Collie-based medicinal cannabis startup Cannaponics founder and managing director Rod Zakostelsky.
Western Australian medicinal cannabis manufacturer Cannaponics is preparing to launch on the Australian Securities Exchange (ASX) later this year, aiming to position itself within a legal cannabis market projected to exceed $150 billion by 2030. The company, led by Rod Zakostelsky, plans to produce 15,000 tonnes of medicinal cannabis annually, including dried flowers and oil, from its 165-acre facility located in Collie, South West Australia. The first harvest is anticipated in March or April 2024.
Diversification Strategy in Action
With an eye on an initial public offering (IPO) slated for the second half of the year, Mr. Zakostelsky emphasized that he has “future-proofed” the company by diversifying its revenue streams. A significant move included the acquisition of the Club Hotel Collie, which Cannaponics purchased for $550,000. The hotel features 21 rooms, three bars, and a bottle shop, providing a vital resource for attracting and retaining staff amid a regional housing crisis.
Since the acquisition, the hotel has opened its doors to local mining workers, contributing to a nearly 100% increase in revenue, which has risen to $6 million. Plans to expand the hotel with an additional 48 rooms could potentially elevate annual revenue to $14 million. “We have diversified within the company to combat any future challenges that we may face within the industry,” Mr. Zakostelsky noted, while also highlighting a trend of consolidation expected in the cannabis sector over the next 12 to 36 months.
Positive Market Projections
Despite the challenges, Mr. Zakostelsky expressed optimism based on various industry analyses predicting that the global legal cannabis market will reach approximately $102 billion (around $152.4 billion) by 2030. “We’re one of only half a dozen growers here in the country at the scale that we have, so for us it’s exciting to be part of that,” he said.
In preparation for the IPO, Cannaponics has engaged Morgans as its lead manager and advisers. This announcement follows the recent executive order by US President Donald Trump, which reclassifies cannabis from a Schedule I drug to a Schedule III drug, easing restrictions and aligning it with some common prescription painkillers. This change is anticipated to have significant implications for the cannabis industry globally.
Cannaponics is poised to make a substantial impact in the rapidly growing cannabis sector, as it prepares for its ASX listing and aims to meet the increasing demand for medicinal cannabis products.
