In what may be a catalyst for ASX cannabis shares, a private company today gained approval to grow medicinal cannabis in Western Australia.
As reported by the ABC, the private medicinal cannabis company Elite Cannabinoids has received approval for growing a range of different cannabis strains at a secluded location 800km north of Perth.
High-level details for Elite Cannabinoids
Elite Cannabinoids recently gained its license for growing medicinal cannabis. The company will now be able to utilise 46 hectares of land in the production of cannabis. Additionally, the company expects to have an onsite pharmaceutical manufacturing facility. The combined enterprise should generate more than 60 jobs for the Gascoyne region.
In the words of Elite Cannabinoids CEO Sebastian Cox, "It will be one of the biggest medicinal cannabis facilities in the southern hemisphere."
Mr Cox further explained that the Gascoyne region was exceptional for the operation due to the high solar exposure, low biosecurity risks, and good water security.
The facility will be positioned to accommodate the demand of patients throughout Australia, with the added potential of expanding to international markets. As such, the company will begin with 253,000 cannabis plants in the first stage of operations. Production is anticipated to be in the works by 2023.
What does this mean for ASX cannabis shares?
Any correlation between Elite Cannabinoids approval and other companies is speculation. However, it does indicate there is still an existing demand for medical uses of cannabis. As mentioned in the ABC report, the Australian Institute of Health and Welfare estimates 600,000 Australians currently use it for medical purposes.
Australia legalised production and cultivation in 2016, which invoked pot stock mania in 2017. Since then, the sector has been rather quiet, with many shares falling back to reality. The big potential yet to be unlocked is legalisation for recreational use in Australia.
A few ASX-list players in the game include Ecofibre Ltd (ASX: EOF), Cann Group Ltd (ASX: CAN), Zelira Therapeutics Ltd (ASX: ZLD), and Althea Group Holdings Ltd (ASX: AGH).
Notably, the best performers in the last year have been Zelira and Althea. Shareholders would be happy with appreciations of 38% and 47% respectively. In contrast, the others have experienced falls of 40% or more. Internationally it is a very competitive landscape for these companies, but the market is still budding.
