High hopes: New Zealand cannabis start-up seeks $20 million in funding

24 January 2019 Consultancy.com.au

A New Zealand-based start-up that allows easier access to medical marijuana, Zeacann, is seeking to raise $20 million in growth funding. The company, formerly known as PharmaCann, has tapped consultants from PwC to oversee the capital-raising process. 

Zeacann is an online portal that allows pharmacists and health practitioners to order high-quality cannabis products from around the world, as well as locally, when infrastructure (and product) is in place to support such demand.

The start-up's name change was not without meaning. “[It] was actually geared to be more acceptable to a conservative regime with law reform off the agenda,” Chris Fowlie, Zeacann co-founder, said in an interview with New Zealand-based publication The Register. When a more liberal government took hold, however, and introduced legislation to make medical marijuana legal, PharmaCann rebranded. “Our new branding reflects our New Zealand origin and our status as a top-tier company representing the best cannabis that can be produced here.” 

The potential for global operations also played a part in the name change – when people think of New Zealand, they think of green, of lushness, of nature. That’s potentially an international selling point for New Zealand weed.

“The New Zealand market is by itself fairly small, so we’re targeting countries like Canada, where it has just become legal, as well as 20 other countries around the world that have legal cannabis markets,” Fowile said in an interview with The New Zealand Herald.

New Zealand cannabis start-up seeks $20 million in funding

New Zealand recently passed a law that allows for broader use of medical marijuana, which was previously highly restricted. The law also allows terminally ill patients to begin smoking illegal cannabis immediately, as well as puts the gears in motion for local companies to grow and distribute cannabis products locally and internationally, according to The Guardian.

The New Zealand cannabis industry “is being touted as a potential game-changer for deprived Maori communities on the east coast of the North Island, who hope to turn the thriving illegal industry into a thriving legal one,” the article states. The government has pledged to hold a referendum on the legalisation of recreational marijuana in the coming two years.

The New Zealand cannabis industry is in a phase of rapid growth, with companies such as Helius Therapeutics, Hikurangi Cannabis Company, and Cannasouth attempting to stake a claim in the burgeoning market. There seems to be no lack of consumer interest, either. A recent study in the US revealed that 76% of people would try therapeutic cannabis products – those containing CBD, which do not give the user a “high” – while 55% surveyed said they would try recreational cannabis, should it become legal. 

A cannabis HR network, which will help cannabis human resources professionals communicate and collaborate, was officially launched at the Lift & Co Cannabis Business Expo in Vancouver, Canada, on January 11.

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Chinese investment into Australia plunges to eight-year low

09 April 2019 Consultancy.com.au

Chinese investment into Australia plunged to US$6.2 billion last year according to the latest KPMG analysis, down by more than 35 percent to an eight-year low. 

A study from global professional services firm KPMG in conjunction with The University of Sydney has found that Chinese investment into Australia dropped by 36.3 percent in 2018, despite Chinese outbound direct investment growing by 4.2 percent globally to nearly US$130 billion. Taking in mergers and acquisitions, joint ventures, and green-field projects, Chinese investment into Australia totaled US$6.2 billion in 2018, down from US$10 billion the previous year.

As part of an ongoing collaboration between the Big Four firm and Sydney Uni, the latest release in the ‘Demystifying Chinese Investment in Australia’ report series (now into its fifteenth edition) points to Chinese domestic policy changes for the decline, with the local downward rate of investment now coming into line with trends seen in the US and Canada, which last year recorded respective Chinese inbound investment drops of 83 percent and 47 percent (in USD terms).Value of Chinese ODI into US, Europe and Australia 2012-2018

Designed to reduce its international exposure, the policy measures being implemented in China since early 2017 require overseas investments by Chinese firms to be non-speculative, only undertaken after fully considering major potential risks, and consistent with the company’s strategy and the country’s socio‑economic development goals – with certain categories of investment encouraged and others prohibited or restricted.

With 80 percent of Chinese executives stating that it was more difficult to get capital out of China in 2018 compared with 65 percent the year prior, the result is the second-lowest Chinese inbound investment in Australia since the mining & gas driven investment peak of 2008, with over US$16 billion coming into the country. Outside of the US$3.9 billion figure in 2010, the investment sum hasn’t dipped below US$8 billion in a decade.Chinese investment into Australia - 2007 to 2018

Yet, despite the domestic policy measures and downturn in inbound investment, Australia is still seen as a relatively safe investment destination according to a cross-sector survey of Chinese executives, with an improving political climate (those cautious due to the local political debate dropped from 70 percent in 2017 to 59 percent last year) and slight increase in the sense of being welcomed – up three points to 38 percent, although those feeling ‘unwelcome’ also rose by four points to 19 percent.

“Whilst Chinese investors confirm they remain positive about many aspects of the Australian market and its prospects compared with many other countries, there is an increasing concern around transparency of regulations, high costs and their continued perception of being unwelcome as reflected by negative Australian media coverage.” the report states.  “We need to be aware of the very real impact that poorly received, politically motivated public discourse and unbalanced media coverage can have on the future level of Chinese capital entering Australia.”2018 Chinese investment into Australia by sector

As an investment breakdown, private Chinese companies accounted for 87 percent of the deal value in 2018 and over 92 percent of deal volume, with state-owned entities contributing only 13 percent of value and 8 percent of the volume – which in total, dropped by 28 percent from 102 transactions in 2017 to 74 last year. As per those deals, over 40 percent of the investment total was made in the Australian healthcare sector, a more than 110 percent increase on the prior year.

According to the analysts, Chinese investors are primarily interested in scalable medical services and healthcare products which can be scaled in their home market, and the Australian healthcare sector has gained increased interest due in part to the ‘Australia package’ – ‘the combination of transferable management know‑how, high‑level care service experience, state of the art technology, the ‘clean, green and healthy’ image of Australian products.”

Meanwhile, new mining investment has dropped sharply – down 90 percent from a spike last year for just 5.6 percent of the total – opening the door for commercial real estate (predominantly mixed-use development and office stock according to figures provided by Knight Frank) to claim the second highest levels of Chinese investment at ~37 percent (albeit down 31 percent on 2017 levels). The remaining deal value was mostly in oil & gas (8.8 percent, up 295 percent) and renewable energy (4.8 percent, up 217 percent) sectors.2018 Chinese investment into Australia by geography

Perhaps of further note, at least in terms of demystifying Chinese-Australian investment, ‘Northern Australia’ attracted at most just 8 percent of total investment, with Queensland accounting for only 5 percent, Western Australia 3 percent, and zero deals made in the Northern Territory. Here, the bulk of the inbound investment was made in New South Wales (56 percent) and Victoria (27 percent) with South Australia (8 percent) claiming the majority of the remainder.

“While this annual result brings Chinese ODI in Australia back to the second lowest level since 2008, there is no reason why Australia can’t return to higher levels seen historically,” the report concludes. “2018 need not define a trend, but it is a period to reflect upon. There are a great many opportunities for Chinese companies to contribute towards the development and internationalisation of Australian industries and supply chains in the coming years and there is much that can be done to improve the perception of the Australian market to Chinese investors and vice versa.”