Our first licenced cannabis grower is having money trouble

Share trading in the publicly-listed and Mildura-based Cann Group was suspended last week as the company works to find new finance sources.

Cann Group has reported a net loss of $14,338,000 in the first six months of last year on the back of an almost $19 million loss the period before.

Cann Group is an Australian-based company working to develop, produce and supply innovative cannabis medicines.

It has received the support of government authorities like Agriculture Victoria which has been working to support this new industry and recently claimed a world first by unlocking the genetic code of medicinal cannabis.

Victoria has been aiming to become Australia's home of cannabis production with investments in Mildura, Melbourne and Shepparton.

Established in 2014, Cann Group began with two medicinal cannabis processing facilities based in Melbourne and in 2019 entered an agreement with the Mildura Rural City Council over the purchase of a $10.75 million site to locate a greenhouse and production facility.

The greenhouse development was to cost $130 million.

It was the first company to be issued with a Cannabis Research Licence by the government's Office of Drug Control in February 2017.

In March that same year, Cann Group was issued Australia's first Medicinal Cannabis Cultivation Licence, which authorised Cann to produce Australian-grown cannabis (in association a relevant permit) for medicinal purposes.

Cann Group said it hoped it would be able to cultivate up to 50 tonnes of medical cannabis in dried flower form a year.

It made $8.5m of cannabis sales in the second half of last year, revenue was up 46 per cent on the first half of the year.

The company's debt is around $64m.

"On the basis the company is successful in its pursuit of additional financing, the directors are of the opinion the company is a going concern," the company has told shareholders.

Shares traded at about $1 at the start of the year and fell to around six cents apiece when trading was halted.

The ASX was told last month, Cann Group is now involved in legal action with New Zealand biotech company Rua Biosciences Ltd over a manufacturing and supply agreement which Cann Group says it will defend "vigorously".

Rua Bioscience is claiming damages for an alleged breach of contractual rights to exclusively sell Cann's medicinal cannabis products in Australia.

Also, Cann Group's founding director and chairman Allan McCallum retired from the board in late August after nine years of involvement and was replaced by Dr Julian Chick as chair.

Kerang farmer, Mr McCallum is well known in agribusiness and agripolitics as a former leader of the Victorian Farmers Federation's grains group and with his involvement in various companies including Incitec Pivot, GrainCorp, Vicgrain and Nugrain (Nuseed).

He was also chair of seafood manufacturer Tassal Group for 16 years.

Deborah Ambrosini departed as chief financial officer ns late December to be replaced by Tony Di Pietro starting in April.

Auditors William Buck said in their report on the last half-yearly report which triggered the ASX suspension they had been unable to confirm the group's ability to secure the necessary finance to "support the group as a going concern" over the next 12 months.