The Altium Limited (ASX: ALU) share price came under pressure on Tuesday following the release of a trading update.

The electronic design software company’s shares fell as much as 5% before recovering to end the day 2% lower at $30.13.

What did Altium announce?

Altium’s update revealed that trading conditions were tough during the six months ending 31 December.

In light of this, the company is expecting to report a 3% decline in first half revenue to US $89.6 million.

Management explained that this decline was “due to extreme COVID conditions in the US and Europe and challenging economic conditions, post COVID in China, for licence compliance activities.”

Positively, the company witnessed an improvement in trading conditions during the second quarter, which has given management confidence that the second half will be much stronger.

Altium’s CEO, Aram Mirkazemi, commented: “I am confident that with our pivot to the cloud and our move to digital sales that the Q2 momentum will continue into the second half.”

In light of this, the company has maintained its guidance for FY 2021.

Is this a buying opportunity?

According to analysts at Credit Suisse, this could be an opportune time to pick up Altium shares.

This morning the broker retained its outperform rating but with a revised price target of $35.00. While it was disappointed with its update, it notes that management has stated that its second half deal pipeline is significant.

Credit Suisse’s price target implies potential upside of 16% over the next 12 months.

Elsewhere, analysts at Goldman Sachs have retained their neutral rating. However, it is worth noting that their price target of $36.35 offers upside of 20% from yesterday’s close price.

That’s better than some of the potential returns on offer with shares that the broker has buy ratings on at present.

More reading

• 5 things to watch on the ASX 200 on Wednesday
• ASX 200 drops lower
• Objective (ASX:OCL) share price continues its rise in 2021 after doubling last year
• ASX 200 up 0.4%: Altium disappoints, ARB impresses, Mesoblast charges higher
• Why Altium, Clover, PolyNovo, & Tyro shares are dropping lower

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Core Lithium Ltd (ASX: CXO) share price has been a very strong performer on Wednesday morning.

In early trade the emerging lithium miner’s shares jumped as much as 19% higher to 25 cents.

The Core Lithium share price has since dropped back a touch but is still up 9% to 23 cents at the time of writing.

This latest gain means its shares are now up an incredible 360% over the last couple of months.

Why is the Core Lithium share price jumping higher?

Investors have been buying the company’s shares this morning following the release of a positive announcement.

According to the release, Core Lithium has been granted a mineral lease for the high-grade BP33 Lithium Deposit. This is a key component of the company’s 100%-owned Finniss Lithium Project located near Darwin in the Northern Territory.

Management notes the 25-year lease for BP33 follows the receipt of the first ever mineral lease that the Northern Territory Government had awarded for a lithium project. That was for Core Lithium’s Grants Deposit, which is another key component of the Finniss Lithium Project.

Core Lithium’s Managing Director, Stephen Biggins, believes this approval is both well-timed and a significant milestone in the company’s history.

He commented: “This additional mining lease approval from the Northern Territory Government is well timed as Core continues to advance the Finniss Lithium Project towards commencing construction and as we aim to further expand resources, life of mine and production capacity in 2021.”

“It is a further encouragement that the NT Government understands the important role that Finniss will play in the future of the lithium sector and as we continue to see signs of global improvement in this industry, we are optimistic of our near-term plans for Australia’s next lithium mine,” he concluded.

More reading

• Afterpay and Creso Pharma were among the most traded shares on the ASX last week
• Here’s why the Core Lithium (ASX:CXO) share price rocketed 45% higher today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Dividend shares could prove to be a sound means of obtaining a passive income for life. At the present time, they offer significantly higher income returns than other mainstream assets, such as cash and bonds.

Furthermore, many stocks have solid financial positions that mean their dividends are very affordable. They could also produce strong dividend growth in the coming years that outpaces inflation and provides an investor with an increasingly sound financial outlook.

Reducing the risk of loss from dividend shares

Dividend shares offer a substantially higher passive income than other assets due to low interest rates and the effect of the 2020 stock market crash. Low interest rates mean that the income returns available on cash and bonds are below inflation in some cases. Meanwhile, many income stocks have not fully recovered from the market decline. This may mean that they offer above-average yields at the present time.

Of course, the higher income return from dividend stocks comes with greater risk. A weak global economic outlook means that some companies could experience challenging operating conditions. As such, diversifying among a wide range of companies, sectors and regions could be a shrewd move. It may reduce risk and provide an income investor with a more reliable return in the coming years.

An affordable passive income

Alongside diversification, enduring that dividend shares can afford their current payouts is crucial when seeking to make a passive income for like. A company with a generous yield that is unaffordable is unlikely to provide any added value to an income investor.

Assessing a company’s financial position can provide guidance on the likelihood of it experiencing difficulties in paying dividends. For example, low debt levels and defensive characteristics may help in producing a robust income return. Similarly, a company’s dividend cover provides an insight into the amount of headroom it has when making dividend payouts. It is calculated by dividing net profit by dividends. A figure of more than one suggests it has room to spare when rewarding shareholders for its success via a dividend.

Dividend growth opportunities

Dividend shares that can increase shareholder payouts at a fast pace may become increasingly valuable. The loose monetary policies being followed in major economies could lead to higher inflation. Therefore, a passive income that can grow at a high rate could be required in the coming years to maintain, or increase, an investor’s spending power.

A company’s capacity to raise dividends at a fast pace is closely linked to its financial outlook. Therefore, buying shares in companies that could benefit from long-term industry growth trends, or those businesses that have a competitive advantage over their peers, may be a sound move. They may be able to produce strong dividend growth that further enhances an investor’s passive income in the coming years.

More reading

• Here’s why the Core Lithium (ASX:CXO) share price stormed 19% higher today
• The Saracen (ASX:SAR) share price dips on dividend update
• Here’s why the Universal Store (ASX:UNI) share price is surging 10% higher
• Why the Audinate (ASX:AD8) share price is dropping lower today
• Why lithium miner AVZ Minerals (ASX:AVZ) is shooting higher today

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Saracen Mineral Holdings Limited (ASX: SAR) share price has dipped 0.42% in early trade. Shares in the Aussie gold miner are in focus after an update on its special dividend payment to shareholders late last night.

Why is the Saracen share price moving today?

Northern Star and Saracen announced a $16 billion mega merger-of-equals back in October 2020. The proposed merger would see Northern Star acquire 100% of Saracen shares for 0.3763 Northern Star shares.

The Saracen board has unanimously recommended that shareholders approve the proposed scheme of arrangement relating to the deal. Last night’s release provided an update on the special dividend to shareholders as part of the scheme.

Saracen will pay a fully franked special dividend to Saracen shareholders of $0.038 per share, conditional on the scheme becoming effective. Eligible shareholders should also receive a $0.016 per share franking credit, subject to ATO approval.

The Saracen share price is one to watch following the latest update as shareholders react to the news.

The special dividend record date is Wednesday 3 February with scheduled payment on 11 February 2021. The new Northern Star shares are set to commence trading on Monday 15 February 2021.

How have ASX gold shares performed recently?

2020 was a good year for ASX gold shares in general as markets edged towards a more hawkish view.

The coronavirus pandemic and subsequent bear market saw investors flock to the perceived safety of gold. Gold prices surged higher last year and boosted profit margins for major producers.

That meant the Saracen share price rocketed higher and remains up 34.8% in the last year. It was a similar story for Northern Star shares which have climbed 10.0% higher in 12 months.

Both ASX gold shares have seen a soft start to 2021 and edged lower in early trade this year. However, the merger looms as a potential game changer for both Saracen and Northern Star as they look to combine assets and operations to become a serious global player.

More reading

• ASX 200 down 0.4%: Afterpay tumbles, bank shares lower, gold miners crash
• Why Newcrest (ASX:NCM) and Northern Star (ASX:NST) shares could crash lower today
• 5 things to watch on the ASX 200 on Monday
• Why these leading ASX gold and tech shares could rally on through 2021
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Universal Store Holdings Ltd (ASX: UNI) share price is surging higher this morning.

At the time of writing, the fashion retailer’s shares are up 10% to $5.70.

Why is the Universal Store share price surging higher?

Investors have been fighting to get hold of the fashion retailer’s shares after it revealed that it expects to report a significant jump in its sales and earnings in the first half of FY 2021.

According to the release, Universal Store’s first half sales were up 24% to approximately $118 million for the six months ended 31 December.

Management advised that this was driven by a 26.5% increase in like for like sales, which offset store closures in Adelaide, Melbourne, and Sydney during lockdowns.

And thanks to an improvement in its gross margin, Universal Store’s profits are expected to grow at an even quicker rate.

The company advised that its underlying earnings before interest and tax (EBIT) is expected to be in a range of $30 million to $31 million for the half. This represents growth of between 61% and 67% on the prior corresponding period.

Universal Store’s CEO, Alice Barbery, commented; “Despite a significant period of disrupted trade in Melbourne and to a lesser extent Adelaide and Sydney the results delivered across the first half of FY2021 are well ahead of the results delivered in the prior corresponding period.”

“This not only highlights the ability of our team but also our agility to operate in what has been an unpredictable trading environment,” she added.

However, due to the ongoing uncertainty relating to COVID-19, the company has decided against providing any guidance for the full year at this time.

An update on its performance so far in the second half is likely to be released with its half year results on February 25.

Elsewhere, the Premier Investments Limited (ASX: PMV) share price is charging 14% higher after the release of an update of its own today.

It expects first half Premier Retail EBIT to be in the range of $221 million to $233 million, up between 75% and 85% on the prior corresponding period.

More reading

• ASX 200 drops 1.1%
• Why a2 Milk, AVZ Minerals, Nanosonics, & Premier Investments are dropping lower
• Investors caught in crossfire as ASX retailers battle ASX property stocks in 2021
• 3 recent ASX IPOs to watch
• Forecast double-digit surge in Aussie dollar could put brakes on ASX rally in 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Audinate Group Ltd (ASX: AD8) share price is on the move on Wednesday following the release of a trading update.

At the time of writing, the professional audio-visual media networking solutions provider’s shares are down 1% to $7.72.

What did Audinate announce?

This morning Audinate revealed that it generated unaudited revenue of US$11.1 million for the six-month period ended 31 December.

This was in line with the prior corresponding period, which was pre-COVID, and up from US$9.3 million during the second half of FY 2020.

However, the strengthening of the Australian dollar versus the US dollar has adversely impacted its revenue in the local currency. For the half, revenue came in at approximately A$15.4 million, which is down from A$16.1 million a year earlier.

Audinate’s CEO, Aidan Williams, commented: “Our first half revenue result is pleasing, yet we remain cautious of the near-term economic uncertainty associated with the ongoing impacts of COVID-19 around the world. However, our strong balance sheet has enabled us to remain focused on our medium-term strategic priorities.”

Video development team established.

Following an unrelated corporate acquisition in Cambridge, United Kingdom, Audinate revealed that it has been able to attract and establish an experienced video development team of 11 employees.

The release advises that the onboarding of four team members has been completed, with the remainder commencing over the coming months. After which, Audinate expects the team to be further strengthened by the end of the financial year.

These initiatives are estimated to result in additional cash expenditure in FY 2021 of approximately A$1.3 million to A$1.5 million. A portion of this will be capitalised in accordance with the existing policy on capitalisation of development costs.

Mr Williams commented: “The establishment of a dedicated video team significantly increases the level of video expertise and experience within Audinate and improves our ability to execute more swiftly on our video strategy. The addition of the VP of Strategic Partnerships is another important step in being able to execute on other business opportunities, which are emerging more regularly.”

More reading

• 3 ASX growth shares to buy this week
• Got cash to invest? Here are 3 ASX shares to buy
• Put these small cap ASX shares on your watchlists today
• 3 recovery ASX shares to buy for 2021
• 3 ASX growth shares to buy

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO. The Motley Fool Australia has recommended AUDINATEGL FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The AVZ Minerals Ltd (ASX: AVZ) share price is charging higher on Wednesday after the release of an update.

In early trade the lithium-focused mineral exploration company’s shares are up 7.5% to 22 cents.

This latest gains means the AVZ Minerals share price is now up 175% over the last two months from 8 cents.

What did AVZ Minerals announce?

This morning AVZ Minerals revealed that it has successfully completed the preliminary metallurgical testing for its planned lithium sulphate plant and production of 1.5 kg of primary lithium sulphate material.

The company advised that it engaged Kingston Process Metallurgy (KPM) in Canada to test, at bench scale, each of the processes in its proposed Manono Lithium Sulphate plant flowsheet.

The test work objective was to produce primary lithium sulphate from Manono spodumene concentrate (SC6) and to demonstrate the technical feasibility of the flowsheet.

According to the release, the test work was undertaken from September to December 2020 at KPM’s Kingston, Ontario, facility. Approximately 9kg of spodumene concentrate (SC6) from the Manono deposit assaying approximately 6.1% (Li2O) was processed.

After which, conversion of the alpha-spodumene to beta-spodumene was successfully completed, with the test results indicating a primary lithium sulphate product containing greater than 80 wt. % lithium sulphate monohydrate can be readily produced.

Management notes that this would make a highly suitable feedstock for the electrolytic production of lithium hydroxide monohydrate and ultimately lithium batteries.

AVZ’s Managing Director, Mr Nigel Ferguson, said: “It is pleasing to have independent confirmation of our proposed lithium sulphate plant process as well as verification that our product is suitable for feedstock for battery plants.”

“KPM’s test work provides further confirmation that our high-quality Manono product is capable of producing clean Primary Lithium Sulphate that is suitable for use in the production of batteries,” he concluded.

More reading

• Why a2 Milk, AVZ Minerals, Nanosonics, & Premier Investments are dropping lower
• Here are the best All Ordinaries performers of 2020
• Why AVZ Minerals, Immutep, Kogan, & Strategic Elements shares are pushing higher
• Why the AVZ Minerals (ASX:AVZ) share price rocketed 27% higher
• Why AVZ Minerals, BrainChip, BSA, & Credit Corp shares are storming higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are some small cap ASX shares that are growing really quickly and could be worth looking into.

Businesses with a small market capitalisation have the advantage of being much earlier on in their growth journeys and could generate more capital growth, unlike large blue chips which have already become major players in their industry.

With that in mind, here are two small cap ASX shares that could be worth looking into:

Sezzle Inc (ASX: SZL)

Sezzle is a buy now, pay later (BNPL) business on the ASX.

Many businesses in the BNPL industry are growing quickly. Sezzle just announced its growth for the fourth quarter of 2020.

The small cap ASX share said that the fourth quarter underlying merchant sales (UMS) went up by 205.4% year on year to US$320.8 million, this was growth of 40.6% quarter on quarter. December’s UMS beat November’s UMS by 0.4%. The annualised run rate reached US$1.36 billion.

Average monthly UMS reached US$106.9 million in the fourth quarter of 2020, compared to US$76.1 million in the third quarter of 2020 and US$35 million in the fourth quarter of 2019.

Merchant fees as a percentage of UMS were 5.4% in the fourth quarter of FY20, compared to 5.5% in the fourth quarter of 2019. This reflected Sezzle’s expansion into large enterprise.

Active consumers for the 2020 fourth quarter went up 143.9% year on year to 2.2 million. This was an increase of 24.5% quarter on quarter.

Active merchants went up 166.6% year on year in the fourth quarter to 26,690, which represented growth of 27.8% quarter on quarter.

The small cap ASX share said that its consumer profile continued to improve as active consumer repeat usage grew to 89.8%, which represented two years of consecutive monthly improvement. Management said this is a key driver for lower loss rates.

In terms of merchant fees for Sezzle, it grew by 195.6% year on year to US$17.2 million.

Sezzle also said that it is now experiencing omnichannel traction with large enterprise. In the fourth quarter of 2020, it became available at Fortune 500 company GameStop, which is the world’s largest retailer of video games and Sezzle is now available at GameStop’s more than 3,300 retail stores, as well as online and in its mobile app. Sezzle is also available at Pure Hockey, the US’ largest hockey retailer.

Australian Ethical Investment Limited (ASX: AEF)

Australian Ethical is a fund manager that focuses on ethical investments on behalf of investors. It offers both superannuation and managed funds.

Funds under management (FUM) growth is an important contributor to the growth of profit for fund managers.

About a month ago the small cap ASX share gave an update about its profit expectations and FUM movements.

At 30 November 2020, Australian Ethical’s FUM had risen by 14% to $4.92 billion, up from $4.32 billion. This was 21.6% higher since 30 June 2020. This increase was driven by “exceptional investment performance of $0.43 billion and strong net flows of $0.18 billion in October and November.”

Australian Ethical is expecting underlying net profit after tax for the six months ending 31 December 2020 to be between $4.6 million and $5.1 million. The mid-point of that range represents an increase of 11% on the six months ending 31 December 2019.

Strong growth in FUM was partially offset by the impact of superannuation fee reductions including those implemented in the second half of FY20 and fee and threshold reductions across some managed funds in October. The idea is that lower fees may attract more FUM over time.

Australian Ethical said it continues to invest in its growth strategy and anticipates that revenue will exceed $50 million this financial year, with associated tax rate adjustments.

More reading

• Here’s why the Sezzle (ASX:SZL) share price is up over 5% today
• Why did the Australian Ethical (ASX:AEF) share price storm 9% higher today?
• How to invest in ASX shares in a post-COVID world 
• 3 exciting ASX payment shares to buy in January
• ASX sector of the year: BNPL goes from strength to strength

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. and Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Rio Tinto Limited (ASX: RIO)’s most important growth project is under threat, with the government of Mongolia this week threatening to pull the deal.

For years Rio Tinto, through its subsidiary Turquoise Hill Resources Ltd (NYSE: TRQ), has been trying to expand the Oyu Tolgoi copper and gold mine.

But on Tuesday Australian time Turquoise Hill announced to the market that the Mongolian government was “dissatisfied” about the estimated economic benefits of the $8.7 billion expansion.

The numbers were released mid-December but this was the first the market heard about the Mongolian government’s response.

“The government of Mongolia has indicated that if the Oyu Tolgoi project is not economically beneficial to the country, it would be necessary to review and evaluate whether it can proceed,” Turquoise Hill stated on the NYSE and TSE.

The situation is serious enough that Ulaanbaatar has expressed intent to tear up the Oyu Tolgoi Underground Mine Development and Financing Plan (UDP) that it signed with Rio in 2015.

“The government of Mongolia has stressed the importance of achieving a comprehensive solution that addresses both financial issues between the shareholders of Oyu Tolgoi as well as economic and social issues of importance to Mongolia, such as water usage, tax payments, and social issues related to employees, in order to implement the Oyu Tolgoi project successfully.”

The Oyu Tolgoi project is rather important to Rio Tinto

Turquoise Hill announced it would be “engaging immediately” with the Mongolian government to sell the economic benefits and save the UDP.

This is the latest crisis in a long-troubled project.

The Oyu Tolgoi expansion was first budgeted to cost $6.8 billion but Rio Tinto was forced to update that number to $8.7 billion in October.

Notwithstanding the headaches, the mining giant is keen to keep the project going as it wants to grow and diversify from its main iron ore business.

The Mongolian government’s adverse reaction to the economics estimate is the first big challenge for Rio Tinto’s new chief executive Jakob Stausholm.

He was appointed to the job after the company’s last crisis — last year’s blowing up of the historically significant Juukan Gorge in Western Australia.

Rio Tinto, in testimony to parliamentary committees and in an internal investigation, defended the destruction, citing that it fully complied with the law. 

The company initially penalised 3 executives a total of $7.2 million of bonuses without apportioning blame on any individual. 

But after a campaign from its biggest shareholders, the 3 executives exited Rio Tinto. Although the ‘punishment’ possibly ended up better than an exoneration, with the trio walking away with massive golden handshakes.

After that messy saga, Stausholm promised to rebuild trust with indigenous owners of lands the company mines. Now he unexpectedly faces a test of that promise in north Asia.

More reading

• Here’s why the Fortescue (ASX:FMG) share price is up 12% in a month
• The Pilbara Minerals (ASX:PLS) share price is already up 25% in 2021
• 5 top ASX mining shares for dividends and growth in 2021
• ASX company stops Kakadu uranium production
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There is a sector in Australia that’s about to grow its revenue by 478% in the current financial year, according to one analyst.

Consumer research firm IBISWorld revealed Tuesday that the medical cannabis manufacturing industry is currently experiencing a boom despite the still-remaining legal hurdles.

“The strict regulatory framework regarding the manufacture of medical cannabis products has limited the sector’s growth over the past five years,” said IBISWorld senior industry analyst Will Chapman.

“However, the recent determination by the Therapeutic Goods Administration to allow over-the-counter [cannabidiol] products to be sold without a prescription is expected to drive significant revenue growth in the years ahead.”

The industry produces medicines and consumables based on one of two ingredients extracted from the cannabis plant: cannabidiol (CBD) and tetrahydrocannabinol (THC).

CBD is a non-psychoactive ingredient used as a pain killer and an anti-convulsant. THC is the stuff that gives you “a high” but can be used to treat pain and nausea, low appetite and insomnia.

Recreational use for cannabis has been legalised in Canada and some US states. There is no sign of such a development yet in Australia, but IBISWorld reckons this won’t stop local cannabis businesses from growth.

“It will take time for new medical cannabis products to be approved, but medicines derived from cannabis will eventually appear on pharmacy shelves,” said Chapman.

Banks are offering massive finance to cannabis companies

The sector in Australia is still very much in the startup phase – so it’s coming off a low base. 

Nevertheless, after seeing total revenue of just $5.4 million in the 2020 financial year, IBISWorld has forecast the current year will end with $31.2 million.

But there’s still plenty of growth to come, it reported.

“Overall, medical cannabis manufacturing revenue is projected to rise at an annualised 79.1% over the five years through 2025-26, to $575.2 million,” said Chapman.

“IBISWorld anticipates employment in this industry to reach 1,500 by 2025-26.”

There are a few cannabis businesses listed on the ASX.

The Motley Fool reported last month Zelira Therapeutics Ltd (ASX: ZLD) had a stunning 2020, with the share price spiking up 67%. Althea Group Holdings Ltd (ASX: AGH) returned a nice 14% to its investors over the calendar year.

IBISWorld singled out Cann Group Ltd (ASX: CAN) as a “major player” in the Australian industry, with a 24% market share in the 2020 financial year.

Privately owned Little Green Pharma was also named by the analysis firm as a player to watch.

Banks have already recognised the huge potential, according to Chapman, lending out large sums to cannabis startups.

“The growth opportunities in the budding cannabis industry have not gone unnoticed by Australian financiers. In March 2020, start-up CannaPacific secured a $3.5 million debt facility from Westpac Banking Corp (ASX: WBC). Cann Group secured a $50 million credit facility from National Australia Bank Ltd (ASX: NAB) in November 2020,” he said.

The ultimate milestone

Recreational legalisation may remain politically unpalatable in the near future in Australia. But the local industry’s current focus is to get a cannabis-based medicine on the Australian register of Therapeutic Goods for domestic supply.

There is currently none on that hallowed list.

“For many start-up cannabis businesses, the ultimate goal is to have the medical benefits of cannabis recognised and their products accepted among medical professionals,” Chapman said.

“Achieving the listing of cannabis products on the Pharmaceutical Benefits Scheme would be a major win for cannabis products.”

More reading

• Why ASX cannabis shares are cheering the US elections
• Why the Althea (ASX:AGH) share price is flying high this morning
• Why the Cann Group (ASX:CAN) share price is moving today
• Are these 4 ASX medical shares set for a healthy 2021?
• Why the Cann (ASX:CAN) share price has backflipped today

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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