Cannabis stocks get a healthy boost after UN removes narcotic tag

Shares in Australian cannabinoid-based medicine producers were given a healthy boost today after the United Nations (UN) reclassified cannabis so it is no longer considered a risky narcotic.

Following recommendations from the World Health Organisation on marijuana and its derivatives, the UN has removed cannabis from Schedule IV of the international treaty governing narcotic drugs where it sat alongside deadly and addictive opioids such as heroin.

Australia and the US are among 53 counties who have been signatory to the protocol since 1961.

The UN vote was passed by the slimmest of margins with 27 in favour and 25 against with one abstention, paving the way for the medicinal and therapeutic potential of the recreational drug which is still illegal in most jurisdictions.

Australian therapeutic cannabis producers were among the most traded stocks on the ASX this morning, buoyed that the reclassification will unlock new opportunities globally for the industry.

Shares in Creso Pharma (ASX: CPH), Roots Sustainable Agriculture (ASX: ROO), Cann Global (ASX: CGB) and ECS Botanics Holdings Ltd (ASX: ECS) were among the top six shares traded by volume.

Roots shares surged more than 20 per cent, while Cann Global rose more than 16 per cent and Creso Pharma more than 10 per cent.

Roots' chairman and CEO Boaz Wachtel was a member of the steering committee for ENCOD, the European Coalition for Just and Effective Drug Policies, which was one of the organisations instrumental in calling for changes to the classification of medical cannabis. The cannabis sector is Roots' largest market for its proprietary RZTO technology.

"The UN ruling to declassify cannabis is a landmark decision and paves the way for the relaxing of cannabis drug classifications in large markets across the world," says Wachtel.

"The result of this vote follows 60 years of the status quo, three years of scientific review by the world's leading health organisations, two years of diplomatic discussions and considerable lobbying from NGOs."

Roots says the change is likely to lead to an increase in production in some of its cultivation operations while opening the market to new countries for Roots' systems of cultivation.

AusCann Group Holdings (ASX: AC8) expects the move to vitalise research into medicinal cannabis.

"This is a positive development for AusCann and the medicinal cannabis industry," says AusCann CEO Nick Woolf. 

"It will assist in global research into clinically-relevant cannabinoid-based medicines to address unmet medical needs."

Bod Australia (ASX: BDA) is confident of a favourable impact on its global business with an easing in regulation in its key markets, namely the UK, Europe and North America.

The company says that, in collaboration with its exclusive global partner Health & Happiness Group Limited, it will be progressing initiatives to leverage H&H's established sales channels, distribution footprint and leading brand reputation.

"Bod has always taken a scientific-backed approach to its product development and we are very confident that this decision will unlock major opportunities for us," says CEO Jo Patterson.

ECS Botanics' managing director Alex Keach says the Australian cannabis industry will benefit on a global level.

"We have a best-of-breed medicinal cannabis framework backed by good manufacturing practice, which has EU recognition," Keach says. 

"Although Australia has been slow to the global race, unsurprisingly this is now looking to become our biggest strategic advantage. All of this bodes extremely well for ECS's business model."

Elixinol Global (ASX: EXL) expects the decision to have a substantial impact on the company's ability to drive product sales in Europe.

"This is possibly the most important day for cannabidiol or CBD - since it was scheduled as a narcotic in 1961," says Elixinol's group CEO Oliver Horn.

"Over the last two years we've already built a substantial base in Europe which has contributed significantly to our recent performance and from which we can now unlock new value.

"Given the significant influence of the UN, we also expect positive follow-on effects into other countries where we operate."

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