Following the merger with Eqalis, effective June 1, 2023, Cannasouth put the spotlight on opportunities for cost rationalization through operational efficiencies and greater focus. A range of initiatives are underway to deliver the efficiency gains and to reduce cash spend by around $400,000 per month once restructuring is fully implemented. The restructure will retain key business intellectual property and functionality to meet immediate revenue goals.
Cannasouth is awaiting verification for a range of products intended for the New Zealand and export markets. Cannasouth expects delays in the timeline for product verification because the Medicinal Cannabis Agency (MCA) has been slow in turning around such verification approvals.
CEO Mark Lucas says, “We believe that our new products, which are manufactured under GMP quality standards, will be verified. However, 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.”
With the delays in the availability of verified medicinal cannabis products, the Company’s business plan for revenue generation has been delayed. There is a need for the Company to raise additional capital to continue with the Company’s growth strategy. The board is currently actively considering capital-raising options to support the constrained cash position of the Company in the short term. The Company will update the market when initiatives are confirmed.
Mr Lucas says, “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”.