Cannasouth boss Mark Lucas. Photo / NZME
Medical cannabis company Cannasouth will use the funds generated by a raise of capital to take full ownership of its growing and manufacturing business.
The company says it has signed a $ 3.54 million deal to buy the remaining 50 percent stake in Cannasouth Cultivation, currently a joint venture with Aaron Craig and his family interests.
Cannasouth Cultivation has a medicinal cannabis cultivation and processing facility with equipment already installed and checked.
“There is strong global demand for cannabis flowers of the highest pharmaceutical quality,” said Cannasouth Managing Director Mark Lucas.
“The acquisition date will bring all future income from the grow facility to the Cannasouth Group’s P&L. It will also allow the company to control all aspects of the grow operations.”
In a separate agreement, Cannasouth will acquire the remaining 40 percent of the shares in Hawke’s Bay-based product maker Midwest Pharmaceuticals, which it does not yet own.
The purchase price of $ 1.026 million also includes Cannasouth’s acquisition of all shareholder loans granted to the company by sellers Mark Balchin and Greenmeadows Health.
“The Midwest acquisition provides Cannasouth with the opportunity to streamline operations and generate additional revenue from existing operations while positioning the business for GMP (Good Manufacturing Practices) certified medical cannabis manufacturing,” said Lucas.
Cannasouth said it would make a capital increase in the near future to pay for the acquisitions. She hired CM Partners to advise on both transactions and on raising capital.