Australia's Mining Slowdown Prompts Resources Companies To Venture In Medical Marijuana
The slowdown in Australia’s resources boom has prompted struggling miners to bank on the booming market for medical marijuana to attract investments. At least three resource companies are planning to raise funds on the Australian Securities Exchange in the coming weeks in an attempt to ride on the medical pot boom.
Phytotech Medical, a company based in Perth that acquired $4 million in funding in January to become the country’s first listed medical marijuana stock, reports the Financial Times. Peter Tasker, the director of International Goldfields, said Australia’s resource sector in general finds it difficult to gain the support of capital markets.
International Goldfields is a gold mining company with plans to buy an 85 percent stake in an Uruguay-based company that develops medical companies known as Winter Garden. The company is raising up to $4 million from investors.
Other mining companies looking to capitalise on the “pot boom” are Capital Mining and Erin Resources. Sales of cannabis for recreational and medicinal purposes in the U.S. had increased 75 percent year on year, reaching $2.7 billion in 2014.
Australia and other countries are still considering the legalisation of medical marijuana. The trend has spurred investors to support the market in the U.S. and elsewhere. “Australia is a more vigorous investment market for medicinal cannabis companies than other countries such as the U.S., which have already experienced multiple listings in the sector,” said Capital Mining chief executive Michael Sautman.
Capital Mining, a minerals exploration company, wants to raise $19 million to acquire medical marijuana companies based in Australia, Canada and the U.S. The company seeks to become a commercial grower of marijuana in Tasmania. Sautman said Australia is a new market and there are moves to introduce regulatory reform.
Meanwhile, support is growing for the legalisation of medical marijuana in Australia. More than two-thirds of Australians support the use of medical cannabis, according to a recent survey by Palliative Care Australia.
The poll found that 67 percent of people agree with the drug being used to help patients with chronic illness and relieve pain. Support for medical marijuana is strongest among the elderly, reports SMH.
The survey of 1,006 people from all over Australia said only nine percent of respondents do not agree with the medical cannabis use while 24 percent answered they were not sure. The results of the poll will further add to the support behind the legislation currently before the Parliament.
The bill pushing for the legalisation of medical marijuana was drafted by Greens party leader Richard Di Natale and supported by Liberal, Labor and crossbench senators. A senate inquiry into the bill is expected to report to parliament in June. Prime Minister Tony Abbott has previously declared his support for the legislation in 2014.
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