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Ananda Developments on the ‘company making’ potential of its latest cannabis vaping investment (ANA)

Medical marijuana business Ananda Developments (NEX:ANA) rose to 0.63p yesterday after revealing plans to enter the European market with a £460,000 investment into an up-and-coming cannabis vaping firm. We spoke to head of investor relations Jeremy Sturgess-Smith about the deal’s potential to be a ‘company maker’ for Ananda as it continues its search for top quality investments.

Ananda, one of the only UK-listed cannabis investors, will acquire a 15pc stake in Liberty Herbal Technologies Limited (LHT). Yesterday’s deal marks one of the its first since it listed in July, raising £930,000 to take stakes in companies and projects that either carry out research on medicinal cannabis or develop products that contain the drug.

LHT is the developer of hapac, a patent-pending technology that provides customers with small, filter-paper sachets of pre-ground medicinal cannabis flower specifically designed for use in dry-herb vaporisers. The business, which was founded two years ago by ex-British American Tobacco employees, claims its technology is more convenient and potentially less toxic than other options in the cannabis vaping market.

LHT has already completed a consumer trial of hapac in the US, where it received positive feedback, and now plans to launch the product in Italy later this year being entering Canada in the second quarter of 2019. It then intends to start in other legal jurisdictions later next year.

LHT said it chose to launch in Italy first because it has developed a strong relationship with a commercial partner that has a sizeable medicinal cannabis retail footprint in the country. Also, it wishes to take advantage of recent regulatory changes in Italy that allow the sale of ‘low THC cannabis’, which it expects to present it with an opportunity to be the first vaped product in the market.

According to Ananda, Europe is set to be the largest legal medicinal cannabis market in the world. It is predicted to be worth more than €55bn per annum by 2028, with more than 700m people and a total annual healthcare spend of €1.49trn.

Ananda’s investment is subject to it receiving shareholder approval to expand the geographical focus of its investment strategy to Italy and the United Kingdom. When it listed it said it would initially will limit its exposure to private and public opportunities in Israel, Canada, and the Netherlands. However, it added that it was open to expanding its reach in line with the development of the global market.

If permission is granted, it will have a two-year right of first refusal to participate in any LHT fundraising to increase its stake, and its executive director Melissa Sturgess will join the firm’s board. In yesterday’s announcement, Sturgess said:

‘We are delighted to be supporting the LHT team in the launch and rollout of hapac. Not only is hapac a well-positioned product, it is being developed by a team which understands the dynamics, challenges and opportunities in the herbal vaping space. One of the most important facets of hapac is its ability to deliver a measured dose of medicinal cannabis, where precise dosing is important in medical treatment protocols. We look forward to working closely with the team on its Italian and subsequent further rollout.’

Speaking to ValueTheMarkets, Ananda’s head of investor relations Jeremy Sturgess-Smith said yesterday’s investment could be a ‘potential company maker’: ‘Melissa is joining the LHT board to represent Ananda’s interests and will work closely with the team on the Italy and Canadian rollout in 2019. The product has global application and can be a significant player in the cannabis vaping space.’

The deal with LHT comes just weeks after Ananda acquired $200,000 of convertible loan notes in iCAN Israel-Cannabis, a globally recognised Israeli player focused on the medical cannabis industry. It said iCAN has several business units and investments which can create value for its shareholders, adding that it will also be a good source of investment opportunities in the future. Days after the investment, iCan announced that it had signed a MoU with an Israeli Medical Cannabis company to develop and validate treatments for Crohn’s Disease, Autism and other diseases.

Sturgess-Smith told us that Ananda is currently reviewing a wide variety of potential deals: ‘As one of the few participants in the medical cannabis-quoted sector, we are fortunate to see many quality ideas. Our relationship with iCAN in Israel also means we see the very high-end scientific ideas that are coming out of the research efforts there. Israel is leading the global charge in cannabis science, and we expect to see some very strong businesses being developed.

Finally, Sturgess-Smith said Ananda has been ‘constantly staggered’ at the rate of change of opinion within the UK regarding medical cannabis legislation. At the end of July, the Home Office announced that doctors will be able to prescribe medicine derived from marijuana ‘by the Autumn’. The move followed the high-profile cases of Billy Caldwell and Alfie Dingley – two children who were denied access to cannabis oil in the UK despite having severe epilepsy.

On this, he said: ‘We received the comments made recently by the Home Secretary with great enthusiasm and a sign that there will be legislative change within the UK in the coming months. Similarly, the continued progress to legalisation in an ever-increasing number of European countries bodes well for our belief in LHT and its hapac vaping technology.’

 

Author: Daniel Flynn

Disclosure: The author does not hold positions in any of the stocks mentioned above

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