The IPO drought on the New Zealand stock exchange is set to be broken by a cannabis company.

Rua Bioscience was founded in 2016 on the East Coast, and the company is aiming to be a leading producer of cannabinoid derived medicines.

Up to $20 million in new capital is being sought to fund Rua's next stage of development, support the achievement of sustainable revenue and accelerate growth.

The company's market capitalisation of $70 million assumes the offer of 40 million shares, at 50 cents per share, is fully subscribed.

Rua intends to list on the NZX Main Board in late October 2020. All funds raised will be for growth, with no sell-down by existing shareholders at the time of IPO.

Rua Bioscience holds a medicinal cannabis licence from New Zealand's Medicinal Cannabis Agency and has recently completed construction of an operational controlled cultivation facility in Ruatorea and an extraction and manufacturing facility in Gisborne.