Medical cannabis company seeks listing

Shares in TW Holdings slumped sharply today after it announced a backdoor listing of medical cannabis company AusCann Group Holdings, the second deal of this type involving members of the Washer family.

AusCann is led by Mal Washer, who was a Liberal member for the House of Representatives between 1998 and 2013, while Atlas Iron chair Cheryl Edwardes and former Police Federation of Australia head Mick Palmer serve as directors.

Under the terms of the deal, TW will acquire AusCann through the issue of 3.06 billion shares at 0.55 cents each, equal to $16.8 million, along with 600 million performance shares, subject to the achievement of certain milestones.

TW will also seek to raise at least $3 million to comply with ASX relisting rules.

If successful, TW will change its name to AusCann Group Holdings and adopt its target’s business model.

The current board of TW – David Wheeler, Nicholas Calder and Simon Taylor – will resign and be replaced with Mr Washer, Mrs Edwardes and Mr Palmer, along with current AusCann managing director Elaine Darby and director Harry Karelis.

Mr Washer told Business News that following the acquisition of TW, the next step towards growing marijuana in Western Australia would be to obtain manufacturing and growing licences.

He said the Therapeutic Goods Administration could take up to eight months to put in all the regulations required to enact the recent amendments to the Narcotics Drug Act before licences can be applied for.

“Then there’s the manufacturing side of the process; the manufacturing of medical marijuana also requires legislation to pass through the state government,” Mr Washer said.

“Assuming that we get a licence and the state government passes a manufacturing licence, we will probably grow here in WA.”

He said the ideal climate area to grow the product would be around Margaret River.

Mr Washer’s son, Stewart Washer, and Mr Karelis are directors of biotech company Zelda Therapeutics, which is also currently working towards an ASX listing through a reverse takeover of Perth-based Gleneagle Gold.

Zelda has an informal agreement with AusCann and hopes to combine AusCann’s product with its plans to conduct human clinical trials on the effectiveness of cannabis-based formulations for treating conditions such as eczema, acne and post-burn itch.

TW hopes to begin trading under its new model by the end of July.

TW shares closed 42.8 per cent lower at 0.4 cents each.