Is medicinal cannabis another boom and bust industry?
New Zealand is in the midst of a “green rush” following the Government’s decision to pass legislation last year paving the way for the creation of a local medicinal cannabis industry. Kiwi companies are now racing to be in line to capitalise on the legislative change. Each company has a unique approach with different forms of ownership, strategy and direction, but all are asking people to invest in the future of their company. In what could potentially be a crowded market, how do savvy investors identify which company to back?
While the Misuse of Drugs (Medicinal Cannabis Amendment) Act came into effect in December 2018, the details are still being finalised. The Ministry of Health is currently leading work to develop the Medicinal Cannabis Scheme which will enable domestic commercial cultivation and manufacture of medicinal cannabis. The Scheme has three main elements: a licensing regime; introduction of standards for the quality of medicinal cannabis products and all stages of production; and reviewing how cannabis is prescribed. The Ministry of Health says it is aiming to have the standards available for consultation by July this year.
Medicinal cannabis is in demand overseas in countries to have already legalised the cultivation, production and use of the drug. And as scientists learn more about its therapeutic benefits, the demand is expected to increase. Cannabidiol (CBD), the chemical compound found in the cannabis plant, doesn’t get users high, instead it offers pain release for people suffering from a range of conditions. Data from American-based market research and consulting company, Grand View Research’s study conducted in April 2018 estimates that by 2025 the global cannabis market will reach USD $150 billion (NZ $80.4 billion).
It’s understandable that Kiwi companies are keen to break into the market, particularly as there are a number of factors that will contribute to New Zealand holding a strong global position within the medicinal cannabis industry. Globally regarded for pristine landscapes, climate, fertile soils and sustainable agricultural and farming practices, New Zealand is an ideal climate for growing medicinal cannabis. We also have the advantage of world-leading agronomic research and cropping expertise.
It’s not just companies getting swept up in the green rush, investors are getting excited about the opportunity to be involved in a promising emerging industry. However, some investment companies are suggesting caution, saying that investing in an industry that doesn’t yet exist, with legislation that is still to be implemented, is risky.
So, what sets Medical Kiwi apart from the pack? Co-founder and Chairman, Aldo Miccio believes that Medical Kiwi is well on its way to becoming a pioneering medicinal and wellbeing cannabis research and manufacture company. “We have secured land for a purpose-built, state-of-the-art indoor cultivation and medical research facility which will also include product processing manufacturing capability. We have a strong science-based team and are developing global networks to help ensure that the company is extremely well placed to begin generating revenue in early 2021. All of that puts us ahead of what is still a very small number of active participating entities in the medicinal cannabis space in New Zealand.”
Co-founder and Director, Peter Win, states the company’s business values are underpinned by four ticks: the staff have to benefit; the company has to benefit; the community around us has to benefit; and the clients have to benefit. “It’s a simple idea, but I’ve seen time and again situations where businesses either don’t have these four simple actions as a cornerstone of their values or don’t stand by them and, as a result, struggle.”
So what do the four ticks mean for Medical Kiwi? “Our staff will be well paid and appreciated. Ideally we’d like to look at making four day working weeks a possibility. There has to be a return for the shareholder or there is no company. The community around us are our clients so it makes sense to do the right thing. And if our clients don’t believe in the product or benefit from it then the business will have a very short life cycle,” says Peter.
If you’re interested in finding out more about how you could invest in Medical Kiwi, please download our Information Memorandum for investors.