The medicinal cannabis industry faces a significant challenge as Cannasouth enters voluntary administration. This development comes after the company’s unsuccessful attempts to secure essential funding from investors. The halt of share trading earlier this week signaled a brewing crisis, culminating in the company’s admission of its precarious financial state.
Administration and Future Prospects
Ben Francis and Garry Whimp of Blacklock Rose have been appointed as joint administrators. Their immediate task is to conduct a thorough review of Cannasouth’s operations, focusing on identifying profitable product lines and services. The administrators’ goal is to achieve positive cash flow results, which will require the support of shareholders and note holders.
Industry Hurdles
Cannasouth’s financial woes highlight the broader struggles of New Zealand’s medicinal cannabis sector. Despite legalisation in 2020, the industry has grappled with profitability, often attributing its challenges to regulatory red tape. The recent changes allowing for a broader range of plants to be grown and more products to be exported have yet to yield the expected financial turnaround.