Why this ASX cannabis share is charging higher today

The Cann Global Ltd (ASX: CGB) share price has charged higher after the cannabis company made an announcement…

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The Cann Global Ltd (ASX: CGB) share price has been a strong performer on Tuesday.

At the time of writing the cannabis company's shares are up 4.5% to 2.4 cents. This follows the release of an announcement this morning.

What did Cann Global announce?

Cann Global announced that it has secured further institutional support from New York based L1 Capital Global Opportunities Master Fund.

According to the release, the company has agreed to issue 2.6 million secured convertible notes in order to raise $2.22 million after costs.

These notes may eventually be redeemed at various intervals at a 10% discount to the previous 5-day VWAP or in full at a fixed price of $0.04 per share.

Cann Global will also issue 25 million fully paid ordinary shares to the investor. However, these shares are being issued as collateral for the investment under the notes. The company stressed that they are not additional shares being issued to the investor by way of a fee.

Why is Cann Global raising funds?

The release explains that the proceeds will be used towards the further build-up of inventory and production. This is in order to meet the growing demand on the existing inventory.

It will also be used for general working capital and the evaluation and advancement of growth initiatives. The latter includes its recently announced expansion of activities in Asia.

Elsewhere in the cannabis industry on Tuesday, gains are being made by a number of Cann Global's rivals. The Althea Group Holdings Ltd (ASX: AGH) share price is up 1.5% and the Auscann Group Holdings Ltd (ASX: AC8) share price is up almost 2% at the time of writing. This is despite there being no news out of either company.

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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