Phytotech Medical founder Ross Smith.
In the United States, it is known as the dot bong boom. And although in Australia cannabis does not – yet – flow as freely, the first medical marijuana company is about to list on the Australian Securities Exchange.
Perth-based PhytoTech Medical will lodge its disclosure document in late November, with the aim of raising $5 million through 25 million shares at 20¢ each. The float will be fully underwritten by BBY.
At its helm is Ross Smith, 51, who rode the highs and lows of the dotcom boom and who has a long and colourful history with both marijuana and sharemarket floats. Mr Smith, Israeli-based, smoked and sold cannabis as a teenager and young man, and was convicted and fined $15,000 for possessing and cultivating marijuana in 1989.
His online sharetrading company daytraderHQ was all over the headlines in 2000 and 2001 as its stock price rollercoasted – from 50¢ to $2.10 to 1.5¢ – amid legal action from former employees over their termination. Pilbara Mines – of which he was managing director – endured an even more dramatic run, its shares going from 5¢ to $8.07 to 19¢.
“The daytraderHQ days were 14 years ago and crazy times,” Mr Smith said. “I was corporately naive back then and, yes, mistakes were made.”
He pointed out that Pilbara Mines – renamed Jabiru Metals – was eventually sold for $531 million and another of Mr Smith’s companies, RequestDSL, for $78 million.
Although listed on the Australian Securities Exchange, PhytoTech will use marijuana grown in California and Uruguay to develop medical products in Israel. These will then be sold in Israel, Europe, the US and Canada.
If medical use of marijuana is legalised in Australia, the company aims to be a major player here as well.
Recreational use of marijuana in Australia is effectively decriminalised for small amounts. Worldwide, about 20 countries – as well as more than 20 states in the US – have legalised medical cannabis. Colorado and Washington have also legalised the sale of cannabis for recreational use.
Marijuana stocks are touted as the next big thing in the US, with stocks such as Hemp, GreenGro Technologies, Advanced Cannabis Solutions and Tranzbyte enjoying enormous gains in 2014. Investors, meanwhile, are cashing in on the trend. Possibly the best known of these is the so-called “Wolf of Weed Street” who has reportedly made more than $US500,000 ($568,000) trading in green stocks.
Mr Smith said his interest in medical marijuana stemmed from a broken back he suffered at age 25. In his late 40s, suffering “severe” arthritic pain from a laminectomy on his back, the anti-inflammatories and painkillers “were causing me serious grief”. A hunting and fishing holiday with a marijuana-smoking friend led to an epiphany: “After three days of enjoying a puff every night, I found that I didn’t need to take my medication.”
PhytoTech’s other directors include chairman and co-founder Peter Wall, partner of Perth law firm Steinepreis Paganin, who is currently non-executive chairman of miners Galicia, Minbos and Aziana. Non-executive director Winton Willesee has sat on the board of numerous Perth-based small miners, while the fourth member of the board is Israeli medical cannabis pioneer/activist Boaz Wachtel.
“One of the guys we’ve got [Dr Yehuda Baruch] headed the Israeli health department medical cannabis division … We’ve got the who’s who of the world authorities. In Israel, they’ve been researching medical cannabis for more than 40 years,” Mr Smith said.
Besides Dr Baruch, the other three members of Phytotech’s medical advisory board are the chief of haematology/oncology at San Francisco General Hospital, Donald Abrams, and Israeli medical academics Av Domb and Reuven Or.
With a long-term aim of cracking the Australian market, should medical marijuana become legalised, Mr Smith is bringing Professor Or to Australia for a series of talks with health ministers. Currently, there are clinical trails of cannabis-based medicine in Victoria and New South Wales, while the Victorian Labor Party has pledged to legalise access to medical marijuana for people with life-threatening conditions if it wins government.
The Australian Medical Association supports the trial of medical cannabis products, provided they have been fully tested and approved by the Therapeutic Goods Administration. However, the raw plant, and any oils or tinctures made from it, should continue to be banned, the AMA believes.
“What we are seeking to do is exactly what any other new medicine would be required to do coming onto the market,” the head of AMA’s Victorian branch, Tony Bartone, said recently.
Federally, Greens senator Richard Di Natale, chairman of the cross-party Parliamentary Group for Drug Policy and Law Reform, is finalising a bill allowing medicinal cannabis.
Prime Minister Tony Abbott indicated in a letter in August that he would support the bill, stating: “I have no problem with the medical use of cannabis, just as I have no problem with the medical use of opiates.”
However, Mr Smith said he was not expecting medical marijuana to be legalised soon in Australia. “It’s still talk and they need to do trials. I can give you 40 years of medical evidence if that’s what they want. There are people in Australia who need this medication now. The government has been irresponsible to deny Australians access to this.”
The company has no plans to get into the recreational cannabis market, he said. “It’s not our thing. We’re very corporate … there’s not a hippy in sight.”