It’s been a while since pot stocks have made headlines.
The industry as a whole has been fairly quiet lately. Largely overshadowed by the ongoing pandemic and its fallout.
That hasn’t stopped MGC Pharmaceuticals Ltd [ASX:MXC] from their plans though.
The medicinal cannabis specialist is trading 4.17% at time of writing. The MXC share price rising slightly after acquiring Medicinal Cannabis Clinic (MCC), an Australian business that offers cannabis-based treatments to patients.
And for MGC, this could be their ticket into the local market…
More patients, more drugs
Based out of Europe, MGC only just acquired its import license on 8 July.
Meaning up until just under three weeks ago, they couldn’t even get their products into the country. Namely, their CannEpil and CogniCann drugs, used to treat epilepsy and dementia/Alzheimer’s respectively.
Now though, not only can they import these products, but they also have a wholly-owned distribution network. Utilising MCC’s patient and professional ties to generate awareness and sales of both drugs.
As MGC co-founder, Roby Zomer comments:
‘The acquisition of Medicinal Cannabis Clinics’ assets is an important part of our strategy to grow our distribution network and direct supply chain capabilities in both Australia and Internationally.
‘Importantly, with the acquisition of MCC’s assets, MGC Pharma will be well on the way to achieving our cashflow breakeven targets.
‘We look forward to integrating MCC’s high quality network of clinics.’
No doubt, MGC will be hoping this is just the first of many deals to come. Perhaps even expanding MCC into a multi-clinic business. Reaching new markets across the country.
For now, they’re starting small and building up.
Just like the broader industry for that matter.
Because we have to remember, cannabis is still very much an industry in its infancy. At least, it is in Australia.
Pot stock potential
For long-time MGC investors, today’s news is unlikely to inspire any great confidence.
Like many pot stocks, the company has been in a steady decline since the 2018 highs. Afflicted by ongoing red-tape and pessimism surrounding cannabis.
It’s a sector that still has a long road ahead of it. One that has been very rocky so far.
However, that doesn’t mean you should count pot stocks out just yet.
Because while times are tough now, the potential to turn things around is still very possible.
All it takes is one policy change, or development to bring back interest. A trigger that could put pot stocks back on the map big time.
The upcoming New Zealand referendum, for example, can’t be ignored. A vote that could be the catalyst for a cannabis revival. That is, if the Kiwis vote in favour of it.
One way or another, the push to legalise cannabis — both medicinally and recreationally — isn’t going away. It is likely just a matter of time before the world comes around.
For now it’s up to investors to decide if they’re willing to take that risk.
Obviously, for some, it is a risk that is too big to bear. And that’s perfectly reasonable.
If you’re looking for small-cap opportunities with less speculation, then we’ve got you covered.
For Money Morning