USUALLY, when a relatively unknown explorer experiences a sharp spike in its share price, it means they've found something valuable in the ground or they're about to start digging it up to sell.

So, when Queensland Bauxite (ASX: QBL) jumped 114% to a high of 3 cents last week it seemed logical to assume the company hit some "pay dirt" in its hunting grounds of the Sunshine State and NSW.

But this had nothing to do with bauxite or mining.

It was all about cannabis as QBL became the latest "dope hope" on the market with the decision last year by the Australian Government to approve cannabis cultivation for medical purposes.

QBL acquired a 55 per cent stake in Australian unlisted company Medical Cannabis Limited (MCL) on March 3, 2017, and since then there have been further announcements which have attracted investors into the stock.

Queensland Bauxite has a market cap of $31 million and makes no money, yet it attracted investment from a New York based institutional investor into the takeover deal, with the ultimate aim of bringing MCL to an IPO and an independent listing on the ASX.

So why the left-field takeover by a junior mining explorer with US backing?

"The sky is the limit with this. Medicinal cannabis is the new dot com industry of the 21st century," says Andrew Kavasilas, technical director of MCL, a pioneering company in the cannabis and hemp industry.

"How much will this industry be worth in Australia? We could well be on a par with Netherlands and Israel (which already have a national medicinal cannabis program) so it has the potential to be a billion dollar industry."

The medicinal cannabis industry has evolved at a rapid pace and Kavasilas says he only began talking to QBL around six months ago.

"It was all pretty straight forward really. We had mutual friends, we had done some research for them and we wanted to get on to the ASX," Kavasilas says.

"We're Australian owned and focused and we want to be the premier manufacturing company in this industry.

"We needed some serious money to kick this along and we needed to capitalise on all the momentum that is happening (with medicinal cannabis)."

The spark was lit under the industry in October 2016 when it became legal to cultivate, produce and manufacture medicinal cannabis products.

The ruling opened the floodgates to a potentially profitable new industry in Australia which will generate jobs and help tens of thousands of chronically ill people who've been demanding its availability.

Medicinal cannabis is used to treat severe pain, nausea and vomiting and can ease muscle spasticity and provides relief for patients suffering cancer, epilepsy, HIV and MS.
It will still be illegal to use or grow marijuana for recreational purposes.

Most states are now legislating to legalise cannabis production and the latest news was from Queensland which on Friday amended laws to allow licensed growers to supply cannabis seeds into Australia's medicinal cannabis system.

"This creates new opportunities for Queenslanders. The changes will be mutually beneficial for licensed industrial cannabis growers and those Queensland businesses interested in being part of the emerging medicinal cannabis industry in Australia," says Queensland Minister for Agriculture and Fisheries Bill Byrne.

For former Nimin café barista Andrew Kavasilas, and the fledgling medicinal cannabis industry, the positive announcements are coming thick and fast.

"No other governments in the world have acted so decisively as has happened here in Australia," Kavasilas says.

"There's real momentum happening, and that momentum is all in the right direction."

In recent months, at least half a dozen companies have moved to capitalise on the legalisation of medicinal cannabis in Australia including The Hydroponics Company,  AusCann Group, Zelda Therapeutics, MGC Pharma, Creso Pharma, the International Cannabis Corp and Stemcell United.

Shares in the Singaporean biotech Stemcell United rocketed this month on the back of an announcement they'd hired the "King of Cannabis" Nevil Schoenmakers as its strategic adviser.

Schoenmakers, an Australian-Dutch dual national, became a legend in the world of cannabis in the 1980's by cultivating some of the most potent varieties of the plant.

That announcement sent the stock on an 8,300 per cent orbit to 50 cents. As the SMH pointed out at the time, someone holding $1,000 of stock on a Monday would have had $83,460 by Wednesday.

The hot pot stocks could become the new darlings of speculative investors.

Business News Australia

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