New Zealand's medical cannabis industry has struggled to achieve profitability since legalization in 2020. Photo: Eric Limon/1234RF
Listed medical cannabis company CannaSouth has gone into voluntary administration after failing to raise much-needed funding from investors.
Trading in the company's shares was halted earlier this week following a dispute with some investors, and the company warned it needed cash to remain solvent.
In a market announcement late on Thursday, CannaSouth revealed that administrators had been appointed.
The company said the decision was the result of “careful consideration of the company's circumstances, including the challenges of securing additional funding and balancing the interests of shareholders and convertible note holders.”
Ben Francis and Gary Wimp of Blackrock Rose have been appointed joint administrators and are now responsible for planning the ongoing operations and “achieving positive cash flow results”.
“Managers will conduct a detailed review of CannaSouth's operations, with a particular focus on identifying profitable areas of the company's products and services,” KhannaSouth said.
“Once that is complete, the administrator will seek financial support from shareholders and noteholders to implement its plans.”
The company said the review “will take some time to complete” as the parent company and trading subsidiaries are scrutinized.
Earlier this month, CanaSouth reported a full-year loss of $8.8 million for the year ended December, but sales rose 11% to $956,000.
New Zealand's medical cannabis industry has struggled to achieve profitability since legalization in 2020.
The industry blames red tape in part for this.
Regulation changes announced last year will allow a wider range of plants to be grown and more cannabis products to be exported.
