Move over coffee, medicinal cannabis' global revenue attracts backers
Self-storage and equipment hire kings the Kennard family are backing the expansion plans of one of Australia’s biggest medicinal cannabis firms amid expectations the alternative healthcare product could become “bigger than coffee” globally over the next few years.
Led by brothers Jim and Walt Kennard, the Rich Lister family’s private office was the first external investor in Australian Natural Therapeutics Group, which this month snapped up a major cultivation and manufacturing facility near Brisbane Airport.
Jim Kennard has also joined the board of ANTG, which was founded eight years ago by Matt Cantelo, a former senior executive at ASX-listed Corporate Travel Management.
ANTG’s Brisbane acquisition – the former operations of cannabis firm Rapid Growth, which traded as Pure Cannabis Australia – complements the Byron Bay-based company’s existing network, comprising a main commercial greenhouse and manufacturing plant in Armidale, NSW, and a research and development centre at Pitt Town on Sydney’s outskirts.
Mr Cantelo told The Australian Financial Review he expected the Brisbane facility would quadruple ANTG’s production capacity – to date it has sold more than 350,000 products – and allow it to offer third-party logistics services such as packaging and labelling services to other companies in the sector.
The facility, which ANTG will lease, includes multiple indoor cultivation room and 14 manufacturing rooms.
ANTG ranked 18th on the 2021 AFR Fast Starters list with revenue of $8.2 million and a compound annual growth rate between FY19 and FY21 of 150 per cent.
“We’ve experienced massive growth. The biggest problem is not having enough product to supply,” Mr Cantelo said.
“This is the fastest-growing industry in the world and is on track to surpass coffee in terms of global revenue.”
The third Global Cannabis Report by Prohibition Partners estimated that global sales of CBD (a therapeutic but non-psychoactive derivative of marijuana), medical and adult-use cannabis amounted to US$44.2 billion ($66 billion) this year and could be worth more than US$100.4 billion by 2026.
Prohibition Partners forecast Australia’s medicinal marijuana industry to be worth $1.6 billion by 2026, having been worth just over $50 million in 2020 and about $200 million this year.
There are certainly no shortage of companies looking to grab a slice of the medicinal marijuana pie.
While ATNG is a private company – Mr Cantelo still owns around 75 per cent of it – many of the leading players have turned to the ASX to raise money and lift their profile.
Among the biggest – by market capitalisation – is Cronos Australia ($341 million), which in December shipped its one-millionth unit of medicinal cannabis and is on track to deliver annual revenues of $128 million.
Another is Incannex Healthcare ($302 million), which in May raised $13 million from institutional investors to fund the development of new products.
Last month, the teal independent candidates’ top donor, Sydney share trader Rob Keldoulis, paid $3 million for a 44.26-hectare turnkey marijuana farm south of Launceston sold by ASX-listed ECS Botanics.
The sector, which was legalised in Australia in 2016 and now has well over 100,000 active users, faces several challenges despite its rapid growth. These include the cost of medication, which can be as high as $1000 a week and which must be fully covered by users because medicinal cannabis products are not subsidised under the Pharmaceutical Benefits Scheme.
