Federal Government in Australia recently announced about its aim to ease the import laws of medical marijuana which is used to treat patients with chronic or painful illness. Post the announcement, medical cannabis stocks have witnessed a significant uproar as the move now aims to provide a faster Access to Medical Cannabis. Currently, the medication is sourced from overseas on a case-by-case basis. However, with the new scheme there would be an interim fast track on importation while local cultivation will be increased to meet the demand. However, people might still not be able to get a prescription so easily and also the Australian Medical Association (AMA) has urged caution about the sale of medicinal cannabis. Various companies are now positioning themselves for an entry in the Australian market given the recent drive. Let us have a look at some of the ASX listed companies with the cannabis interest. 

MMJ Phytotech Ltd

MMJ Details
Expansion efforts: MMJ Phytotech Ltd (ASX: MMJ) announced that its wholly-owned Switzerland-based subsidiary, Satipharm AG has secured Pharmaceutical Central Numbers (PZN codes) for its 10mg and 50mg Gelpell-CBD Microgel Capsules, enabling both products to be sold in all pharmacies throughout Germany. Meanwhile, MMJ's wholly-owned subsidiary United Greeneries Holdings Ltd has executed an agreement with Cowichan Tribes in respect to the leasing of a 13-acre land package located adjacent to the company's existing Duncan Facility which will add additional 20 acres of greenhouse space further boosting production capacity to approx. 50,000 kg per annum by 2020.  By the end of 2017, dried cannabis buds’ production capacity is expected to be around 8,500 kilograms. MMJ lately provided a secondary trading notice and issued ordinary fully paid shares upon the exercise of options. In the past three months’ trading session, MMJ stock price has recorded an almost 200% gain peaking to its 52-week high levels (as at March 23, 2017). MMJ looks "Expensive" at the current share price of $ 0.66
 

MMJ Daily Chart (Source: Thomson Reuters) 

Auscann Group Holdings Ltd

AC8 Details
Attractive joint ventures: The recent regulatory move has enabled Auscann Group Holdings Ltd (ASX: AC8) to be a part of the recent boom for pot stocks and the group is all set to lead the Australian cannabis market with the support of its joint-venture with Daya Foundation in Chile and Canopy Growth in Canada. Prior to the announcement, AC8 was required to have medical practitioners pre-authorized for a particular medicine. However, now it can speed-up its application to becoming an approved supplier for the products by importing from its partner Canopy Growth Corp. It targets to eventually have Australian grown medicines. 

Auscann’s Facility in Chile (Source: Company Reports)
 
In its recent half-yearly financial report, AC8 recorded a net loss attributable to members of $533,604, up 221%; while the company undertook a capital raising of $5 million. Given the recent boost, the stock has witnessed a 227.27% gain in last three months (as of March 23, 2017). We give a "Hold" recommendation at the current share price of $ 0.76
 

AC8 Daily Chart (Source: Thomson Reuters) 

Stemcell United Ltd

SCUDetails
Strengthening management: Stemcell United Ltd (ASX: SCU) recently appointed Nevil Schoenmakers as its strategic advisor in order to pursue opportunities in the Medical Cannabis sector complementing its traditional medicine operations. The global medical cannabis market is expected to reach $55.8 billion by 2025. SCU forecasts strong synergies with existing business including the ability to leverage existing investments and expertise in plant extract technology as part of its new venture. The newly appointed advisor is referred as the King of Cannabis and he brings a wealth of sector experience to SCU. For first half financial year, SCU has recorded a 140% increase in the net profit attributable to members of $174,277. SCU has already recorded a 1507% gain in last three months (as of March 23, 2017) in its stock price. On the other hand, the stock slipped 11.11% on March 24, 2017 as the group responded to ASX queries relating to its intention of entering the medical marijuana sector as revealed by updates released in March 2017. The response in terms of leveraging opportunities by combining Dendrobium extract business with medical cannabis business and use of existing plant extraction and chromatography techniques in proposed business might not have appealed the market. Given some level of uncertainty and current trading conditions, we give an "Expensive" recommendation at the current share price of $ 0.19
 

SCUDaily Chart (Source: Thomson Reuters) 

Queensland Bauxite Ltd

QBLDetails
Acquired stake in Medical Cannabis: Even minerals explorer, Queensland Bauxite Ltd.’s (ASX: QBL) has ventured into the sector at the back of the recent boom, and acquired a 55% stake in unlisted public company Medical Cannabis Limited (MCL) which has been reported to have an excellent market positioning for the anticipated rapid economic growth in the medical Cannabis sector and hemp seed food industry in Australia and globally. The group expects a revenue stream from future royalties on licensed hemp varieties as well as from being a premier supply hub for bulk and packaged seed for the local and international marketplace. The Board of QBL announced that the Board of Food Standards of Australia and New Zealand has approved a change to the Australian Food Code in order to allow the consumption of hemp seed foods in Australia. In the past one-month trading session, QBL has recorded a 233% increase. However, the stock has fallen 8% on March 24, 2017 owing to some volatility. We believe that the stock is "Expensive" at the current share price of $ 0.023
 

QBLDaily Chart (Source: Thomson Reuters) 

Creso Pharma Ltd

CPHDetails
New sales agreements and raising fresh capital: Creso Pharma Ltd (ASX: CPH) recently signed binding Letter of Intent (LOI) with Brazil-based market-access and distribution service company, Sin Solution, which will help CPH foray into the vast Latin American market. Creso and Sin will work together on the commercialization of Creso's premium Swiss Vitamin nutraceuticals and cannabinoid-derived nutraceuticals products in Brazil. Sales of Creso's products in Brazil will target the privately insured middle class population of 60 million people leading to a potential market of more than $800 million. On the other hand, Creso subsidiary Hemp Industries recently received regulatory approval in the Czech Republic for its new range of hemp extract-based THC free products called diCBDium. Meanwhile, post the recent stock price rally, Creso Pharma is being said to have raised $5.6 million with the help of EverBlu Capital and the proceeds are expected to be directed towards fast-tracking the commercialisation of animal and human health nutraceutical products, and expansion into new regions. We have earlier rated the stock a “Speculative Buy”. The stock has now been under a trading halt since March 23, 2017 pending release of an announcement and is expected to resume normal trading on March 27, 2017.
 

CPH Daily Chart (Source: Thomson Reuters) 

Zelda Therapeutics Ltd

ZLD Details
Clinical trial programme in Chile: Zelda Therapeutics Ltd.’s (ASX: ZLD) stock has surged 141.18% in last one month (as at March 23, 2017). The group lately announced about its move to launch a clinical trial programme in Chile in the second half of this year, while the trials will target insomnia and eczema. ZLD will also leverage the relationship with Auscann through joint venture DayaCann that has the license to grow medical cannabis in Chile. We give a “Hold” recommendation at the current price of $ 0.083
 

ZLD Daily Chart (Source: Thomson Reuters)
 
Although the recent movements in the sector do give a rosy picture, the prospects are highly dependent on the regulatory changes. At the same time, it might be too early to call it a bubble. A wait and watch approach coupled with having a balanced portfolio with some investment in the sector might be a safer bet.

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