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Why this ASX cannabis stock is surging higher today

ASX cannabis stock Cann Global Ltd (ASX: CGB) has seen its share price rocket 8.70% higher today after a key announcement.

What is Cann Global?

Formerly Queensland Bauxite Limited, the company has undergone significant changes in recent years. It relisted on the ASX as Cann Global in late August and now has a market cap of $79 million. 

Cann Global is not to be confused with fellow ASX-listed pot stock Cann Group Ltd (ASX: CAN). Despite the similarity in terms of company name, there doesn’t appear to be an obvious link between the two cannabis companies.

What did Cann announce?

Prior to market open today, Cann announced further expansion of the company’s existing Asian operations. Cann has incorporated an Asian-focused subsidiary, Cann Global Asia, as part of the strategy. The new entity’s focus is on undertaking legal broad-acre industrial CBD hemp cultivation and processing.

Cann’s other priorities include legal indoor cannabis cultivation, and the acquisition of processing operations in Southeast Asia.

The Asian market represents a constantly-changing but lucrative market for Cann Global, and the Aussie group is seeking direct investment and financing to fund its Asia expansion plans.

Cann also said its Asian subsidiary has signed a deed of agreement with Sun Agriculture to expand into Laos.

The big boost for Cann’s operations is the ability to use its hemp licenses to cultivate and process CBD hemp in Laos. Sun has been issued two licenses allowing it to cultivate, purchase, process, retail and export hemp products. This could make Cann’s Asian subsidiary one of the first legal Aussie producers of CBD hemp in South-East Asia.

The subsidiary is planning to establish and operate an extraction and manufacturing plant in Laos.

Cann Global Asia will pay Sun 10% of the gross products sold locally or exported and sold.

What about this ASX cannabis company’s share price?

Cann’s share price was at a 52-week low of $0.023 per share prior to this morning’s announcement, but is now up 8.70% to sit at $0.025 per share. The company has only been relisted on the ASX since 28 August.

Cann is the latest in a long line of ASX cannabis stocks that have seen their share prices struggling in 2019, as investors have moved past the initial hype.

Where to now for Cann Global stock?

Cann is looking to enter the medicinal cannabis market in Thailand in the coming months and has advised it is currently seeking to provide extraction and manufacturing services for pharmaceutical grade products for retail in Thailand.

The company anticipates making an announcement regarding its Thailand expansion activities before the end of 2019

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Motley Fool contributor Kenneth Hall 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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