Shares in THC Global (ASX: THC) climbed 7% after its wholly-owned subsidiary, Canndeo, received cannabis cultivation and production permits from the Australian Office of Drug Control.

The permits allow it to produce proprietary, high-CBD strains at a facility in Queensland, while also researching and developing new products. The company called it a critical step towards full-scale medicinal cannabis production in Australia and said the news makes it the market leader in this burgeoning industry.

The receipt of these permits is a critical step in progressing our Australian farm-to-pharma strategy and confirms expectations that THC Global will be in a position to commence full-scale production in the near term as one of the only Australian companies to have production ready facilities with licencing and permitting at an advanced stage.Chief Executive Ken Charteris

Most companies in Australia have delayed building cannabis production facilities as they go through the red tape required to obtain a license. But THC Global took a gamble by building its facility first and simply hoping the government gave it the green light to commence production. That gamble appears to have paid off and it expects to beat its rivals to the market.

Australia legalized cannabis for medicinal purposes in February 2016, but a lack of domestic supply means it remains expensive. That is prohibitive for many patients, who cannot afford the high prices demanded for marijuana that is imported from countries like Canada. This threatened to stifle growth in the industry, but the situation should improve when companies like THC Global begin releasing Australian-grown products.

The cost of medicinal marijuana in Australia has halved in the past year, but Australians are still paying AU$370 ($260) a month for treatment. Many turn to the black market to source much cheaper weed, and companies like THC Global have to essentially make themselves competitive against illicit suppliers.

Charteris now hopes to team up with cannabis producers around the world in order to develop exciting cannabis strains that can benefit Australian patients. The company is bidding to live up to its name by entering into a binding agreement to purchase a Canadian cannabis producer and expanding into the New Zealand market via a partnership with DATAPHARM.