Public Interest Journalism funded through NZ On Air
Medicinal cannabis company Rua Bioscience needs to secure $3 million through a capital raise to keep the business operating and help increase sales.
After spending $37m over the past six years, the Tairāwhiti-based company was about to break even if it could raise the $3m, Rua Bioscience CEO Paul Naske said.
The capital raise began on November 6.
The funds would go toward business expenses that included overheads and paying cultivators, and would be used as working capital to get stock and to sell more products, Naske said.
“The sales are jumping up considerably in three markets of Germany, Australia and New Zealand and soon to be a fourth market, which is the UK.”
The current revenue trajectory, along with new product offerings in key markets, had given the company confidence in its business plan and it was forecasting revenue of more than $3m by the end of the 2025 financial year.
“That’s how much effect bringing a product to the market in NZ and Australia has increased the demand and sales.”
Naske said monthly sales in NZ and Australia would be the biggest yet and sales were tracking up.
Rua Bioscience also had a strong demand for its product in Germany, through its partnership with Nimbus Health.
“It has taken us this long to set up the pipelines to get the sales going and we are just getting going and about to hit the straight but we need gas in the tank, the gas in this case being money,” Naske said.
In 2020, Rua Bioscience became the first company founded by a Māori community to be listed on the NZ Stock Exchange.
It debuted at 70c a share and the current stock price is around 3c.
As part of its capital raise, Rua Bioscience held roadshows across Tairāwhiti, nationwide and online to tell shareholders and others what the company is doing.
The first was at its cultivation site Mangaoporo in Ruatōria, an outdoor production and research space.
“Everyone loves seeing what is behind the fence and behind the doors. You get more questions when people are physically engaging.”
Naske said Rua Bioscience’s point of difference was its connection to tangata whenua and the dreams and aspirations of those on the East Coast who wanted to see jobs, profits and benefits from the company.
“No other NZX-listed company is driving up and down the East Coast doing what we do.”
Aotearoa’s medicinal cannabis industry has not had an easy year, with Cannasouth and Aether Pacific Pharmaceuticals (formerly known as Medical Kiwi) both going into voluntary administration.
Over the past six years, Rua Bioscience has been through restructuring to keep it going.
It closed and sold its manufacturing facility in Commerce Pl, Gisborne.
Naske said the company thought in its early days that it needed separate places for cultivation and manufacturing – where the product was turned into oils and packaged.
But over time, it realised it was going to be tough to make money and be sustainable while manufacturing medicinal cannabis products.
“We had to rethink the business model and worked to create pipelines to get our Rua Bio product into different countries.”
Rua Bioscience manages genetics research and development at the Mangaoporo facility, outsources the cultivation and manufacturing and then sells a branded Rua product in different markets.
The capital raise closes on Monday. Naske said the response so far had been positive.
He hopes the company can continue meeting its goals, which include job creation, more people on the compassionate access programme and more scholarship recipients.
Along with this, Naske hopes cannabis is decriminalised but feels the result of the cannabis reform referendum in 2020 means that politicians have “parked it and are not willing to look at it”.
Medicinal marijuana is easier to access since the failed referendum, but products are still expensive for patients as prescriptions are not subsidised by Pharmac.
Nearly all medicinal cannabis products and CBD oils are considered unapproved medicines by Medsafe, which means only someone registered with the Medical Council of New Zealand as a practitioner of medicine can obtain them for their patients and prescribe them.
Last year, Rua Bioscience cannabis cultivation consultant Porourangi Tawhiwhirangi said regulations at the time made it hard for growers and producers to supply the local medicinal cannabis market.
Matai O’Connor, Ngāti Porou, has been a journalist for five years and Kaupapa Māori reporter at the Gisborne Herald for two years.
