But some sectors inevitably performed better than others. That's capitalism for you. And the sector we're looking at today – ASX cannabis shares – certainly had its fair share of both winners and losers.

So let's check out how this popular sector fared in the financial year that has just passed us by.

How did the top ASX cannabis shares fare in FY21?

Below is a table of how the ASX's top cannabis shares performed in FY2021:

As you can see, it was something of a mixed bag. If you were lucky enough to hold Creso Pharma shares over the financial year, you would have enjoyed a very pleasing gain of more than 350%. However, if you were unfortunate enough to have money invested in Ecofibre, you instead would have had to cop a nasty near-70% loss for your time, effort and capital.

Highs or red eyes for ASX cannabis?

While each company had its own individual trials, triumphs and tribulations, it's worth noting this is a sector that often moves in tandem. This is due to the unique but uniform challenges ASX cannabis shares all face. The most prominent of these is, of course, the legal status of cannabis itself.

Whilst recreational use of cannabis/marijuana is still illegal in many countries, including Australia, recent changes have been happening.

Perhaps at the forefront of these changes is the ever-evolving regulatory landscape in the United States. As it currently stands, 18 US states currently allow recreational use of cannabis.

Most recently, we saw the state of New York 'legalise it' back in April. This saw an immediate boost to the values of ASX cannabis shares despite the Australian market implications being limited.There is also debate in Mexico over the potential legalisation of cannabis. If this went ahead, it could open up a market of nearly 130 million people.

Another headache…

On the other hand, ASX cannabis shares have seen some setbacks in this arena as well. Last October, New Zealand held a 'reefer-rendum' on legalising recreational use of cannabis across the ditch. It failed, meaning that, at least for now, recreational use of cannabis remains illegal in the Land of the Long White Cloud. This was a big setback for the ASX cannabis sector here in Australia.

But, as you may have noted, there were some clear winners in this space regardless. As we noted earlier, Creso Pharma was the top performer in its sector.

Creso managed to capture investor attention through its acquisition of Halucenex Life Sciences. Halucenex specialises in psychedelic compounds and stands to benefit if the US state of California legalises psilocybin (the active drug in 'magic mushrooms'). This is still currently being debated in the Californian Congress but investors certainly seem optimistic.

It's also worth noting that some of the worst-performing ASX cannabis shares of FY21 were once known as some of the best performers.

Companies like Althea and Xalra were top-performing companies as recently as last year. But the tide has definitely turned for some of these companies' share prices. Mostly, complications surrounding the pandemic, as well as regulatory issues, are mostly to blame here for the woes of Ecofibre and Cann Group in particular.

The post Blazing it? How the top ASX cannabis shares performed in FY21 appeared first on The Motley Fool Australia.

CBD, which occurs naturally in marijuana plants, can help relieve pain, anxiety, insomnia and reduce cancer-related symptoms and side effects. Unlike THC, which is the main psychoactive cannabinoid found in marijuana, CBD does not make users 'high'. 

The TGA's decision means adults will be able to purchase a maximum daily dose of 150mg of CBD over-the-counter in oral and sublingual formulations. CBD topical creams and vaping products will continue to require a doctor's prescription.

What does this mean for ASX cannabis shares?

The change is a positive development for ASX cannabis shares, which have been lobbying for easier access to medical marijuana products. But don't rush out to your nearest pharmacy just yet — no specific CBD products have been approved for sale so far. 

Australian cannabis companies are working hard to get products approved for sale, and sales of CBD products are expected to boom over the coming months as products come to market. This will create a significant opportunity for ASX cannabis shares. We take a look at how some of the largest ASX cannabis shares are performing in light of this development. 

Althea Group Holdings Ltd (ASX: AGH) 

Althea is a producer, supplier, and exporter of pharmaceutical-grade medicinal cannabis products. Currently operating in Australia, the United Kingdom, and Germany, the company has plans to expand into emerging markets throughout Asia and Europe. The Althea share price has been on the rise since the TGA's decision was announced in December, gaining 23% from a low of 42 cents. Shares in Althea are currently trading at 52 cents apiece. 

Althea has welcomed the TGA's decision and is exploring registration options for current and future products. Even before the decision, Althea was performing strongly. In the company's December quarter, Australian revenues increased 29% (compared to the September quarter), and UK revenues grew 90% month on month in December. 

Germany's health department granted all necessary licences for the sale and distribution of Althea products in Germany late last year. An initial shipment of products is en route to the country. Althea also operates a manufacturing plant in Canada, which entered an agreement to manufacture three cannabis-infused beverages during the December quarter.

Expansion into South Africa is on the cards, with a wholesale supply agreement signed under which Althea-branded products will be imported for sale and distribution in the country. The first shipment of products under the agreement is expected to be delivered in the second quarter of 2021. This represents a significant opportunity for Althea, with the South African legal medicinal cannabis industry expected to be worth US$667 million by 2023. 

Auscann Group Holdings Limited (ASX: AC8) 

Auscann has a pipeline of proprietary cannabinoid-based pharmaceutical products in development and has voiced its support for the TGA decision to make cannabinoid products available over the counter. The decision means a number of Auscann's CBD products in development have the potential to be registered as pharmacy-only medicines.

CEO Nick Woolf has said, "the TGA decision is a positive outcome for the industry. We are well advanced in developing compliant CBD-only products that could be registered as over-the-counter medicines." 

Auscann is in the process of acquiring Cannpal Animal Therapeutics Ltd (ASX: CP1), a move that will add breadth and depth to the product line.

In the December quarter, Auscann completed a restructuring program to reduce cash burn, with expenditure focused on value-adding R&D. Utilising its state-of-the-art medicinal cannabis facility in Western Australia, Auscann is advancing the development of a hard-shell capsule product containing up to 150mg of CBD. This CBD-only product candidate is being formulated for approval as a pharmacy-only medicine.

Auscann's share price has also risen off the back of the TGA decision, gaining 28% since 1 December 2020. Auscann shares are currently trading at 18 cents a share. 

Zelira Therapeutics Limited (ASX: ZLD)

Zelira is a therapeutic medicinal cannabis company with a portfolio of proprietary revenue-generating products and a pipeline of products undergoing clinical development.

In the December quarter, Zelira launched its HOPE products in Australia, which are targeted at patients with autism. Available through the TGA's special access scheme, the products are now working their way via authorised prescribers into the market. A new licencing deal was also announced to distribute HOPE products in Washington DC late last year. Washington has reciprocity arrangements in place with 32 other US states, meaning patients in these states will be able to legally purchase HOPE products at an approved Washington dispensary. 

Zelira announced the launch of its proprietary CBD toothpaste in December, which will be distributed in the USA through retail stores such as Bed Bath & Beyond and e-commerce platforms such as Amazon. Discussions regarding distribution in networks outside the US are ongoing.

Sales of Zelira's products have been in line with forecasts, although they were impacted by COVID lockdowns. Increasing sales are forecast as the company builds market awareness of its products and market conditions improve thanks to the roll-out of the COVID vaccine internationally.

Zelira's share price spiked late last year following the TGA's announcement but has since fallen back to levels seen in November 2020, with shares currently trading at 7.6 cents. 

What's next for the medical marijuana industry? 

The availability of CBD products over the counter is a step towards increasing social acceptance and reducing the stigma often associated with medical marijuana products.

CBD products are expected to start to become available in the coming months – each product that goes on sale requires individual approval by the TGA. The market is expected to be competitive, with early entrants potentially benefiting from a first-mover advantage.

For ASX cannabis shares, the race is on to make a mark in the over-the-counter CBD space. 

The post CBD to be sold in pharmacies, ASX cannabis shares react appeared first on The Motley Fool Australia.

In morning trade the medicinal cannabis company's shares are up 14% to 24 cents.

What did AusCann announce?

This morning AusCann announced that it will be changing its Chief Executive Officer upon the completion of the acquisition of CannPal Animal Therapeutics Limited (ASX: CP1).

According to the release, the Founder and Managing Director of CannPal, Layton Mills, will lead the combined company. This decision was reached following a combined meeting of the Boards of CannPal and AusCann and will take effect from the completion of the transaction.

AusCann's current CEO, Nick Woolf, has decided to tender his resignation, but has agreed to stay with AusCann as Interim CEO until the transaction completes. After which, he will stay on in an advisory capacity to assist with an orderly transition until 30 June 2021.

Mr Woolf was only appointed CEO of AusCann in August of last year.

AusCann's Chairman, Max Johnston, commented: "Since Nick joined us in August 2020 he has been instrumental in moving forward the development of a robust pipeline with advancement of studies of the existing hard-shell capsules based on the Neuvis platform, initiating formulation work of a novel CBD only variant and engaging an experienced US-based team to develop additional product candidates addressing unmet health needs."

"In addition to this, Nick has also taken significant steps toward making AusCann more cost effective and efficient in utilisation of its assets and operations. We thank him for all his efforts in taking AusCann forward during his tenure whilst also progressing the proposed acquisition of CannPal. I am pleased that Nick has agreed to provide continuity during the prospective transition and wish him well in his future endeavours," he added.

The outgoing CEO, Mr Woolf, commented: "The combination of AusCann and CannPal has clear synergies including multiple revenue streams and the leverage of data in the animal health space for the development of human medicines and vice versa. Both companies have established a strong network of alliances that should accelerate success."

"I believe that the medicinal cannabis industry in Australia has significant growth potential and the combined company will be well placed to benefit from this," he concluded.

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But the Australian medical marijuana industry is building momentum, continuing its growth trajectory in 2020 despite the impacts of COVID-19. According to Freshleaf analytics, the market tripled in size over 2020 with 30,000 active patients and $95 million in annual revenue. 

As the industry matures, competition is increasing. The number of available products has doubled in the last year to 150, putting pressure on prices. Prices have trended downward, and are now on par with more mature markets such as Canada. With price decreases, patient doses have increased, while average spend remains static. 

The industry got a boost in September when the TGA down-scheduled cannabidiol (CBD). This will allow Australian patients to purchase CBD products from a pharmacist, without needing a prescription.

But in New Zealand, voters were against a proposal for greater legalisation and decriminalisation of recreational cannabis floated in October, albeit by a narrow margin. This will be a blow to the industry which may have hoped for a potential widening in customer base.

In more positive news, the UN voted to remove cannabis and cannabis-related substances from Schedule IV of the international treaty governing narcotic drugs in early December. 

ASX cannabis shares saw mixed results over 2020. While some outperformed the broader market, others lagged. By comparison, the S&P/ASX 200 Index (ASX: XJO) is up around 1% over the year.

Let's take a look at how 5 of the best ASX cannabis shares have performed in 2020.

1. Zelira Therapeutics

Small cap Zelira outperformed following its merger with US-based medicinal cannabis product developer Ilera in late 2019. The merger provided Zelira with direct access to the US market where revenue is being generated by the recently launched HOPE brand of cannabis formulations. Zelira entered into a licensing agreement in December to allow for distribution in the Washington DC market. 

Zelira has previously licenced HOPE in Pennsylvania and Louisiana and remains focused on expanding distribution across approved markets in the US. With its sights firmly set on becoming a profit generating pharma company, Zelira completed a $4.58 million capital raise earlier this year to fund the launch of multiple products into global markets. 

2. Althea Group 

Althea had a bumper year of share price growth compared to some pot sticks. The company is in the product distribution game, connecting patients and prescribers via its Althea Concierge app.

Active in Australia and the UK, and Althea recently started distributing to Germany. The company has also entered the manufacturing sector with its Peak Processing Solutions facility in Canada, which is capable of processing cannabis infused edibles and nutraceuticals. 

In December, Althea reported 11,841 Australian patients, up from 3688 a year earlier.  The aim is to have 30,000 patients by 2021. With 810 healthcare professionals prescribing Althea products in Australia, revenue is growing – it was up 48% month-on-month in November to $110,378. This has been reflected in an increase in the Althea share price over 2020. 

3. Cann Group

The Cann Group share price, on the other hand, is finishing 2020 largely flat. A July capital raise was conducted at a 50% discount to the (then) share price of 82 cents, causing the price to plummet. Key stakeholder Aurora Cannabis then sold its 11.84% shareholding in the company in October in off-market trades to undisclosed buyers. 

In more positive news, the company finally executed debt documentation in December. This will provide funding of $50 million to complete construction of the first stage of the company's production site near Mildura.

A staged approach to construction of the facility was adopted in response to the global oversupply of cannabis late last year. Cann Group is choosing to initially focus on meeting Australian domestic demand while reducing operating expenses as it seeks to transition to profitability. 

4. Ecofibre

Ecofibre saw its share price decline over the full year as investors shied away from the hemp products producer. The company listed on the ASX in March 2019 at $1 per share and was trading above $3 in late 2019.

The share price has since, however, retraced its steps. Ecofibre's US based Ananda Health business has been significantly impacted by COVID-19, lawlessness in key US markets, and industry changes in the US CBD market. Revenue for the first quarter of 2021 was significantly down on the prior corresponding period. Ecofibre has advised the best it can expect is a breakeven profit result in FY21. 

5. Auscann Group

The Auscann share price spent most of 2020 in the mid teens but spiked in early December following the UN's vote on cannabis. Auscann's CEO commented, "the change in scheduling has the potential to vitalise research into medicinal cannabis, removing some of the deterrents to activity in this space."

Nonetheless the share price remains well down from all time highs. The company launched its hard shell capsules in 2020 and says sales have initially been slower than hoped but are building. From a low base, sales are currently increasing 50% month on month. 

The Australian medical marijuana industry has undergone a reckoning with reality over the last couple of years. This has resulted in more realistic valuations than in the early, exuberant days post legalisation.

As the sector moves toward maturity, 2021 could mark a turning point in discovering what a healthy medical marijuana industry looks like in Australia.

The post 5 top ASX cannabis shares in 2020 appeared first on The Motley Fool Australia.

California, America's most populous state and the fifth largest economy in the world, was legalising the recreational use of cannabis, and Canada had announced it would be doing the same. A new, potential multi-billion-dollar global industry in recreational cannabis was basically being invented overnight.

But jump forward a couple of years and the winds have gone out of the sales of most pot stocks. Take AusCann Group Holdings Ltd (ASX:AC8) as an example. In January 2018, it seemed like AusCann could grow into the leading medical marijuana company in Australia, and excitement around its prospects had pushed its share price up towards $2. But since then its share price has trended steadily downwards. Its shares are now valued at just $0.215 and its total market cap has dipped under $70 million.

The share price charts of other once promising companies, like Cann Group Ltd (ASX:CAN) and THC Global Group Ltd (ASX:THC) tell a similar story. Despite all the hype around legalisation, it seemed like market saturation meant that only those few major players at the very top could actually turn a profit. In the US state of Oregon, one of the first states in the country to legalise the recreational use of marijuana, new sellers flooded the market, driving pot prices down.  

However, something curious has been happening over the last month. The share price of Cann Group has doubled in just a few weeks, while that of fellow small-cap Creso Pharma Limited (ASX:CPH) is up an astounding 650% since early November.

What is driving the gains?

A couple of key global events have been behind the surge in ASX pot stock valuations. Firstly, in early December, following recommendations from the World Health Organisation, the UN removed medical marijuana from its list of Schedule IV narcotics. Schedule IV contains harmful and highly addictive drugs like heroin and other opioids.

Many governments look towards these UN schedules for guidance on how to classify drugs, and so this downgrade could potentially lead to further global acceptance of medical marijuana.

The second key event was the passing of the Marijuana Opportunity Reinvestment and Expungement (MORE) Act by the US House of Representatives. While many US states have legalised cannabis, it still remains illegal under federal law. The MORE Act aims to decriminalise weed at the federal level and erase non-violent federal marijuana convictions.AC8

The MORE Act is unlikely to pass a Republican-controlled Senate, but it is still a demonstration of continually changing attitudes towards marijuana in America. And it has ramifications on a global scale, with many investors now renewing their interest in local Australian cannabis companies.

However, the same problems of market saturation and high competition still remain, meaning picking winners in this race is still an incredibly risky enterprise.

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The EXL share price lost 7.6% to 24 cents in after lunch trade when the S&P/ASX 200 Index (Index:^AXJO) gained 0.5%.

Other ASX medicinal cannabis stocks are faring better. The Creso Pharma Ltd (ASX: CPH) share price gained 10.3% to 11 cents and the Auscann Group Holdings Ltd (ASX: AC8) share price stayed flat at 17 cents at the time of writing.

Elixinol share price well above offer price

But Elixinol shareholders may not be too perturbed as the stock is still up 33% since the company emerged from a trading halt.

The trading halt was called as management undertook an $8.2 million placement and launched a SPP to raise another $2 million.

Management said today that its SPP has secured $1.3 million ahead of the 11 December closing date for the SPP.

Unusual SPP update

It's quite unusual for management to issue an update to the SPP, but I take it that management is very eager to get the cash.

This was evident as the ASX statement "strongly encourages" shareholders who haven't put in their applications to do so before next week's deadline.

The fact is, there is no incentive for shareholders to lock in bids for the raise so far out from the SPP closing date.

Why it's better to wait

Between now and then, the Elixinol share price could drop below the offer price of 17 cents a share. If that were to happen, it would be cheaper for shareholders to purchase shares on market instead.

If management really wanted shareholders to consider applying to the SPP earlier instead of later, it would have offered a discount to the five-day volume weighed average price (VWAP).

This means SPP applicants will either pay 17 cents or the small discount to the VWAP, whichever is lower.

Foolish takeaway

The update also worked against the company, in my view. Shareholders now know they are likely to get their full allocation.

If they thought that there is a good chance they will be scaled back (meaning they only get part of what they applied for), shareholders may be tempted to apply for more than what they really wanted.

Of course, there could be a late surge in applications as there normally is to such programs, but today's update puts the oversubscription theory in doubt.

Sometimes more is less.

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Today's rise in the CannPal share price is good news for investors. It means the company's shares are 25% up for the year so far, up 36% since 9 November, and up 114% since 25 March.

So what is this company and why is the CannPal share price soaring today?

What is this ASX cannabis company?

We can almost ascertain what this company does through its name alone. CannPal Animal Therapeutics describes itself as an "animal health company". It is developing "innovative and naturally derived plant-based therapeutic products for pets targeting the endocannabinoid system". The company was founded in Australia in 2016.

CannPal has a "research focus" on cannabinoids, the "active pharmaceutical ingredients" found in the cannabis (marijuana) plant. According to the company, CannPal has "identified a significant opportunity" to benefit from the fast-growing medical cannabis markets for the purposes of animal health.

The company asserts that "innovation in the animal health industry is lacking". It notes that existing treatments for pet conditions like arthritis and cancer are reportedly replete with side effects like nausea, appetite loss, internal bleeding and depression.

In response to this problem, CannPal is working to "further explore the natural healing abilities of compounds that can target the endocannabinoid system" in order to develop treatments for these issues that are natural and less likely to produce side effects. These treatments work by acting on the endocannabinoid system. The company informs us that this is "a system of receptors and compounds that are involved in almost every disease state, especially inflammation, pain and neurological conditions" in mammals.

CannPal, as of the time of writing, does not have any products currently in the market. However, it is currently "in the process" of testing a lead drug candidate by the name of "CPAT-01D". This drug is a pain control drug for canines (dogs). It is also testing 'DermaCann' – a product for canine skin health.

Why is the CannPal share price shooting higher today then?

We can likely put the dramatic move in this company's share price today down to an ASX announcement the company released this morning.

In this announcement, CannPal announced that it has "entered into a scheme implementation". This involves another ASX cannabis company, AusCann Group Holdings Ltd (ASX: AC8). This 'scheme', if successful, will result in AusCann acquiring 100% of CannPal shares – in other words, a takeover. AusCann is willing to pay a price of 18.4 cents per share under the arrangement. That likely explains why the CannPan share price surged on trade resumption today. The offer price is more than a 50% premium to CannPal's closing share price last week.

CannPal tells investors that the deal "gives CannPal access to the resources required to accelerate the Company's growth objectives". According to CannPal, "the two companies will form a combined entity with the financial resources and technical expertise to rapidly accelerate the commercialisation of human and animal health products".

The company goes on to say that "the combined group will also benefit from a strengthened leadership team, shared staff and administration, operational cost savings, intellectual property and procurement synergies".

Reportedly, CannPal's largest and founding shareholder, the Merchant Opportunities Fund, has indicated its intention to vote in favour of the scheme. This fund holds approximately 19.88% of the CannPal shares on issue. The CannPal board is unanimously recommending shareholders vote in favour of this scheme as well.

It's this development which is likely behind the surging CannPal share price today.

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Both companies entered a trading halt on Friday, prior to revealing that Auscann has entered into a scheme implementation deed (SID) with Cannpal.

Neither company escaped the ravages of the COVID-19 market rout in February and March. But Cannpal came roaring back, with shares up 8.3% year-to-date. Auscann shareholders have had a more difficult year, with Auscann's share price down 53.3% since 2 January. By comparison the All Ordinaries Index (ASX: XAO) is down 1.8% for the year.

What do Auscann and Cannpal do?

Auscann is a pharmaceutical company based in Western Australia. Its focus is on developing, producing and distributing a range of cannabinoid treatments for use in Australia and internationally.

CannPal Animal Therapeutics develops natural plant-based therapeutic products for pets. The company has a research focus on cannabinoids, the active pharmaceutical ingredients extracted from the cannabis plant, to provide veterinarians and pet owners a means to treat animals in a safe and ethical way.

What's the plan?

Auscann advised the ASX this morning that it had entered into a SID to acquire 100% of Cannpal for around $17.5 million.

That works out to 18.4 cents per Cannpal share, 53% more than the closing price of 12 cents per share on Thursday 12 October.

The company expects the transaction to create a larger and complementary product offering across both human and animal health, with 2 products already in the market and 2 more products expected to be launched within 12 months.

Other benefits should be increased research and development (R&D) capabilities and an expanded geographic footprint.

Commenting on the deal, CannPal chair Geoff Starr said:

There is a great logic to combining Cannpal Animal Therapeutics Ltd with AusCann Group Holdings Ltd with the new business having enhanced capability to exercise the potential for new and stronger commercial pathways.

The synergies around local and overseas market knowledge and research and development know-how will enable faster to market solutions. It represents a unique and compelling value proposition for both companies.

Auscann chair Max Johnston added:

The combined business is expected to have the financial resources and technical expertise to accelerate the growth, commercialisation and market penetration of its pipeline products in Australia and offshore.

The scheme still needs to clear the normal hurdles, such as receiving Cannpal shareholder and court approvals.

The Auscann and Cannpal share prices emerge from their trading halts tomorrow.

The post Look out for the Auscann (ASX:AC8) and Cannpal (ASX:CP1) share prices post trading halt appeared first on The Motley Fool Australia.

When the news broke, shares in the cannabinoid pharmaceutical company rose to 15 cents, however they have since retreated.

At the time of writing, the Auscann share price is marginally higher at 14.2 cents, up 1.4%. This compares to the All Ordinaires Index (ASX: XAO) which is up 0.6% to 6,557 points.

So, let's see why Auscann sold off its stake in DayaCann.

Sale of joint venture interest

According to the release, Auscann advised that it has entered a sale agreement with GrowForChile SpA (GFC) and Telor International Limited. The offloading of its 50% interest in its Chilean joint venture, DayaCann SpA, will see Auscann focus on its core business interests.

The deal will involve the transfer of the company's loan with DayaCann to GFC. In addition, Auscann will receive an upfront payment of US$200,000 and further payments that amount to US$1.5 million.

Auscann formed an evenly split joint venture with Fundación Daya in Chile in November 2016. The goal was to cultivate and supply global markets with cost-effective medicinal cannabis.

Today, DayaCann is the only commercial-scale medical cannabis company in Chile that has obtained production licences to grow multiple harvests. Until recently, DayaCann produced over 1,000 kilos of dried cannabis flower every year. However, the Chilean government has limited the supply of cannabis to patients and has not approved the export of medical cannabis to international markets.

Auscann stated as a result of the anticipated developments, it sees its Chilean join venture become a non-core activity. Furthermore, the company noted its strategy has evolved to expand its offering of differentiated cannabis products.

Management commentary

Auscann CEO Mr Nick Woolf commented on the sale agreement:

The DayaCann joint venture became a non-core activity for AusCann due to the restrictions imposed by the Chilean government on the use and export of medicinal cannabis from Chile.

This Agreement strengthens AusCann's capital position and enables management to focus on the Company's core strategy of building value through R&D and a differentiated portfolio of cannabinoid-based pharmaceuticals, the first being our unique hard-shell capsules already launched into the market.

Auscann share price summary

The Auscann share price has tumbled in 2020, losing more than 50% of its value since the beginning of the year. Although higher today, the company is sitting just above its 52-week low of 13.5 cents, which was reached last week.

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During the initial round of exuberance, as Canada and some of the biggest states in the US legalised not just marijuana's medicinal use but also its recreational use, most every share involved in the cannabis field saw its share price soar.

From boom to bust to renewal

Inevitably, reality came into play and when revenues didn't match sky-high valuations the pot stock bubble burst.

In 2019 global cannabis shares – with the biggest listed on the Canadian and US exchanges – lost roughly half their value. And earlier this year, driven by the COVID-19 share market rout and a dearth of funding, cannabis shares tumbled even further.

But the past few weeks has seen numerous ASX listed pot stocks' share prices soaring.

Three ASX cannabis shares rocketing in September

Medicinal cannabis was given the green light in Australia in 2016. Recreational use remains strictly illegal outside of the Australian Capital Territory. But there are a number of Aussie companies involved in both medical and recreational cannabis production as well as hemp, marijuana's non-narcotic cousin.

On the hemp front, the Australian Primary Hemp Ltd (ASX: APH) share price has enjoyed a stellar few weeks, up 32% so far in September. The share price is now up 9% year-to-date and a whopping 270% since the low on 7 April. Most of the September gains came this week after the company announced it was producing hemp-based protective face masks providing 99.9% microbial reduction. This came alongside its launch of a hemp-infused hand sanitiser.

On the medicinal marijuana front, the Auscann Group Holdings Ltd (ASX: AC8) share price is up 14% so far in September. Year-to-date it's nowhere near to recovering from the February and March selloff, with the share price still down 47% in 2020. But the recent gains are encouraging, coming after the company announced it had completed its first clinical trial of a cannabis-based capsule intended to treat nerve pain.

And on the recreational marijuana front, the Althea Group Holdings Ltd (ASX: AGH) share price is up 38% so far in September, despite falling sharply yesterday. The share price is now up 35% year-to-date and has gained an eye-popping 228% from the 23 March low.

By comparison, the All Ordinaries Index (ASX: XAO) is up 33% since 23 March.

Althea's share price owes much of its September gains to its Canadian Standard Processing Licence announcement earlier this week. After getting the nod from Health Canada, Althea's wholly-owned subsidiary, Peak Processing Solutions can now begin commercial cannabis operations at the company's facility in Tecumseh, Ontario.

While the prices of these cannabis companies, and indeed throughout the industry, remain volatile, the trend for well-run ASX cannabis shares is once again upwards.

The post Is it time to buy into these three ASX cannabis shares? appeared first on The Motley Fool Australia.

The Auscann share price movement is in response to an update regarding the completion of its Neuvis phase I study.

Neuvis phase I study results

Auscann announced the completion of its first clinical trial of an orally administered cannabis-based capsule developed to treat nerve pain.

The tetrahydrocannabinol (THC) and cannabidiol (CBD) combination using its Neuvis hard-shell capsules involved the treatment of 25 patients. The study was divided into 2 groups who received either a low 2.5mg or high 10mg dosage. The hard-shell capsules were supplemented with a cross-over to a pre-formulation oil comparator.

Auscann noted that the hard-shell capsule showed a lower peak concentration than the oil-based comparator with the 2.5mg dosage. However, the 10mg quantity was similar to the comparator and to the results for its volunteers receiving comparable dosages of its oral spray Sativex product.

Furthermore, adverse events were seen more often during treatment with the oil comparator than with the Auscann capsule formulation. The company recorded 16 of 28 (57%) patients experiencing at least one adverse event with the oil, compared to 7 of 25 subjects (28%) treated with the capsules. The Sativex oral spray adverse event rate was at 66%, more than double the rate of using capsules.

The full clinical trial of its completed phase I study is expected to be released in next month. In addition, Auscann will prepare to conduct an investigator-led phase IIA research in the near future.

Management commentary

Auscann's CEO Nick Woolf was pleased with the completion of the phase I study of the hard-shell capsules using the novel Neuvis platform. He commented:

We are committed to an evidence- based approach to support the appropriate prescribing of our novel cannabinoid-based pharmaceutical products. Our intent in conducting this study was to provide data to assist doctors in the use of our THC:CBD combination capsules and to make informed treatment decisions.

Our capsules are presented in a familiar dose form so that Healthcare Professionals can have confidence in dose uniformity and ease of use for their patients, which should enhance patient compliance and correct dosing.

About the Auscann share price

The Auscann share price has fallen heavily since the cannabis hype wore off in the market in 2018. It reached a 52-week high of 39 cents before dropping to its 52-week low of 13.5 cents in March. 

At the time of writing, Auscann shares are up by more than 6%.

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For example, at the time of writing the Althea Group Holdings Ltd (ASX: AGH) share price is up 8% to 54 cents.

Elsewhere, the Auscann Group Holdings Ltd (ASX: AC8) share price is up 3% and the Cann Group Ltd (ASX: CAN) share price is 6% higher.

Why are ASX cannabis shares on a high today?

Investors have been buying ASX cannabis shares after a positive industry development this morning.

That development is the Therapeutic Goods Administration (TGA) releasing a notice of an interim decision to amend the Poisons Standard for cannabidiol (CBD).

This amendment would see CBD supplied for therapeutic use over the counter in pharmacies without the need for a prescription.

Althea has responded to the news by revealing that it has been engaging with the TGA throughout the consultation process and is supportive of the amendment.

It notes that the proposed amendment would bring patient access into closer alignment with comparable international jurisdictions, improving access to CBD products for therapeutic use.

Althea's CEO, Josh Fegan, commented: "We applaud the TGA's interim decision in this matter and see it as one of the biggest developments in our industry to date. The interim decision reflects the significant shift in community and government attitudes towards medicinal cannabis since it was legalised in Australia in late 2016, which has seen it move from a fringe alternative towards an accepted mainstream option."

"As a strong advocate for patient access, Althea has closely monitored the proposed amendment since it began and has participated in the consultation process. We are excited by the TGA's interim decision to down schedule CBD products and see this development as a big step forward for prescription cannabis products already available in Australia," he concluded.

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3 ASX cannabis shares in the spotlight

Althea Group Holdings Ltd (ASX: AGH)  

Althea saw growth in patient numbers falter due to COVID-19 disruptions early in the pandemic. Average new patients per business day fell from more than 36 in December to less than 22 in April. But the rate of growth has since rebounded with 583 new patients added in June, meaning Althea finished the financial year with 7,295 patients. Sales, which were lower than expected in April and May, rebounded in June, which became the company's highest revenue month on record. 

Last month, Althea launched online sales of its medicinal cannabis products. Using the Althea Concierge app, patients can purchase products online and have them delivered directly to their doors, eliminating the need to visit a doctor or a pharmacy. Althea CEO, Josh Fegan, said "The ability for contactless sale is probably the biggest development yet for medicinal cannabis in Australia. You need to have a lot more than just a quality product in the highly regulated prescription cannabis space and Althea's ongoing investment in technology provides us with a premium value proposition that we believe none of our competitors possess." 

Interactions with healthcare professionals were fewer during the June quarter due to COVID-19 restrictions. In order to mitigate this, the team pivoted to virtual meetings where possible. The Althea concierge app also continued to play a role in providing virtual training and supporting health care professionals with product information and patient treatment plans. At the end of FY20, close to 600 health care professionals were prescribing Althea products. 

Althea achieved unaudited revenue of $1.59 million for the June quarter. This was a new record and up 5% on the March quarter despite COVID-19 disruptions. Unaudited revenue over the full year was $4.97 million, a 547% increase on FY19. At 30 June 2020, Althea had $10.4 million cash on hand, leaving it fully funded and in a strong position to meet its financial obligations. The strong increases in revenue despite the impacts of the pandemic have seen the Althea share price rebound strongly from its March low. This ASX cannabis share is currently trading at 35 cents, up 118% from its 16 cent low, but still 27% below its high for the year.  

Cann Group Ltd (ASX: CAN) 

Cann Group is in the medical marijuana cultivation and manufacture business. The business faced headwinds in the form of a global oversupply of cannabis earlier in the year. This combined with the coronavirus pandemic caused the Cann Group share price to fall from a January high of $1.69 to a March low of 61 cents. A July capital raising saw the share price fall further, with shares now trading at 49 cents. Cann Group raised $24.3 million of capital at an issue price of 40 cents per share, however the company's major shareholder, Aurora Cannabis Inc (Canada), did not participate. Nonetheless Cann Group says it believes Aurora remains committed to the strategic relationship. 

The coronavirus pandemic has slowed the company's progress in obtaining debt financing for the build of its Mildura growing facility. The build also requires engagement with specialist contractors based in Europe who are unable to enter Australia. Cann Group believes demonstrating an established revenue stream will strengthen its position in relation to securing external funding for Mildura. To this end, Cann Group has secured commercial supply agreements for cannabis products and dried flower for sale in Australia and to export markets including the United Kingdom and Europe. A distribution agreement is in place to deliver products to hospitals and pharmacies throughout Australia. An offtake agreement is also in place with Aurora enabling Cann Group to supply Aurora with products through to 2024. 

The ASX cannabis share can supply a broad range of products from specific cultivars in unique finished product formulations. Manufacturing arrangements with IDT Australia Limited (ASX: IDT) ensure products meet standards required for distribution in a range of markets. Cann Group is pursuing additional supply contracts with third parties in Australia and overseas. A growing revenue base and expanding supply arrangements will considerably strengthen the business case for the Mildura expansion, which the company remains strongly committed to. 

Auscann Group Holdings Ltd (ASX: AC8) 

The Auscann share price collapsed in March, falling to a low of 14 cents after trading as high as 36 cents in February. The share price has yet to recover from this fall, with shares currently trading at 15 cents. The company produces controlled dosage THC/CBD capsules and received its first orders during the June quarter. Product was supplied to Australian patients under the special access scheme. 

Recruitment and dosing was also completed during the quarter in a phase one study of the products. The study will provide information to inform dose selection and assist in prescribing the hard shell capsules. CEO, Ido Kanyon, said, "We are very excited to be progressing this important study to provide evidence-based information to medical professionals about our unique hard shell capsule. This is the first of many studies planned by AusCann to better understand and prove the benefits of using controlled dose medicinal cannabis for medical treatment."

Auscann recorded net cash outflows of $5.5 million during the June quarter, primarily due to product manufacturing and operating costs. $3.1 million was spent securing high-quality raw material for R&D and manufacture. Research and development costs of $1.1 million were also incurred mainly in relation to the clinical trial. At the end of FY20, Auscann had a cash balance of $19.2 million which will support the continued progress of its growth strategy. 

What's next for ASX cannabis shares?

The coronavirus pandemic has had a mixed impact on ASX cannabis shares. Demand for cannabis products had been growing strongly prior to the pandemic. Experts report that medicinal cannabis products get to about 1% to 2% of the population. Based on current Australian patient numbers, there is still significant growth to be seen. The key for these ASX cannabis shares will be capturing demand, both at home and abroad. 

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ASX cannabis share prices have seen mixed comebacks from the March downturn. Some have struggled in the current environment, while others have adapted in the face of coronavirus challenges. We take a look at how ASX cannabis shares are facing the coronavirus challenge. 

Althea Group Holdings Ltd (ASX: AGH)

The Althea share price has regained 125% from its March low. The medicinal cannabis distributor responded to the coronavirus pandemic by launching online sales of medicinal cannabis. Patients can have products delivered direct to their door via Althea's app, which has been registered as a medical device. 

Althea finished FY20 with a record month and quarter. Unaudited revenue for the quarter was $1.59 million, a new record and 5% up on the March quarter, notwithstanding COVID-19 disruptions. June sales rebounded strongly for a record revenue month following a COVID-19 affected April and May. Unaudited revenue for FY20 totalled $4.97 million, a 547% increase on FY19. 

At the end of June, Althea had 7,295 Australian patients and was achieving strong month-on-month growth in the UK. The number of healthcare professionals prescribing Althea products grew to 590 at the end of June, an increase of 16% on the prior quarter. Althea reported a healthy balance sheet with $10.4 million cash on hand at 30 June 2020.

Cann Group Ltd (ASX: CAN)

The Cann Group share price fell 18.4% yesterday. Cann Group announced a capital raising last week to fund working capital. Shares were issued under a $14.3 million institutional placement at 40 cents a share, which represented a 51.2% discount to the previous closing price. 

The company needed funds for working capital while it pursues near-term growth opportunities, including the expansion of its Mildura facility, which remains a key component of its growth strategy. COVID-19 has slowed progress of potential funding options and practical timing of construction involving offshore specialists. Cann Group's existing facilities provide 1,200 kilos in capacity. 

The company has a manufacturing agreement with IDT Australia Ltd (ASX: IDT) to manufacture resins, oils, and finished products. Products are distributed to hospitals and pharmacies in Australia under a distribution agreement with Symbion. Cann Group also has existing supply agreements in place with Iuvo Therapeutics, Astral Health, Entoura, Zalm Therapeutics, and Aurora. These agreements cover Australia, New Zealand, South Africa, North and South America, Europe, and parts of Asia. The company says it has secured or is negotiating multiple supply agreements which are expected to generate ~$15 million revenue in FY21. 

Cann Group reports that Australian industry momentum continues to be positive. The company is well positioned to address growing demand due to its manufacturing of bio-pharmaceutical grade products. New international markets are also opening up, with initiatives including patient reimbursement in Germany and pilot programs on France and Poland. 

Auscann Group Holdings Ltd (ASX: AC8)

The Auscann share price is currently on par with its March low of 14 cents. Auscann is involved in the manufacture of medicinal cannabis products. With a focus on providing reliable and standardised cannabinoid-based pharmaceutical products, Auscann has developed a capsule formulation designed to enable accurate dosing. 

Auscann's capsules are currently undergoing a phase 1 study to examine the pharmacokinetics of doses in volunteers. Dosing of the first subjects was completed in April. The study is designed to provide information that will inform dose selection and assist medical professionals in prescribing the hard shell capsules. The study is expected to be completed this calendar year. 

Auscann's hard shell capsules were made commercially available for prescription in the March quarter. Patients can access the products through the TGA special access scheme and authorised prescriber scheme. The capsules are also available in a low-dose formulation, confirming Auscann's ability to customise dosing in a standardised and scalable way. This is critical for personalised treatment. 

The company finished the March quarter with $24.7 million in cash and no debt. This was down from $26.1 million at 31 December 2019, however the strong capital position supports the continued progress of Auscann's growth strategy. This strategy is centred on product development, clinical evaluation and market access. In its quarterly results announcement, Auscann CEO Ido Kanyon said, "product standardisation backed by clinical evidence and medical education will drive growth, medical acceptance, and consequent demand for our capsules."

Ecofibre Ltd (ASX: EOF)

The Ecofibre share price has recovered strongly from its March low of $1.25 and is currently trading at $2.49. Nonetheless, it remains significantly down from its highs for the year of over $3.

Ecofibre manufactures hemp and CBD products which are sold in the US and Australia. The Ananda Hemp and Ananda Professional brands produce nutraceutical products for human and pet consumption as well as topical creams and salves. Ananda Food produces Australian grown hemp food products including hemp oil and protein powders. The Hemp Black business develops hemp-based textiles and composites.

Ecofibre recently announced that FY20 net profits are expected to be around $12.5 million, double that of FY19. Full year revenue is expected to be in  excess of $50 million. Ecofibre adjusted focus as a result of coronavirus, with the Hemp Black business tapping into demand for PPE. The brand launched a face mask and sold around 135,000 of these in May and June. This added $2.4 million to revenue in FY20. Manufacturing capacity will double this quarter from its current rate of 65,000 per month to 130,000 masks, and distribution to Australia has begun. 

The Ananda Food business also continues to experience steady growth. Its newly formulated protein powder will be used by The Alternative Meat Co in a new range of products. The range will be available in Coles from August. Woolworths will also begin stocking Ananda's hemp seed oil under its Macro brand. The oil will be available from August alongside existing hemp seed and protein powder products.  

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What does Althea do?

Althea is a supplier of medicinal cannabis. The company operates in the highly regulated medical cannabis markets across Australia, the United Kingdom, and Germany. It also has plans to expand into emerging markets throughout Asia and Europe. Althea's Peak Processing Solutions subsidiary is an extraction and manufacturing business based in Canada. Work was recently completed on Peak Processing's manufacturing facility and licensing of the facility with Health Canada is currently underway.

What does the new agreement mean?

The new agreement is an important milestone for Peak Processing Solutions and provides validation of the company's industry-leading production capabilities. Manufacture under the agreement will commence once Peak Processing Solutions is granted its Health Canada Standard Processing Licence. Once licensed, Peak Processing Solutions will support clients with a suite of professional services including product and brand development, regulatory affairs, warehousing, and distribution.

Peak Processing Solutions aims to leverage Canada's 'Legalization 2.0', which allows the sale of cannabis-infused edibles, drinks, nutraceuticals, and cosmetic products. The subsidiary is being positioned as a leading contract manufacturer for consumer brands looking to supply recreational cannabis and create cannabis infused products.

How are cannabis shares performing?

The Althea share price has more than doubled since March when it hit a low of 16 cents per share. In this respect, Althea has outperformed other ASX-listed cannabis companies. For example, Cann Group Ltd (ASX: CAN) has seen its share price increase 55% from its March low. Meanwhile, the Auscann Group Holdings Ltd (ASX: AC8) share price has increased 14% over the same period.

What is the outlook for the cannabis market?

Despite the coronavirus pandemic, the global medical marijuana market is predicted to grow by US$22.33 billion over the next four years, with a compound annual growth rate of 24%. In fact, cannabis sales in the United States surged in the wake of the pandemic. On 16 March, sales of recreational marijuana increased by 159% in California, 100% in Washington State, and 46% in Colorado, compared to the same day in 2019.

Australia's cannabis market is forecast to grow from $52 million in 2018 to $1.2 billion in 2027. This would make it the fifth largest market in the world. The jump in value is the anticipated result of regulatory changes that have come into effect in recent years, lifting restrictions on the use of cannabis for certain purposes. Althea, Auscann, and Cann Group all stand to benefit from this burgeoning market.

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Four shares that have failed to follow the market higher today are listed below. Here's why they are dropping lower:

The Auscann Group Holdings Ltd (ASX: AC8) share price is down over 3% to 15.5 cents. Investors appear to have been selling the cannabis company's shares after it was kicked out of the All Ordinaries index. AusCann's shares will be removed from the index at the next rebalance on 22 June 2020. The AusCann share price is now down almost 50% since the start of the year.

The Phoslock Environmental Technologies Ltd (ASX: PET) share price has crashed 13% lower to 39.7 cents. Investors have been selling the water treatment company's shares after it downgraded its revenue guidance for FY 2020. It now expects revenue in the range of $30 million to $40 million. It was previously targeting revenue of $50 million to $70 million this year. Management has concerns that a second wave of COVID-19 could delay projects.

The Kogan.com Ltd (ASX: KGN) share price is down 0.5% to $12.92. Investors may believe the ecommerce company's shares have now peaked after some stellar gains over the last few months. One broker that appears to believe this is the case is Credit Suisse. Late last week it put a neutral rating and $11.72 price target on Kogan's shares.

The Village Roadshow Ltd (ASX: VRL) share price is down almost 2% to $2.13. This follows the release of a takeover update by the entertainment company this morning. According to the release, the company has extended the exclusivity period for its discussions with BGH Capital for a further two weeks. Investors may be concerned that these delays are a sign that discussions are not running smoothly between the two parties.

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Coronavirus has no doubt had an impact on the cannabis industry with patients likely to be reliant on medicinal cannabis in times of stress, and crisis. 

Data from the Therapeutic Goods Administration (TGA) show prescriptions of medicinal cannabis remained steady during the coronavirus. The TGA approved more than 7,300 Special Access Scheme applications in March and April, up from 6,700 in January and February. With this in mind, we take a look at how ASX cannabis shares are performing. 

Althea Group cannabis shares

The Althea share price has recovered nicely from its March low, currently trading at 36 cents. The cannabis share is well up from its 16 cent low although below the January peak of 50 cents. 

Althea announced a 3-year supply agreement with Nimbus Health GmbH, a pharmaceutical wholesaler with a 25% cannabis market share in Germany, which boosted its May share price.  

Nimbus will sell and distribute Althea's full suite of products in Germany under the Althea name. Althea will receive 50% of the net sale profits. In Germany, 120,000 patients have been prescribed medicinal cannabis to date with this number expected to grow to 1 million by 2024. 

In Australia, Althea finished the most recent quarter with 5,803 patients (increasing from less than 500 a year prior) and 509 healthcare professionals prescribing its products. This led to an increase in revenue. 

Revenue for the quarter containing March was up 39% from December. March's revenue alone was the best month on record, increasing by 30% since February. This was achieved despite multiple challenges during the quarter including the Christmas holidays, bushfires, and the onset of COVID-19. 

Althea CEO Josh Fegan said:

"Against all odds the March quarter was a great success for Althea. Revenue certainly exceeded our expectations, whilst strong patient and prescriber growth continued. Gross profit margins have improved due to restructuring of commercial arrangements, with cash collection also now faster."

Althea recently completed work on its Canada extraction and manufacturing facility; Peak Processing Solutions. Peak aims to leverage Canada's legalisation 2.0 to allow the sale of cannabis-infused food, nutraceuticals, and cosmetics. Althea believes Peak is well-positioned to become a leading manufacturer for consumer brands looking to supply recreational cannabis and infused products. 

Auscann Group 

The Auscann share price remains near record lows for the year. It is currently trading at 16 cents up marginally from its 14 cent low in March and well below its January peak of 36 cents. Auscann was removed from the All Ordinaries Index (ASX: XAO) last week as part of the rebalance of S&P/ASX Indices.

Auscann released its prescription hard shell capsules in Australia earlier this year. The capsules are available to patients through the Therapeutic Goods Administrations's special access scheme and authorised prescriber scheme. 

The company recently began its first clinical pharmacokinetics evaluation for 2 formulations of an orally administered THC/CBD combination. Dosing of the first volunteers has been completed. 

The study will assist medical professionals in prescribing its hard shell capsules and inform the dose selection. Auscann CEO Ido Kenyon said, "we are very excited to be progressing this important study to provide evidence-based information to medical professionals about our unique hard sheep capsule."

Auscann finished the last quarter in a strong capital position with $24.7 million in cash and no debt. The March quarter recorded gross cash outflows of $2.7 million with net cash outflows for the quarter at $1.4 million due to the receipt of an R&D tax incentive refund of $1.2 million and $92,000 interest received. 

Construction of the Perth-based product development site was completed late last year with $4.5 million spent on the facility and additional capital spent on R&D equipment. The facility provides Auscann with a state-of-the-art centre to develop cannabinoid-based medicines. 

Cann Group 

Cann Group cannabis shares have staged a comeback from the March meltdown, up 50% from its low. Nonetheless, at 92 cents it remains well down from its January high of $1.69. Cann Group was also removed from the All Ordinaries Index last week.

Through new supply agreements executed with UK and European partners, the Cann share price did receive a boost last month. With import restrictions easing, European medical cannabis markets are expanding and wholesalers are building future inventory. 

New Zealand also holds a Cann supply agreement after medicinal cannabis regulations came into effect on 1 April. Cann Group CEO Peter Crock said, "these agreements represent important progress as we execute on our strategy to be a producer of choice for both the Australian domestic market and markets elsewhere."

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Hype surrounding the sector has faded as investors take a sober look at share prospects. As investors have switched from bulls to bears, share prices have eased well back from last year's highs. 

Now the industry is facing a renewed threat from coronavirus and its economic consequences. Unemployment in Australia is predicted to hit 10%, the highest level since 1994. The economic fallout is likely to equate to the biggest contraction in the economy since the Great Depression. 

But there is hope for ASX cannabis shares. Prohibition Partners has predicted the Oceania region cannabis market will be worth $1.55 billion by 2024. Australia is predicted to comprise 79% of the $1.55 billion. As of December 2019, some 18,549 Australian patients had been approved access to medicinal cannabis, with the majority receiving approval in 2019. While the industry has hit some rough patches there are potential gains to be made in future. 

Let's take a look at how the ASX cannabis shares performed in the March quarter. 

Auscann Group Holdings Ltd (ASX: AC8)

During the March quarter, Auscann released its hard shell capsules for prescription in Australia. The capsules are available to patients through the Therapeutic Goods Administrations's special access scheme and authorised prescriber scheme. 

Auscann finished the quarter in a strong capital position with $24.7 million in cash and no debt. Gross cash outflows of $2.7 million were recorded for the March quarter. Due to the receipt of an R&D tax incentive refund of $1.2 million and $92,000 interest received, net cash outflows for the quarter were $1.4 million. 

Since the end of the quarter, Auscann has commenced its first clinical evaluation. The phase 1 study will evaluate the pharmacokinetics of 2 formulations of an orally administered THC/CBD combination. Volunteers have been recruited, with one group to receive a 2.5mg dose and the second a 10mg dose. Dosing of the first subjects has been completed. 

The study will provide information to inform dose selection and assist medical professionals in prescribing Auscann's hard shell capsules. Auscann CEO Ido Kanyon said, "we are very excited to be progressing this important study to provide evidence-based information to medical professionals about our unique hard shell capsule."

Cann Group Ltd (ASX: CAN)

Cann Group revised its strategy in January in response to demand-supply disruptions in the global medicinal cannabis market. The revised strategy focuses on initially meeting Australian demand as export markets continue to be developed. The group has also reduced operating expenses including a reduction in headcount of 25% and elimination or deferment of $7 million in annualised costs. 

As part of the strategy reset, Cann Group plans to proceed with the first stage of its Mildura facility which will have an annual capacity of 25,000kg of dried flower. The company is continuing to progress funding options for the facility, but the board has advised that market volatility relating to COVID-19 impacts may delay a decision on funding until the end of the financial year. 

During the March quarter, Cann Group initiated extraction activities for the first batches of medicinal cannabis resin. This paves the way for formulation and packaging activities to produce a wide range of medicinal cannabis finished dose form products. 

On 1 April, Cann Group announced the first of its product formulations, dried cannabis flower and cannabis oil from Australian grown cannabis, was ready for distribution. Product has subsequently been supplied to healthcare company Entoura for distribution to Australian patients. 

Cann Group believes it has sufficient working capital to support operations through the remainder of the financial year. It issued $8 million in convertible notes in February to provide working capital. The immediate priority remains securing funding for the Mildura facility. In the meantime, however, Cann Group is seeking to progress potential supply agreements with third parties in Australia and overseas. 

Althea Group Holding Ltd (ASX: AGH) 

Althea posted its best quarter on record in 1Q20, despite seasonality, bushfire, and COVID-19. Sales in the March quarter were 39% higher than the December quarter, and on revenue alone March was the best month on record, up 30% from February. 

Unaudited revenue for the March quarter was $1,524,359, up from $1,095,057 in the previous quarter. Althea finished the quarter with 5,803 patients, with 596 patients added in March. The number of healthcare professionals prescribing Althea products increased to 509 as at 31 March 2020. 

Cash outflow during the March quarter was $7.3 million, below the $8.8 million originally forecast. Of this number, $2.5 million was operational and $4.8 million capital expenditure. Althea ended the quarter with cash of $15.07 million and says it is fully funded to meet its current and future financial obligations. 

CEO Josh Fegan said:

Against all odds the March quarter was a great success for Althea. Revenue certainly exceeded our expectations, whilst strong patient and prescriber growth continued. Gross profit margins have improved due to restructuring of commercial arrangements, with cash collection also now faster.

Althea's newest product, Althea CBD100, performed strongly during the quarter, representing approximately 25% of sales. Since the end of the quarter Althea has executed a 3-year supply and distribution agreement with Germany's Nimbus Health GmbH. Nimbus is a pharmaceutical wholesaler with a 25% market share of medicinal cannabis sales in Germany. 

Nimbus will sell and distribute Althea's full suite of medicinal cannabis products under the Althea brand name in Germany. Althea will receive payment for products supplied to Nimbus, as well as 50% of the net profit on sales. The first shipment of Althea's medicinal cannabis products are expected to arrive in Germany in the second half of CY20. 

Germany's medical cannabis market is one of the largest in Europe. The country has a population of 82.3 million and a favourable regulatory environment. Rapid patient growth is expected as health insurers typically cover the entire cost of medicinal cannabis, with current approval rates from health insurance providers upwards of 70%. 

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Cann Group Ltd (ASX: CAN) shares have also recovered from March lows, up 50%, as the company brings its first products to market. 

AusCann commences clinical evaluation

This morning, AusCann announced the commencement of its first clinical evaluation. The phase 1 study will evaluate the pharmacokinetics of 2 formulations of an orally administered THC/CBD combination. Volunteers have been recruited, with 1 group to receive a 2.5mg dose and the second a 10mg dose. Dosing of the first subjects has been completed.

The study will provide information to inform dose selection and assist medical professionals in prescribing AusCann's hard shell capsules. AusCann CEO Ido Kenyon said, "we are very excited to be progressing this important study to provide evidence-based information to medical professionals about our unique hard shell capsule."

The study is expected to be completed this calendar year. It is the first of many studies planned by AusCann to better understand and prove the benefits of using controlled dose medicinal cannabis. 

Cann Group products ready for commercial release

Cann Group announced the first of its product formulations, dried cannabis flower and cannabis oil from Australian grown cannabis, was ready for distribution at the start of the month.

The company revised its strategy in January in response to demand-supply disruptions in the global medicinal cannabis market. The revised strategy focuses on initially meeting Australian demand as export markets continue to be developed. The Group has also reduced operating expenses including a reduction in headcount of 25% and elimination or deferment of $7 million in annualised costs. 

Cann Group is continuing to progress funding options for its Mildura facility. The company plans to proceed with the first stage of the facility which will have an annual capacity of 25,000kg of dried flower. The Board has advised that market volatility relating to COVID-19 impacts may delay a decision on funding until the end of the financial year. 

Cann Group believes it has sufficient working capital to support operations through the remainder of the financial year. It issued $8 million in convertible notes in February to provide working capital. The immediate priority remains securing funding for the Mildura facility. In the meantime, however, Cann Group is seeking to progress potential supply agreements with third parties in Australia and overseas. 

The post ASX cannabis shares stage a comeback after the March bear market appeared first on The Motley Fool Australia.

So, let's take a look at how three ASX cannabis shares are performing.

Auscann Group Holdings Ltd (ASX: AC8)

AusCann has made its hard-shell cannabinoid capsules commercially available and is commencing a clinical trial to evaluate their benefits. 

Clinical trial

Auscann announced this morning that it is set to commence a clinical trial of its hard-shell capsules, which are currently available for prescribing by authorised doctors in Australia. The trial will evaluate the pharmacokinetics of its hard-shell capsules at two different dose strengths, providing information to inform dose selection. 

All required approvals to run the study have been obtained, including ethics committee approval. Recruitment for the study will occur in April, with the study scheduled to start on 20 April. Developments around COVID-19 will be monitored and study timelines adjusted if required. 

CEO Ido Kanyon commented, "Auscann have developed standardised cannabinoid-based formulations in a dose-controlled capsule. The capsules have been tested in a lab setting and demonstrated to be reliable, stable and deliver a consistent controlled dose of the formulations. We are now excited to commence the clinical evaluation of the capsules to demonstrate the product's benefits for patients."

Commercial availability 

AusCann has made its dose-controlled capsules commercially available for prescription following interest from medical practitioners. Patients can access the capsules through the Therapeutic Goods Administration's Special Access Scheme and Authorised Prescribers. 

Kanyon said, "we are extremely pleased to have reached this milestone and that our capsules are now available for prescription. These results will build the clinical evidence supporting the unique benefits of AusCann's capsules, whilst enhancing the medical acceptance of cannabinoid-based medicines for patients in Australia." 

Althea Group Holdings Ltd (ASX: AGH)

Yesterday, Althea reported significant progress across Australia, the UK and Canada, with March expected to be its highest revenue month in history.

Patient numbers growing

Althea added 617 new Australian patients in February with total patients exceeding 5,000. As at 28 February, 5,207 Australian patients had been prescribed Althea's medicinal cannabis products by 440 healthcare professionals. 

The expanding patient base has resulted in increasingly growing recurring revenue from patients continuing to purchase Althea medication after an initial treatment period of 1-3 months. This, combined with strong uptake from new patients, means March is on track to deliver the most sales in a single month for the company. 

UK exports ramp up

Althea reported yesterday that it was shipping more product to the UK than ever before. The Home Office has changed import restrictions to ensure people with prescriptions for cannabis-based products do not have their treatment delayed or interrupted. 

Althea is now able to import larger quantities of cannabis-based product to the UK and hold supplies for future use by existing and new patients. Althea has shipped hundreds of units from Australia to the UK and has import licenses submitted to dispatch hundreds more. 

The Home Office changes are expected to improve lead times so that patients receive their medication within a matter of days, rather than weeks. A consistent supply of Althea products will provide confidence to both Health Care Professionals and patients in the UK. 

Peak Processing Solutions facility complete

Althea yesterday announced that practical completion of the Peak Processing Solutions facility in Ontario, Canada, has been delivered. The facility was delivered on budget with only a slight delay in the intended timeline. 

Practical completion means Peak can shortly submit remaining documentation required for the grant of its Health Canada licence. Following the granting of this license, Peak will have one of the first licensed cannabis processing facilities in Canada capable of manufacturing cannabis-infused products for consumer-packaged goods companies.

Coronavirus measures

Althea is monitoring the coronavirus situation carefully in terms of its impact on the company, the ability of health care providers to service patients, and patients' access to medicinal cannabis products. 

The supply of Althea products is continuing as normal. The company is working closely with health care providers to minimise disruption to patients by promoting telehealth services, fast-tracking use of electronic prescriptions, launching online sales, and shipping products directly to patients' homes. 

Notwithstanding current conditions, Althea intends to deliver on its responsibilities to patients and shareholders. The company has no debt, $1.8 million in inventory, and $15 million cash on hand. 

CEO Joshua Fegan said, "Althea provides an essential service to the community and we will continue to work with our many stakeholders to ensure our patients can access their medications in a safe and efficient way."

Ecofibre Limited (ASX: EOF)

Ecofibre has been awarded a contract to supply hemp seed oil to Woolworths Group Ltd (ASX: WOW) and has plans to launch twelve additional health and beauty products.

Hemp food business

Ecofibre's Australian activities are focused on its hemp food business ('Ananda Food'). Its primary client is Woolworths where products are sold under the Macro health brand. The company has been awarded a contract to supply hemp seed oil for Woolworths Macro brand which will be introduced to all stores in September 2020.

Ananda Food is also launching a food-based nutraceutical line in the United States in April with a range of omega fatty acid products, protein supplements and activated hemp-derived charcoal cleansers. 

US business

Ecofibre's main income business is Ananda Health in the US. Ananda Health has not so far been impacted by coronavirus as independent pharmacies constitute the major distribution channel. Twelve additional products that cover health and beauty ranges will be launched in October. 

CEO Eric Wang said, "Ecofibre continues to operate in a business as usual capacity. Ananda Health is working at full capacity and there are no breaks in supplying our customer needs. Despite recent market volatility, the Board and I maintain an extremely positive medium and long-term view on the business. We have taken all measures to ensure there is no break in supply for our patients who depend on our products for their health and wellbeing."

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