NZX-listed Cannasouth has flagged plans to raise additional capital, reduce its workforce, and put its planned ASX dual listing on hold as it waits for New Zealand's Medicinal Cannabis Agency (MCA) to verify its products.
The company said it is awaiting verification of products destined for both the domestic New Zealand market and export, with delays expected due to the MCA's slow turnaround of applications.
Cannasouth recently exported its first commercial shipment of cannabis-based active pharmaceutical ingredients (API) to Australia, but said revenue from additional products depends on MCA verification being granted.
To preserve cash, the company is undertaking a restructure aimed at retaining core intellectual property and operational capacity to meet near-term revenue targets, while cutting monthly cash expenditure by approximately NZ$400,000.
CEO Mark Lucas confirmed the restructure will result in job losses.
He said: "We believe that our new products, which are manufactured under GMP quality standards, will be verified.
"But given the ongoing delays around approval timelines, we are restructuring our business to factor in delays to products reaching the market. Unfortunately, this means regional jobs will be lost in the medium term."
Cannasouth also told shareholders it intends to seek fresh capital to address its tight cash position.
"With the delays in availability of verified medicinal cannabis products, the company's business plan for revenue generation has been delayed," it said.
"There is a need for the company to raise additional capital to continue with [its] growth strategy. The board is currently actively considering capital raising options to support the constrained cash position of the company in the short term."
Lucas insisted: "We are seeing exponential growth in demand for medicinal cannabis products in New Zealand and Australia, with no signs of slowing down. We remain confident that our strategy will meet the needs of patients and investors."
Cannasouth first announced its intention to pursue a foreign-exempt dual listing on the ASX back in August, with completion expected before year's end.
That timeline has now shifted, with the company not expecting to advance the ASX listing until 2024, pending a financial audit of Eqalis Group, with whom it merged in June.
