Why the Cann (ASX:CAN) share price has backflipped today

The Cann Group Ltd (ASX: CAN) share price has backflipped this morning after the company reported a strategic investment. Here's why.

| More on:
cannabis asx share price represented by lots of cannabis leaves against bright blue background

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Cann Group Ltd (ASX: CAN) share price has backflipped this morning after the company reported a strategic investment. At market open, the Cann share price fell to an intraday low of 59.5 cents. However, following release of the announcement during morning trade, Cann shares then stormed more than 9% higher to 65 cents.

At the time of writing, the company's shares have partially retreated to currently trade at 61.5 cents.

What's driving the Cann share price?

The Cann share price jumped higher today following news of the company's latest investment.

According to this morning's release, Cann Group has invested CAD$1 million into a CAD$5 million capital raise from Iuvo Therapeutics Limited.

Based in Germany, Iuvo is a leading cannabinoid therapy importer and distributor, holding GMP certification licences. The company orders medicinal cannabis products and delivers them to over 20,000 pharmacies across Europe.

The investment will translate into Cann holding roughly 2% of Iuvo's issued ordinary shares. Once the capital raise is complete, Iuvo will use the funds to expand its sales and marketing channels, and help build a new manufacturing and formulation facility in Malta.

In return for the strategic investment made, Cann will have exclusive rights to supply Iuvo with its external medicinal cannabis extracts. However, from 31 December 2021, the existing agreement will transfer over to preferred, non-exclusive supplier status.

Supply order

As a result of the partnership, Iuvo placed an initial order with Cann Group for 19,000 units of the company's 30ml extract products. Shipment to Germany is due to be completed some time next month, pending regulatory clearances.

In addition, Cann stated that being compliant with the German monograph for cannabis extracts, it will be one of the first products of its type to market.

Management commentary

Cann Group CEO Mr Peter Crock highlighted the importance of the supply agreement by saying:

We believe this initial order represents the largest shipment of product produced in Australia for export markets and is a tangible sign of Iuvo's commitment to servicing its growing customer base with safe, quality GMP standard medicinal cannabis.

Adding to Mr Crock's comments, Iuvo managing director Mr Daniel Seidl said:

This strategic investment will enable Iuvo to expand its patient reach throughout Germany and Europe. Cann Group's extracts are manufactured from Australian GMP Cannabis flower, providing regulatory, investment and supply security in a market with superior pharmaceutical standards.

Cann share price snapshot

The Cann share price is down 35% since this time last year, reflecting a disappointing result for long-term shareholders.

By late October last year, the company's shares had fallen to a 52-week low of 29 cents. Since then, the Cann share price has only partially recovered. In contrast, last January, its shares were swapping hands for as much as $1.84 a piece.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

asx share price boosted by us investment represented by hand waving US flag across winning athlete
Best Shares

Here are the best-performing ASX 200 shares since the US election result

We reveal the 10 ASX stocks that have had the highest share price gains since the US Presidential election.

Read more »

A young man sits at his desk working on his laptop with a big smile on his face due to his ASX shares going up and in particular the Computershare share price
Share Market News

5 things to watch on the ASX 200 on Friday

A decent finish to the week is expected for Aussie investors.

Read more »

A smiling man at a shop counter takes payment from a female customer, with racks of plants in the background.
Best Shares

Here's why I think Wesfarmers shares are a great buy for any ASX investor

I argue that Wesfarmers offers investors both growth and income potential.

Read more »

A golfer celebrates a good shot at the tee, indicating success.
Share Market News

Here are the top 10 ASX 200 shares today

ASX investors finally enjoyed a win this Thursday...

Read more »

a man sits back from his laptop computer with both hands behind his head feeling happy to see the Brambles share price moving significantly higher today
Industrials Shares

Up 39% in a year, is there more growth to come for this ASX 200 share?

IML Equity Analyst Josh Freiman shares his views on a major ASX 200 industrial stock.

Read more »

Man looking at his grocery receipt, symbolising inflation.
Share Market News

What the latest US inflation print means for ASX 200 investors

The ASX 200 is likely to benefit if the US Fed cuts interest rates again in December. But will it?

Read more »

guy helping girl invest in shares and dividends
Opinions

5 ways for investors buying ASX shares to stay focused during economic uncertainty

AMP Chief Economist, Dr Shane Oliver, offers advice on how to handle the Trump factor.

Read more »

A worried man holds his head and look at his computer.
Share Fallers

Why Graincorp, Light & Wonder, Orica, and Wildcat shares are falling today

These shares are having a tough time on Thursday. But why?

Read more »