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Trading frenzy over ASX marijuana stock
PUBLISHED: 6 MINUTES AGO


Trading frenzy over ASX marijuana stock
PhytoTech’s founder Ross Smith: ”We are going to blow GW Pharmaceutical out of the water.”

Patrick Durkin



Speculators have flocked to invest in the first medical marijuana stock to list on the ASX, which has more than doubled in price on its first day of trading.

The company was seeking to raise $5.9 million through 30 million shares issued at 20¢ each, in the initial public offering underwritten by ­stockbroker BBY.

But by end of trading on Thursday, the share price had more than doubled to 42¢ apiece, as close to 13 million shares were traded and speculators bet PhytoTech Medical would quickly become an investor favourite.

The trading frenzy delivered a stunning return for the founders, their advisers and the initial investors, which includes a cohort of Perth stockbrokers as well as a wealthy Russian backer, who have more than doubled their money in one day.

The Australian Financial Review can also reveal the group will reap a further bonus bonanza with another 10 million shares set to vest if the price remains above 40¢ over the next five days, according to the prospectus and ASX documents. “It’s a pretty good day for everyone to come out above 40¢ but something we expected given the investor interest and the increasing acceptance of medical marijuana globally,” partner atPerth law firm Steinepreis Paganin and ­PhytoTech chairman Peter Wall, who engineered the deal, said.

He forwarded a selection of congratulatory emails from the satisfied brokers who initially invested in the stock: “Confident this is going to be my stock of the year 2015,” one crowed.

The Perth-based company will manufacture vaporisers in Israel to provide smokeless delivery systems across Europe, the United States and Canada for medical marijuana which it will grow in California and Uruguay. It also plans to supply its devices in Australia if medical marijuana is legalised.

The listing follows the success of medical marijuana stocks overseas such as cannabis drug maker GW Pharmaceuticals, whose shares surged 370 per cent on the London Stock Exchange last year. “We are going to blow GW Pharmaceutical out of the water,” said the company’s colourful founder Ross Smith, who is now based in Israel with managing director and Israeli industry advocate Boaz Wachtel.

BBY’s director of corporate finance, Adam Blumenthal confirmed several brokers and traders had invested personally in the business.

“The story has generated enormous interest within BBY, other brokers and the finance community,” he said.

“It’s a growing $100 billion market and every week we see another jurisdiction globally has accepted it or is conducting trials, such as in NSW.”

The pot stock was cleared for trading by the ASX after the exchange sought additional assurances about the legality of the business.

“ASX sought additional information from the company – mainly legal opinions as to its ability to conduct its business in various jurisdictions,” ASX spokesman Matthew Gibbs said. “ASX is now satisfied that Phytotech has met the admission criteria for listing.

The prospectus was also lodged with the corporate regulator but ­commissioner of the Australian Securities and Investments Commission John Price has been at pains not to endorse the business.

“The fact that a prospectus is lodged with ASIC does not mean that ASIC ‘approves’ or ‘endorses’ the nature of a particular company’s business plan or investment scheme in any way.”


The Australian Financial Review


BY Patrick Durkin