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In 2015 Phytotech Medical, which would later morph into MMJ Phytotech and now MMJ Group International, listed on the ASX with the aim of establishing cultivating operations in the US and Uruguay for distribution of medical marijuana products where legal.
MMJ was the first “pot stock” to list on the ASX, back when medical marijuana had not been approved for use in Australia.  The approval came in 2016 and investors flocked to MMJ and the horde of medical marijuana listers that followed.  
MMJ came out of the gate on fire, turned cold, and reignited upon the news of the Narcotic Drugs Regulation of 2016 which permitted the licensing and production of marijuana for scientific and medical purposes here in Australia.

The company is now in suspension seeking re-quotation following a change in its business model, divesting some holdings and adding others to invest in marijuana operations, primarily in Canada.
Whether the company succeeds as a retooled investment firm remains to be seen but the stock performance of MMJ and a host of other entries prompted many to label the sector “for punters only.”
Impressed with the share price explosion of Canadian and United States medical marijuana stocks, some Aussie investors ignored the warnings and jumped on board any ASX stock with even the remotest connection to medical marijuana.  
The most startling example was Stem Cell United (SCU), a micro-cap company working on medicinal treatments extracted from plants. The company took on a recognised expert in medical marijuana as a strategic advisor, sending investors into a short-lived buying frenzy.
Another was bauxite miner Queensland Bauxite (QBL) a company now in suspension from trading awaiting yet another rebirth as a medical marijuana operator.

Some skeptics are falling by the wayside as the sector has come of age, boosted by multiple health-related application possibilities for marijuana and a growing trend of legalising marijuana for recreational use.  In October of 2018 pot went mainstream in Canada and the recent US elections added another state with voters in Michigan approving legalisation of the once maligned substance for recreational use.  There are 31 states where medical marijuana is legal.

Market research firm Global Market Insights released a report a few months back predicting the global medical marijuana market will reach USD$55 billion by 2024 – up from USD$7 billion in 2017- largely on the back of demand for marijuana treatments for chronic pain stemming from a variety of causers – cancer, arthritis, neurological disorders and others.   For 2017, 75% of revenue for the medical marijuana sector came from pain management applications, a trend expected to continue.  Astute investors are aware not all stocks in a sector are created equal, with varying product lines chasing different markets.  Health-related applications of marijuana extend beyond pain management to include food supplements (nutraceuticals) and skin treatments.  In addition, there are players that operate primarily as cultivators.  Investors with minimal patience may elect to look into companies working on the non-pain treatment applications, as the life cycle from concept to market is shorter than that of biotech companies facing clinical trials and more regulatory oversight.
However, given the forecasting models of Global Market Insights and other research firms, it appears growth in pain treatments will outstrip the other applications, suggesting investing in “pure play” biotechs developing pain management treatments may be a better path for investors with more risk tolerance.
Skeptics among the analyst community remain, cautioning against overpaying for stocks in a highly competitive market generating little if any revenue, no profit, and high capital expenditures associated with bringing products to market.
Yet there are some ASX players beginning to simmer, with some revenues and nearing introductions of products to the market place.  
The following table lists some likely candidates, along with a newcomer to the ASX attracting significant investor interest.

The top two players, Cann Group (CAN) and AusCann Group (AC8) have more in common than the sector in which they operate.  Both have strong backing from the top two marijuana stocks in Canada as their major shareholders.  Aurora Cannabis (NYSE: ACB) has a 22.9% interest in Cann Group while the largest marijuana stock on the planet, Canopy Growth (NYSE: CGC) holds close to a 10% interest in AusCann
The partnerships were win/wins for all parties, as the Canadians got access to Aussie markets while our companies got an early start supplying product once licensing requirements had been met.  Licensing is key for medical marijuana stocks, with the government now expanding their ability to import medical marijuana to be able to export as well. 
Cann Group is a cultivator, earning Australia’s first licenses to research and then produce medical marijuana. The company is harvesting crops, generating $560,000 in revenues for FY 2018. 
The export license could be a major benefit for Cann Group due to its large existing cultivation facility and plans for expansion.  Revenues could help the company in its longer-term goal to research and develop medical marijuana treatments. 
The company recently inked a deal to supply marijuana resin to the Victorian government and has collaborative relationships with the CSIRO (Commonwealth Scientific and Industrial Research Organisation), Agriculture Victoria, LaTrobe University, pharma company IDT Australia, Anandia Labs, and Aurora Cannabis.  Earlier in the year an article in the Australian Financial Review (AFR) speculated about a possible takeover of Cann Group by Aurora Cannabis.  The company listed in May of 2017 and the share price has risen close to 300%.

AusCann Group shares another common characteristic with Cann Group, beyond the goal of becoming fully integrated medical marijuana providers and their strong Canadian backing.  The two companies are targeting the Australian market first, while others are pursuing overseas markets.
AusCann does have a joint venture with a Chilean non-profit – Fundacion Daya – for researching and promoting medical marijuana as a means of relieving human suffering.  AusCann has partnership arrangements with Murdoch University, the SABC (Western Australian State Agricultural Biotechnology Centre), and opium poppy producer Tasmanian Alkaloids. 
The company has a distribution agreement in place with Australian Pharmaceuticals Industries (API), first for imported cannabinoid products supplied by Canopy Growth, followed by AusCann’s own products.
The 2017 strategic partnership with Tasmanian Alkaloids led to AusCann being one of the first ASX listed medical marijuana providers with all required licensing to produce and distribute cannabinoid medicines in final form, from cultivation to consumer sales.  Cannabinoids are central to medical marijuana treatments for relief from pain, anxiety, nausea, and inflammation.
On 13 November the company announced it would bring to the Australian market a hard-shell capsule for pain relief in the first half of 2019.  The capsules will be manufactured by US based PCI Pharma, a company licensed by Australia’s TGA (Therapeutic Goods Administration.)
The company had a successful capital raise in mid-year.  Both Cann Group and AusCann trade on the US Over the Counter (OTC) markets under the codes CNGGF and ACNNF.
Investors looking for diversification into nutraceutical and skin treatment applications have other stocks to consider.  Medlab Clinical (MDC) is in those applications as well as a major focus on non-opioid pain treatments, with a treatment undergoing clinical trials – NanaBis™, a pain treatment for cancer patients.
Chronic pain relief treatments for chronic conditions are, diversified, due to the variety of treatable pains.  Given the protracted time frame for final approvals it seems to make sense to seek diversification via other medical marijuana applications.  
However, for start-up companies, one could make a strong argument that too much diversification can be like the proverbial two-edged sword.    Start-ups in all industries struggle with capital requirements to get a product ready for market, only to find themselves faced with more hurdles to finance the marketing, distribution, and associated expenses at the finish line to promote multiple products.
The pure play medical marijuana providers have a more limited focus, without the need to fund multiple product lines.
The final two stocks in the table are in earlier stages of development than AusCann and Cann Group, both of which are close to potentially significant revenue generation.
Zelda Therapeutics (ZLD) has a unique business model, but some investors could rightly question its revenue-generating possibilities.  Essentially the company is using data from prior successful medical marijuana treatments provided by its impressive list of partnering institutions.
Using that data, the company is launching a series or pre-clinical trials in diabetes-related cognitive decline, breast cancer, pancreatic cancer, and paediatric glioblastoma (brain cancer) and clinical trials in insomnia and autism.
In September the company announced a partnership with German medicinal cannabis company, HAPA Medical, granting HAPA first rights for manufacturing and distribution of Zelda’s products in Germany.
While a positive development, the company website and the financial press offer little information on what those products might be nor when they might be ready for the market.
Althea Group (AGH) listed on the ASX on 28 September of 2018, with an issue price of $0.20.  The first day trading price shot up to a high of $0.76, closing at $0.59 and it has been downhill since.

Like the major players Cann Group and AusCann, Althea intends to become a grower, importer, producer, and supplier of medical marijuana treatments here in Australia, with all necessary regulatory licenses already in place.  The company is currently importing five Althea branded products, generating its first revenues in May of 2018.  Althea also has the backing of a major Canadian player, Aphria Inc., which began trading in the US in late October under the code NYSE: APHA. Aphria has a 25% stake in Althea.
Althea has plans to develop a cultivation, extraction and manufacturing facility in Skye, Victoria, with a production capacity of 3-tonne-per-year at a cost of $10 million.
Despite its lagging share price, the company has generated massive investor interest, with a 3-month average daily trading volume of 1.8 million shares, more than twice the volume of AusCann at 745 thousand and ten times the 127 thousand shares of Cann Group.
The company does have some unique features in its business model.  First, there are plans to create the Althea Concierge, an educational platform to foster and support medical marijuana treatments, available digitally online and in a free mobile app.  
Second, the company has hired a team of medical science liaisons for the sole purpose of educating physicians and pharmacists on the benefits and procedures for applying for prescription and dispensing regulatory approvals.

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