This morning the shares of medicinal cannabis company Auscann Group Holdings Ltd (ASX: AC8) will hit the ASX boards following a successful reverse takeover of TW Holdings.
AusCann is the latest in a growing number of "pot stocks" that have listed on the ASX in the last 12 months. Other recent listings include Zelda Therapeutics Ltd (ASX: ZLD), MMJ Phytotech Ltd (ASX: MMJ) and Creso Pharma Ltd (ASX: CPH).
What makes AusCann different?
Although it is early days, I have been impressed with what I've seen from AusCann. As well as having an experienced management team, the company has significant ties with the largest North American producer – Canopy Growth Corp.
The CAD$1.2 billion industry leader is not only a major shareholder in AusCann, but it also provides the company with royalty-free access to its expertise and intellectual property in the cultivation, manufacture, and supply of high-quality medicinal cannabis products.
These products will target palliative care symptoms, chemotherapy-induced nausea, treatment-resistant childhood epilepsy, and chronic pain.
The chronic pain market is the one that really caught my eye. That market alone is estimated by the company to be worth around $5.8 billion a year.
Clearly this would be an incredibly lucrative market for the company if it can bring medicinal cannabis to the masses.
The shared expertise that Canopy Growth Corp provides will be integral to making this a reality, as AusCann will have a battle on its hands to convince Australian doctors to prescribe medicinal cannabis ahead of opioids.
But pleasingly Canopy Growth Corp has been there and done that with its clinician education strategy.
AusCann aims to replicate this strategy through the provision of educational material and by bringing in Canadian prescribers and researchers to conduct education seminars.
Should you invest?
If you were ever going to invest in a medicinal cannabis company then AusCann would have to be the one. But at this stage it is definitely a high risk investment and unsuitable for the average investor.
All being well everything will go to plan and AusCann will become Australia's very own Canopy Growth Corp in a few years. But there certainly is a long road ahead for the company until that happens.
