Why the Auscann Group Holdings Ltd share price is flying high today

One of the biggest movers during morning trade on Tuesday has been the Auscann Group Holdings Ltd (ASX: AC8) share price.

At the time of writing the medicinal cannabis company’s shares are up 8% to $1.57.

Why are its shares on a high today?

This morning AusCann announced that it has received an import permit under its existing import licence and will soon receive finished cannabis oils from its major shareholder, Canada-based medicinal cannabis giant Canopy Growth Corporation.

According to the release, the company will initially import Canopy-supplied AusCann branded products for chronic and neuropathic pain control known as AC 5:5, AC 0:9.5, and AC 15:0. These names represent the ratio of tetrahydrocannabinol (THC) to cannabidiol (CBD) in each product.

In addition to this, the two parties are working together on an arrangement which will see Canopy supply AusCann with Spectrum Cannabis branded products for distribution into the Australian market alongside existing AusCann products. Spectrum Cannabis is Canopy Growth’s international medical brand.

CEO Elaine Darby believes that this latest development, and its existing strategic partnership with Tasman Alkaloids, puts AusCann in a position to be the leading supplier of affordable, effective, and clinically-validated cannabinoid medicines to the Australian market and select international markets.

Judging by the share price reaction today, I think it is fair to say that the market agrees with this view.

As do I. Which is why I think AusCann could be a good option for investors that are willing to make a patient buy and hold investment, just ahead of industry peer Cann Group Ltd (ASX: CAN).

It would, however, be a reasonably high risk investment as the industry is still in its infancy. But given the huge market opportunity in the chronic pain market alone, it certainly provides a decent risk/reward in my opinion.

Three more shares on the rise and in the buy zone are here.

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Motley Fool contributor James Mickleboro 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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