Green dollar runs short at Cannasouth

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The founder of Katikati medicinal cannabis company Eqalis is confident his company will remain viable despite its new owner Cannasouth Limited going into voluntary administration.

Greg Misson was one of the founders and funders of Eqalis in 2020, developing the intellectual property on economic, high-volume extraction of cannabinoids for the production of medicinal cannabis products.

Cannasouth shareholder and Eqalis founder Greg Misson is confident the company will come out of voluntary administration on a better footing.

Last year Eqalis merged with another medicinal cannabis company, NZX listed Cannasouth Limited.

In late March Cannasouth went into voluntary administration as it burnt through the last of its shareholders’ cash and projected cash returns continued to remain elusive.

In early April its CEO Mark Lucas also resigned. This follows on the heels of its chief financial officer Colin Foster.

Misson remains a shareholder in Cannasouth. He said he was confident the administrators Blacklock Rose are bringing some corporate discipline to the operation to ensure it can continue its operations.

On merging, Eqalis bought its IP and full indoor growing facilities in Katikati to the venture, aimed at matching this to Cannasouth’s expertise in plant drying and processing.

Eqalis bought the processes that helped bring down the cost of extracting and processing cannabinoids in the plant, enabling them to be marketed at a lower price, something that has been a barrier to patient uptake.

The merger also bought Cannasouth closer to being a vertically integrated processor with Eqalis’s pharmaceutically certified Katikati growing and extraction facility.

It also provided additional cash reserves, but these ran short with forecast operating cashflow by the end of this year coming too late with noteholders owed $2.9 million by the company.

The IP included a DNA test that could profile a patient to determine their susceptibility to developing psychosis on taking cannabinoid medicines. This is a known response among a percentage of patients when administered such treatments for muscle spasticity and glaucoma.

Misson was also a founding shareholder in Open Country Cheese, the disruptor dairy company that entered the dairy farmer supply scene 20 years ago, breaking Fonterra’s grip on milk supply sector.

Of Cannasouth, he said the company was down “but definitely not out” and he believed the administrators were doing a good job of creating a leaner, agile Cannasouth as a result.

In a statement to the NZX, the administrators said they were undertaking a detailed review of Cannasouth’s operations focusing on identifying profitable lines of the company’s products.

They will then be seeking financial support from shareholders and note holders to implement the plan.

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