Cannabis outfit Cronos on a high as it declares maiden dividend and forecasts further growth

Investors in the ‘Amazon of medicinal cannabis’ have been rewarded with a 1c a share dividend, sparking a new era in Australian pot stocks.

Cronos has become Australia’s first medicinal cannabis company to reward shareholders with a dividend, announcing a maiden investor payout of 1c a share.

The company’s annual revenue more than tripled to $67m, while net profit leapt to $6.04m – a $4.6m turnaround on the previous year.

Investors cheered the news, with Cronos shares leaping 7.3 per cent to 37c on Monday – a six-month high and giving it a market value of $196.1m. This compared with 2 per cent slump across the broader sharemarket and defies the rout plaguing most cannabis stocks after many in the sector failed to deliver on the promises made when the market launched in 2016.

Chief executive Rodney Cocks said the result was largely thanks to its merger with fellow medicinal cannabis business CDA Health last December in a cash and scrip deal. The company also signed 13 new agreements with medicinal cannabis suppliers, taking its total to 27, and now offers more than 160 medicinal cannabis products on its CanView platform.

Unlike many of its rival pot stocks, Cronos does not grow or manufacture cannabis, operating as a market place instead.

“The company has achieved record growth during the 2022 financial year and it is gratifying that the company can share its success with its shareholders in a very tangible way,” Mr Cocks said about the maiden dividend.

“We have got more than 50 per cent of pharmacies on the platform at the moment and that continues to grow week by week. We’ve got in excess of 700 prescribers on the platform, again also increasing.

“Looking forward to 2023, the company is confident that it is well positioned to deliver further growth and shareholder value.”

Cronos is planning further expansion in coming months, opening its second warehouse in Melbourne, which will offer pharmacists in the southern capital same-day delivery, and shave about a day off shipping to elsewhere in Victoria, southern NSW, Tasmania, South Australia and Western Australia.

Mr Cocks said most people were buying whole-flower medicinal cannabis products on the platform, with the majority looking to relieve chronic pain.

“The market in Australia was initially an oils market, so an extracted product market. That has literally been turned on its head from 80-20, to 20-80, with that 80 per cent now being whole-flower products.

“That’s typically vaporised using a medical grade vaporiser, which the doctor educates the patient on. The patients, certainly those who are suitable, have been getting really good results.”

Across the broader medicinal cannabis industry, a wild west scenario is playing out that has crunched the value of related stocks by as much as 80 per cent, with legitimate players being tarred with the same brush as those bypassing clinical trials and other research.

Cronos is the only ASX-listed cannabinoid-focused company that has produced a full-year profit since cannabis cultivation was legalised in 2016, despite talk of multi-billion dollar opportunities to treat conditions from sleep apnoea to inflammatory bowel disease and concussion.

“It’s really interesting to see that the companies that have made it have made a strategic shift away from cultivation. It’s one we’ve taken lessons from and sort of vindicates our decision and our strategy around being asset-lite. But we’re also looking at tech places in the industry moving forward as well,” Mr Cocks said last month.

Cronos will pay the dividend on October 11.