Investors have gone potty for Althea Group with shares in the medicinal cannabis supplier trebling in value on their ASX debut.
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The Melbourne-based business opened at 60 cents after the company raised $19.6 million, at 20 cents a share, in its initial public offering.
Canadian cannabis giant Aphria owned a 25 per cent stake of the company, while founder Joshua Fegan holds 29 per cent, worth about $34.4 million at market close.
Althea will use funds to build a cannabis growing plant on 10 acres in Skye, Victoria.
It plans to grow and produce about three tonnes of high-grade, dried medicinal cannabis flowers per year.
It also wants to increase its sales of imported products.
Mr Fegan started Althea in 2016 when the federal government legalised the sale of medical cannabis to approved patients.
His interest was sparked by a family member who had invested in a medicinal cannabis company in Seattle.
"I said, 'No way, this is not legal'," he told AAP on Thursday.
But like many trends from the US, it eventually trickled its way down to Australia.
Althea began selling five products - four oil-based tinctures and one dried - in May.
Its supply is currently grown by Aphria.
The two companies have a three-year product, plant and genetics acquisition agreement, including the design of Althea's planned Skye facility.
"They've basically given us the blueprint," Mr Fegan said.
In return, the company gets access to the growing Australian market and help to navigate what Mr Fegan says are the nation's "arduous and cumbersome" controls.
A strong local market for medicinal cannabis will depend on doctors and pharmacists, as well as patients, understanding how to prescribe and use the drug, Mr Fegan says.
To help drive the market the company developed Althea Concierge, a mobile app and web-based education service for healthcare professionals and patients wishing to learn about, and access, medicinal cannabis.
The drug is currently being used to treat a variety of illnesses, from epilepsy and non-cancer pain to insomnia, anxiety and post-traumatic stress disorder.
Althea shares closed up 36 cents, or 180 per cent, at 56 cents on Friday.
Australian Associated Press
