Auscann Group Holdings Ltd (ASX: AC8) shares have emerged from their trading halt this morning and rocketed almost 28% higher to an all-time high of 94.5 cents.
This brought the medicinal cannabis company's one-month return to almost 120%.
Why did it shares rocket higher?
This morning AusCann announced that its Chile-based 50:50 joint venture has secured a further licence for the cultivation of medical cannabis crops at its Chilean facility.
This licence allows its DayaCann business to commence cultivation activities immediately and makes it the only licensed producer in Chile. Management believes this gives the company a key competitive advantage in a growing market whose patient demographics are similar to those found in Australia.
Furthermore, it is a major step forward in its aim of being fully integrated across the full spectrum of the Latin America medicinal cannabis supply chain.
The company anticipates the planting of the next crop to commence before the end of the calendar year, with the harvest expected to be undertaken during the first-half of 2018.
Should you invest?
I continue to believe that AusCann is one of the best-positioned medicinal cannabis companies in Australia and could have a bright future ahead of it if its usage becomes mainstream.
Furthermore, with recreational use being legalised in Canada and other countries tipped to follow, demand for cannabis could rise significantly in the future.
This arguably puts growers like AusCann in a solid position to generate meaningful revenues. Especially given its strong ties with Canopy Growth Corp in Canada.
Canopy was in the news recently after alcoholic beverage giant Constellation Brands agreed to acquire a 10% stake in the company for almost C$250 million. According to its management, it sees the recreational cannabis market as a lucrative opportunity in the future.
But having said that, AusCann's shares do have a significant amount of future growth built into them. In light of this, I would hold off an investment until its revenues start to justify the premium. The same applies to fellow hot pot stocks Creso Pharma Ltd (ASX: CPH) and Cann Group Ltd (ASX: CAN).
