Capital Mining gains interest in medicinal cannabis industry

By Trevor Hoey. Published at Mar 30, 2017, in Small Caps

The share price of Capital Mining (ASX: CMY) doubled in the first hour of trading on Wednesday morning after the company announced that an agreement had been reached with medicinal cannabis group Broken Coast Cannabis Limited (BCC), which involved a cash payment to CMY of C$250,000 and the rights to negotiate an investment in BCC.

It should be noted that share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.

As a backdrop, BCC is a leading, profitable Canadian medicinal cannabis producer and distributor headquartered in British Columbia, Canada. The company was incorporated in 2013 and has grown to become one of Canada’s leading medicinal cannabis producers and distributors.

BCC is licensed under Canada’s Controlled Drugs and Substances Act, and adheres to Canada’s Access to Cannabis for Medicinal Purposes regulations.

Because Capital Mining’s core business lies in the mining industry, the company is establishing a separate unlisted enterprise, Capital Cannabis. This will be a wholly-owned subsidiary of CMY, providing the company’s shareholders with exposure to the burgeoning medicinal cannabis distribution industry.

While this will initially be linked directly to the business of BCC, which at this stage remains difficult to quantify given the terms of Capital Cannabis’s investment in BCC are expected to be ratified in the coming 90 days, there is also the possibility that CMY shareholders could benefit from a separate listing of Capital Cannabis.

While it is early days in terms of progressing Capital Cannabis, CMY’s management has demonstrated its commitment to the business in appointing Cameron McDonald-Stuart as a Non-Executive Director.

He is highly credentialled and well respected in the industry, having been the founding chief operating officer and chief technical officer of Cann Operations, the first company to be awarded an Australian medicinal cannabis license.

McDonald Stuart was also a founding board member of the Australian Cannabis Industry Association, and runs cannabis consulting and technology company Medicabis.

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