You are here

Three cannabis companies worth watching in New Zealand

By Jacqueline Havelka
Oct 14, 2018

Despite the fact that all cannabis is illegal in New Zealand, there are still thriving cannabis businesses making their mark in the growing local industry. New Zealand’s cannabis sector is ready, set, go for launch and investors should take notice, as the island nation might represent the next great cannabis investment opportunity. Here are three companies worth watching.

Helius Therapeutics

Helius Therapeutics is already building New Zealand’s first medicinal cannabis cultivation facility; the biotechnology firm is building the plant in southeast Auckland. The company has started construction in response to the government’s 2018 amendment to the 1975 Misuse of Drugs Act. In that amendment, the country’s government seeks to improve patient access to medical cannabis. The bill has widespread support, and Helius is banking on the law actually passing in early 2019 since they’ve already begun construction even before the law has actually changed. Helius plans to have production up and running in 2019 with domestic sales and exports in full swing by summer 2020.

[These six states will all be voting on marijuana initiatives in November]

Helius is definitely a company to watch. The company will do research as well as cultivation, extraction, and manufacturing, and the facility is expected to produce around 50 tons of cannabis per year. Helius also has the option for an additional 6,500 square feet of cultivation space.

The management team of Helius includes P.J. Schmidt, who has extensive private equity experience, advertising expert Paul Manning and former executive at Red Bull Gavin Pook. New Zealand entrepreneur Guy Haddleton recently infused nearly US$10 million in the firm in exchange for the chairman role and a 40 percent stake in Helius.

Helius is treating the law change as inevitable and a safe bet. New Zealand will likely adopt medical cannabis early in 2019 and is also expected to hold a 2020 referendum regarding recreational legalization.

Hikurangi Cannabis Company

Hikurangi is poised to be the first cannabis company to export medical marijuana to the United States. The New Zealand-based company has teamed up with Seattle-based Rhizo Sciences, a firm with eight years of experience in cultivation, extraction, manufacturing, and distribution. Rhizo specializes in cGMP manufacturing and international export. In the conditional agreement, Hikurangi would supply Rhizo Sciences with $160 million worth of products over the next three years. They’ll start out by providing 3000 kg of cannabis and products, and are very likely to ramp up to 12,000 kg by 2021.

In August, Hikurangi became the first New Zealand company to obtain a medical marijuana cultivation license to breed strains that can eventually be incorporated into medicinal products. The company has raised significant funds over the last six months. After a major grassroots funding effort of $2.5 million given by more than 1,500 local families, the funding feat was significant enough to get larger investors to take notice.

[Aphria jumps 15 percent on Altria rumors, boosting Canadian marijuana stocks as global markets plunge]

Hikurangi says they are ready to build their high tech greenhouses. In addition, the company already has plans to begin clinical trials next year to test New Zealand made cannabis medicines. They will likely partner with an as yet unnamed large U.S.-based medical cannabis company on those trials.

The company is thrilled to be building the new facilities in rural Ruatoria on Australia’s east coast, a region desperate for an economic boost; unemployment levels are greatly above the national average. Hikurangi’s first product is rumored to be a very simple sublingual formulation of CBD, but afterward, they plan to very quickly scale their operations to meet the growing domestic and international demand for pharmaceutical-grade cannabis.

1J Capital

1J Capital wants to create a cannabis capital fund. Founder and director of 1J Capital, Andrew Jeffery, is a cheerleader for the effort. Jeffery has extensively studied the California cannabis industry, meeting everyone on the supply chain—dispensary owners, growers, and distributors to learn and eventually better educate New Zealand consumers. Jeffery says giving the public opportunities to invest in cannabis companies is a great way to dispel myths and misconceptions that many New Zealanders have regarding marijuana.

Indeed, New Zealand is an incredibly conservative nation, and marijuana is still not legal in any form. However, 1 in 20 citizens is using medical cannabis obtained through the black market. Some reports estimate that as much as 10 percent of the population uses marijuana in some form. Jeffery had his own personal battle with cancer, so he understands the need for access to medications, and also understands that cannabis companies will need capital for any venture.

[The pure-play marijuana ETF that just keeps growing: Jason Wilson on MJ and the cannabis stock market]

Jeffery has done his homework and knows the capital he would like to raise. He is getting close to launching the fund in early 2019, and the opportunity will give many New Zealanders their first glimpse of the cannabis space.

New Zealand cannabis companies

The cannabis industry is definitely in the very early stages, but these three companies are set to be trailblazers and get ahead of their competition. Could cannabis become the next wine industry? Maybe. The country only began producing wine a few years ago, but now, it is where much of the action is. The same could be said of the cannabis industry, which will likely start out as a small market (think craft beer) and quickly grow to carve their own niche in the global market.

Investors should take a wait and see perspective; follow the legislation changes and follow these companies. The cannabis ecosystem that the U.S. and Canada have experienced hasn’t even touched New Zealand yet, but it will very soon. Be smart and be ready!

Share this article