Australian Firm Buys Big Stake in Canadian Marijuana Grower

An Australian mining firm has purchased a substantial stake in a Canadian medical cannabis business for cash and stock options.

Capital Mining said it paid $7 million in cash plus $25 million in stock options for 49% of Broken Coast Cannabis, one of 14 cultivators that hold a distribution license in Canada.

The mining company also will buy Cannan Growers in its entirety for $250,000 plus $1 million in stock options. Both marijuana companies are based in British Columbia.

Capital Mining said it is the first publicly traded company on the Australian Stock Exchange (ASX) to own a direct stake in a Canada-based MMJ cultivation and dispensing venture. Another firm planning to grow MMJ in Israel became the first medical cannabis company to list on the ASX last December.

The investment will allow Broken Coast to double the current space it occupies to 26,000 square feet, almost triple its production capacity to about 2 million grams a year, reduce cost of production by 50% and boost cannabinoid content by 30% to 40%, Capital Mining said.

Next year, Broken Coast plans to expand to 44,000 square feet and increase production to 3.38 million grams. Long-term plans call for construction of a new facility with 150,000 square feet and output capacity of 11.5 million grams each year.

Cannan Growers is a cannabis developer and adviser that has an application pending for a facility in Vancouver with an option to buy the facility for C$1.2 million.

Capital Mining said it’s buying into the industry as Health Canada expects the number of medical cannabis users to grow more than tenfold to 450,000 users by 2024 and revenues to jump to C$1.3 billion.