There are a lot of options in the medicinal cannabis industry for investors to choose from at present.
But as far as one fund manager is concerned, the one to buy is Cann Group Ltd (ASX: CAN).
What is Cann Group?
Cann Group was the first Australian company to receive a licence and subsequent permit from the Federal Government to cultivate medicinal cannabis in Australia.
It aims to cultivate and manufacture a range of medicinal cannabis products for patients in Australia. These extracts will be provided to researchers and prescribing clinicians to investigate, understand and optimise the therapeutic effectiveness of medicinal cannabis for specific medical conditions.
One of its competitive advantages is that through its relationships with organisations both in Australia and overseas, Cann has obtained elite genetic materials to develop specific genetic strains by utilising advanced breeding programs.
It believes this positions it to be a leading developer and supplier of cannabis, cannabis resin, and medicinal cannabis products.
Why is Cann the one to buy?
According to Paragon Funds Management's March update, its analysts appear confident that Cann Group is well-positioned to achieve its long-term guidance following the signing of a five-year offtake agreement with Canada's Aurora Cannabis.
That agreement will see the C$11.5 billion cannabis giant purchase all excess cannabis-based products not required by patients in Australia and is expected to result in the company achieving total revenue of $180 million in FY 2021.
Another reason the fund manager likes Cann above its local peers Auscann Group Holdings Ltd (ASX: AC8) and Creso Pharma Ltd (ASX: CPH) is that it believes its hefty cash balance and offtake agreement means it is fully-funded to its first cash flows.
I think Paragon Funds Management makes some great points and it could be worth keeping a close eye on Cann's progress in the coming months.
