The AusCann Group Holdings Ltd (ASX: AC8) share price has continued its positive run and pushed higher on Tuesday.
In morning trade the medicinal cannabis company’s shares are up 1% to 71 cents. This stretches its one-month gain to an impressive 36.5%.
Why is the AusCann share price on a high today?
This morning AusCann announced that its 50% owned DayaCann joint venture is to commence its first third party cannabis cultivation activity with Khiron Life Sciences Corp.
Khiron Life Sciences Corp is a Canadian listed medicinal cannabis company with core operations in Colombia.
DayaCann signed a memorandum of understanding with Khiron in October to collaborate on the development of medicinal cannabis products and market in Chile. This included cultivation, manufacturing, scientific and commercial activities that support cannabinoid medicines as a valued medicinal option.
According to the release, this agreement will see DayaCann provide cultivation and potentially manufacturing services to Khiron.
As a result, DayaCann is now preparing for cultivation of cannabis plant material to be used for patients and clinical trials, resulting in staged payments by Khiron to DayaCann of US$1.2 million (A$1.67 million).
AusCann’s interim CEO, Dr Paul MacLeman, was pleased to see the memorandum of understanding progress.
He said: “We are extremely pleased to see the MoU with Khiron progress towards the commencement of cultivation activity on the ground for the 2019-2020 season. This will result in supply of quality medicinal cannabis material to Khiron, allowing them to help Chilean patients. This is the first step in our collaboration, and we look forward to continuing to work together to address unmet medical needs in the Latin American market.”
What else is happening in the industry today?
The AusCann share price isn’t the only one that is in the industry pushing higher today. The MGC Pharmaceuticals Ltd (ASX: MXC) share price has stormed 7.5% higher after announcing the achievement of a number of key milestones for its European and Australian manufacturing and research operations.
Management believes these achievements “materially advances the Company towards commercialisation and delivering on its seed-to-pharma business strategy.”
The Creso Pharma Ltd (ASX: CPH) share price won’t be climbing higher today, though. It has placed its shares in a trading halt whilst it conducts a capital raising.
Should you invest?
While I think that one of two cannabis companies could have promising futures, I don’t believe they are ready for investment just yet. For now, I would suggest investors sit this one out and wait for them to generate meaningful revenues before even considering an investment.
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Returns as of 6th October 2020
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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