What’s the next transformative step for the Australian cannabis industry?
Ask any betting soul what they think of a team that comes in fifth and you’re likely to get a bitter laugh or colorful dismissal — unless the player they’re wagering on is the nation’s emerging cannabis industry. When it comes to Australia’s potential place in the pot race, fifth in the world looks like a straight-up winner.
That’s where experts project Australia’s legal cannabis market to be in 2027, anticipating revenues of $1.2 billion, up from $52 million last year.
The combined legal and illegal market is estimated to be a whopping $4 billion-plus. A roundup from the World Law Group notes that some of Canada’s prestige cannabis firms, including Canopy Growth, Aphria, Cronos Group, and Aurora are doubling down on Australia’s medical cannabis programs. “In the public markets space, 6 of the top 10 cannabis related ASX companies have market caps greater than $50 million. Althea Group’s IPO on 21 September 2018, backed by Aphria, raised $19.6 million and is already the fourth-largest listed cannabis-related company on the ASX,” it reads.
Over 50 countries have decriminalised and legalised cannabis or its derivatives, with 31 legalising it for medical and or recreational consumption. Medical cannabis is legal throughout the country, with over 1000 patients registered as prescription cannabis users with that number predicted to swell to 400,000 by 2028. That outlook seems to assume an easing of the current rigorous prescription requirements, however.
By the time you read this, weed will be fully legal to buy and consume in the ACT, although federal restrictions against recreational use remain in place. Supporters estimate that recreational herb could contribute $300 million annually in GST alone.
Blame it on the sunshine. Depending on the growing region, Down Under cultivators can yield two crops annually, but legislators’ slow pace in working towards legalisation is dampening high hopes for immediate local success.
Home-grownTo date, most of the country’s medical cannabis supply has been imported, but as more growers leap through the system’s many hoops to increase production, that may not be the case in the future. According to the Office of Drug Control, 25 firms are currently licensed to produce prescription herb.
In 2019, Queensland’s Greenfields MC entered into a joint venture with US licensed commercial producer EPHS Holdings Inc. to grow medical weed. Growing for the American medical market since 2013, EPHS has also been a Health Canada Licensed producer since that same year.
In the joint venture announcement, EPHS president Stevan Perry said, “Our plan is to take our years of commercial experience, expertise, and know-how into the global marketplace to cater to what promises to be a wave of industry development across Australia and the Asia-Pacific, capitalising on projected consumer numbers growth, and increasing regulatory awareness of the healthcare benefits of this new pharmaceutical product category.
“We have been looking for a medicinal cannabis company in Australia to partner with, that shares our vision of providing high-quality low-cost medicinal cannabis, and we’re excited to have found it in Greenfield MC. Through our joint venture, we are perfectly positioned to open up these new markets.”
The Sydney-based firm has opened a crowdsourced equity campaign in which investors can commit $242 to $10,000 in return for ordinary shares, and verified sophisticated investors can invest over $10,000.
According to the company, “The raise is hosted online and run by Capital Labs, an authorised CSF platform that holds an Australian Financial Services Licence. Capital Labs is a member of the IQ Group Global, a healthcare and investment banking conglomerate who fund and develop bioscience companies to create life-changing medical innovations.”
Enterprising firms are seizing on the potential of export markets to give weed a powerful push into a robust economic engine. There are expected hurdles, of course; the approval of cannabis exports must be granted by the national governments of both the importing and exporting countries before it can be shipped. Medical cannabis produced here for export must be done so under a GMP license, listed as export-only on the Australian Register of Therapeutic Goods, and extracts must be manufactured under the 1967 Narcotic Drugs Act license.
As with most good things, the hard work of regulatory compliance will be worth it to enter the Asian market, which, according to cannabis lobbying firm Prohibition Partners will be worth about $8.44 billion by 2024.
Coming in fifth? More like coming in hot.