Cannabis company to return $85,000 Govt payout
Cannasouth, the medicinal cannabis company that successfully raised $6 million from the market this week, says it will repay the $85,000 it received under the Government’s wage subsidy scheme.
The company, which listed on the NZX last year, said that on April 1, Cannasouth Plant Research NZ Ltd (CSPRL) applied for and was subsequently granted $85,726.
The subsidy scheme aims to support employers which have been adversely affected by Covid-19, so they can keep paying their employees.
To be eligible for the subsidy, businesses must declare that they have suffered a 30 per cent revenue drop because of the pandemic, and will retain named employees for at least the duration of the subsidy.
This week, Cannasouth raised $6m from its share purchase plan to accelerate its growth plans. CSPRL, which is fully owned by Cannasouth Ltd (CBD), had been generating revenue, it said.
“When CSPRL ceased operations at the Waikato Innovation Park, Hamilton during the Covid-19 level 4 lockdown, it was unable to continue with its revenue-generating activities.
“Other companies within the
Cannasouth Group did not apply for the subsidy. CBD [parent company] and Cannasouth Cultivation Ltd [50 per cent owned] did not meet the criteria, and Midwest Pharmaceutics NZ Ltd [60 per cent owned] revenues have increased as recently reported to the market.
“CSPRL met the criteria for the Government’s wage subsidy and applied for, and used it appropriately.
“While CSPRL still meets the criteria for the subsidy, following the overwhelming success of the capital raising the board has resolved to withdraw the application for wage subsidy and repay the funds to the Ministry of Social Development and is currently investigating the process for doing this.”
In its capital raising, the biopharmaceutical research and development company sold 15.8 million shares at 38c apiece, a 20.7 per cent discount to the five-day volume-weighted average price.
The company, headed by chief executive Mark Lucas, also announced that it has entered into a supply agreement with MediPharm Labs Australia, a subsidiary of Canadian company MediPharm Labs, for the supply of “white label” medicinal cannabis products for the local market, which will have Cannasouth branding.