Australian start-up is planning an initial public offering on the local stock market.
The Hydroponics Company, with the unforgettable ASX code of THC, is at least the sixth company to list on the ASX almost exclusively targeting the potentially lucrative medicinal cannabis market.
But unlike similar companies, THC has a stake in the giant US market, which dwarfs Australia's and is already established.
The company's initial public offering - to be launched next month on the auspicious date of April 20 (420 day) - is 25 to 40 million shares at 20c a share, to raise $5-8 million for "rapid development of a diversified, global cannabis business.”
THC's ace up the sleeve is its conditional acquisition of a Canadian-based hydroponic equipment manufacturer and distributor, Crystal Mountain Product, and Dragon Vision, with a major foothold in the US market.
This company will provide THC with immediate cashflow and expected profits from day one.
Meanwhile, its medicinal cannabis plans for Australia are in the pipeline with one of the first medicinal cannabis research licence applications submitted to the federal government last year.
THC's Australian cannabis breeding specialist, Canndeo Limited, "will provide access to core expertise with more than 17 years in the breeding, variety selection and growth management” of cannabis.
The third arm of the business is the development of large commercial hydroponic greenhouses through a collaboration agreement with A&B Hydroponics International Pty Ltd.
The company is also believed to be in talks with a major US company to position itself for growth in the world's largest recreational and medicinal cannabis market, which is growing at 30-40% annually.
THC's CEO Hamish MacDonald said the company planned to increase its revenue from more than $5 million in 2017 to more than $15 million by 2018 "as we position THC as a leading cannabis company with multiple revenue streams”.
Of course, it's not the only player in the race to get into what is expected to be a highly lucrative and consistently growing market.
Last month the first ever legal crop of cannabis for medicinal purposes was harvested from a secret hydroponic facility in Victoria.
That crop was harvested by the biggest player in the industry, Auscann Group Holdings Ltd - whose stock has more than tripled since the New Year.
According to website Finfeed the global medical marijuana market is projected to be worth $270 billion, with the Australian market tipped to be valued at $50 billion by 2018.
Stock prices of other ASX "pot stocks” as of 5pm March 9
10c to $1
Auscann Group Holdings Ltd (ASX: AC8): $0.70 (up from 20c in early January)
Creso Pharma (ASX: CPH): $0.54
MMJ Phytotech Ltd (ASX: MMJ): $0.39
Zelda Therapeutics Ltd (ASX: ZLD): $0.06
MGC Pharmaceuticals (ASX: MXC): $0.07