Shares in Cann Group Ltd (ASX: CAN) rose to fresh highs for the year yesterday. The Cann Group share price rose 22.55% during the day to close at $1.68, up significantly from Friday’s close of $1.36.
The Cann Group share price has since fallen 8.31% so far in today’s trade, but overall the shares have been on a sharp upward trajectory this year. Having closed 2019 at 63 cents, the medical marijuana company has recorded gains of 144.44% in 2020 thus far.
Cann Group background
Cann Group aims to become a leading developer and supplier of cannabis, cannabis resin, and medicinal cannabis products. The group currently has 2 cultivation facilities from which more than 50 successful harvests have been completed. All required licenses for cultivation, production, manufacture, import, and export are held by Cann Group.
Medicinal cannabis resin extraction
A fortnight ago, Cann Group announced that extraction activities were underway for its first batches of medicinal cannabis resin. Manufacturing partner IDT Australia Limited (ASX: IDT)’s solvent extraction facilities have been utilised in respect of cannabis cultivars grown at Cann Group’s cultivation facilities. This represents the first commercial scale resin extraction from Australian grown cultivars.
The extracted resin will be used as an active ingredient to produce medicinal cannabis oil products and made available for purchase as an active pharmaceutical ingredient. Cann Group is working with IDT Australia to formulate and pack cannabis oil products. The products will undergo stability testing prior to a targeted commercial release in March. This represents a key step in allowing finished products to be produced and released into the market at scale.
The plan is for extracted resin to be formulated into a full range of medicinal cannabis finished dosage form products. Formulations including high THC, high CBD, and balanced formulations are planned. IDT Australia will formulate and pack the products, which will be made available in Australia to Special Access Scheme patients. Cann Group also intends to position the products for export to overseas markets.
Cann Group entered a national distribution agreement with Symbion Pty Ltd in November. Under the agreement, Symbion will distribute medicinal cannabis products imported and produced by Cann Group for supply to approved Special Access Scheme patients. Symbion supplies healthcare services and products to more than 4,000 pharmacies and 1,300 hospitals across Australia.
The prospect of the company moving into the commercialisation phase of the business has tantalised investors who are eager to see the company execute on its plans to satisfy domestic demand and develop valuable export pathways.
Although still well up from last years lows, Cann Group shares have retreated somewhat from yesterday’s highs today and are currently trading at $1.55. Long-term investors are no doubt hoping Cann Group can successfully execute on its plans and boost the share price above last year’s highs of over $2.50.
The post The ASX cannabis share hitting fresh highs in 2020 appeared first on Motley Fool Australia.
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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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