Former MMJ Phytotech boss is starting a new cannabis company in New Zealand with plans to list on the ASX

Photo: SHAWN THEW/AFP/Getty Images

Ross Smith, who quit MMJ Phytotech (ASX:MMJ) in 2014 after a barrage of explicit and threatening rants were posted to his Facebook page, is starting a new cannabis company — in New Zealand.

At the time Mr Smith said the Facebook rants were the work of hackers.

Mr Smith’s new company is called CannMed NZ Ltd and was registered on Wednesday afternoon.

He plans to list it in Australia, likely this year, after raising $1.5 million to $2 million in seed capital, because he doesn’t believe the New Zealand stock exchange is sophisticated enough.

Backers may include a group of retail investors sourced through the ASX Medicinal Cannabis Investors Group on Facebook, who approached Mr Smith last year.

“My group admin team and I are big fans of Ross Smith,” said group admin Jason Richter Wright.

“He mentioned that he was looking to form a new MC [medical cannabis] company for NZ to take advantage of the new MC Bill being introduced this year and naturally we jumped at the opportunity to get involved.”

Mr Wright has been promoting the idea of forming a consortium to invest in the seed round to the Facebook group this month, although details were scant as CannMed did not exist yet.

“Ross mentioned that our group would more than likely need to form an entity to be considered a sophisticated investor,” Mr Wright said.

“He is keen to support us even though he has a large loyal support base of sophisticated investors in Australia. We would even be keen on getting a priority offering on the IPO once he lodges a prospectus. Simply trying to do the best for our group.”

Mr Wright and his supporters believe forming an investment consortium out of a Facebook chat forum will be a world-first.

An ASIC spokesman told Stockhead that a group of retail investors would need a legal entity to put money in as a sophisticated investor.

Further, while marketing and promoting future IPOs is not against the rules, nor is using social media, promoters must be careful not to overstate the potential of a company and properly highlight the risks.

Mr Smith said he would “particularly target these groups, because I believe [Mr Wright’s] group has something like 5000 members”.

“The guys on that group they know me, they’re supportive, they want to expand their offering to their group, so I think they’re sounding the market out to see if there’s interest there.”

“I have no problems raising capital because my group usually makes 800 per cent to 1000 per cent [on the companies I build].”

He said he’s “toying with the idea” of opening the seed and IPO rounds up to mum and dad investors.

Amsterdam ‘joint’ venture

Mr Smith says he has formed a joint venture with Paradise Seeds in Amsterdam via his personal investment company.

Depending on the final version of New Zealand’s cannabis legislation, currently before a select committee, CannMed will initially supply cannabis flowers to the terminally ill and seeds for personal growth, and move into edibles, skin creams and oils later.

“Edibles are the way to go, safe, there’s no possible way people can overdose on them,” he told Stockhead.

“I’m working with a guy at the moment who’s got a skin cancer clinic, he’s a bit of an entrepreneur doctor so we’d be looking to add on a medical cannabis treatment clinic.

“It’ll take 12-18 months to work through the loopholes in getting a full medical cannabis license here in NZ which we would then grow in a secure facility.”

Mr Smith won’t take an active role in the company, but install a doctor-CEO and take a fee for his role in starting and promoting the company.

He is currently busy with property investments in New Zealand, which he says made $NZ8 million of “tax-free” money last year and will pull in $NZ10 million this year, enabling him to “drive a couple of new Bentleys, as we all do”.

This article first appeared at Stockhead, Australia’s leading news source for emerging ASX-listed companies. Read the original article here. Follow Stockhead on Facebook or Twitter.

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