Cannabis Outlook 2023

Table of Contents

Australia Cannabis Market Forecast: Top Trends for 2023

A State-by-State Guide to Cannabis in Australia

Top 3 ASX Cannabis Stocks

Australia Cannabis Market Forecast: Top Trends for 2023

Australia's cannabis market conditions still aren't particularly welcoming, but investor interest continues to grow as companies and regulators persevere with efforts to boost the industry.

Cannabis in the land down under has seen a slow but steady uptick in terms of increased legal accessibility, primarily on the medical side, and 2022 was another year of marginal growth for the sector.

What will 2023 bring? Here the Investing News Network looks at the outlook for Australia's cannabis industry.

More Australians using medical cannabis, but access still tough

In a recent survey on cannabis as medicine, researchers found that medical cannabis use in Australia is on the rise.

Compared to the 2.7 percent of respondents using legally prescribed medical cannabis last time the survey was conducted back in 2018, the results this time around found “37 percent of respondents had received a legal prescription for medicinal cannabis.”

The survey was conducted between September 2020 and January 2021 and polled 1,600 people with a mean age 46.4, but the results were not shared until halfway through 2022.

“The data suggests we have seen a transition from illicit to legal use of medical cannabis,” said lead researcher Professor Nicholas Lintzeris from the Faculty of Medicine and Health at the University of Sydney. According to Lintzeris, those who bought their cannabis legally were more likely to consume oral products or vapourised items compared to smokables.

But while the study shows growth in the cannabis market, it also indicates how much further it still has to go.

For example, although the number of patients using cannabis products has increased, study respondents expressed frustration with the current access model — only 24 percent of prescribed patients found the path “easy or straightforward.” Some people are struggling to find practitioners willing to write a prescription, and are turning to unregulated cannabis instead.

Beyond accessibility, 47 percent of survey respondents said cannabis is too expensive — although one company is arguing the opposite. Levin Health, an Australian sports science company specialising in medical cannabis, indicated that there’s been a downward trend in cannabis prices as imported products are becoming less necessary.

The firm said Australian patients have been asked to carry the costs of imported goods, but they won't be for much longer.

“With domestic cultivation on the rise, imports are expected to be pushed to the side, making way for a 50/50 split between imported and locally grown or manufactured products,” the company said in a statement.

Levin Health noted that with the average cannabinoid price per milligram dropping 12 percent between the months of March and September 2021, lower costs of cannabis products should be the expectation moving forward.

What can Australians expect from cannabis policy in 2023?

Australian cannabis policy has come a long way in just a few years. However, as nations across the globe begin exploring further possibilities, Australia has been called out by experts for lagging behind.

In the country, it is still illegal for adults to possess or use cannabis without a medical prescription.

A recent report from the drug-focused Penington Institute, based in Melbourne, indicates that Australian taxpayers would save approximately AU$850 million per year if cannabis were decriminalised.

“The demonstrated harms and enormous financial burden associated with Australia’s simplistic prohibition approach is much more harmful than the substance itself,” John Ryan, CEO of the Penington Institute, said in the foreword of the report.

The new year is off to a fast start as a new medical cannabis policy is already slated to come into effect later in 2023.

Starting on July 1, 2023, the Therapeutic Goods Administration (TGA) will introduce changes geared at elevating the quality of cannabis products imported to Australia. The new rules will require that imported products come from facilities that meet Good Manufacturing Practice standards. The TGA will also add new requirements for labelling and packaging.

In terms of adult-use legalisation, it’s difficult to see a roadmap to changes in 2023.

Even so, the calls to action keep increasing. As Ryan noted, “It is time to pull Australia into the present and capitalise on the many and varied opportunities that a proper, regulated cannabis market affords us. It also makes clear economic sense, allowing for taxation schemes to direct critical funding into prevention and treatment efforts."

Investors may want to keep an eye on proposals from the Australian Greens in the year ahead.

A tweet from New South Wales Senator David Shoebridge sent the market into a frenzy this past September as he indicated a plan that could see cannabis legalised in 2023. Essentially, the lawmaker obtained a legal advisory plan from constitutional lawyer Dr. Patrick Keyzer on how legalisation could take place in Australia through a federal framework.

“Traditionally, the regulation of drugs ⁠— normally, the criminalisation of drugs ⁠— has been seen as a state and territory issue,” he told Sydney Criminal Lawyers. “However, law reform at a state and territory level faces significant institutional resistance from the law and order lobby, most particularly the police and police unions.”

Investor takeaway

It's still early days in Australia's cannabis industry, but as the world continues to change its views on the drug, it's clear that perspectives in the country are adjusting.

Will these changes in mentality be reflected by policies in 2023? Investors will have to wait and see.

You can also follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Additional information on Cannabis stock investing — FREE

A State-by-State Guide to Cannabis in Australia

Australia federally legalised medicinal cannabis in 2016, and its marijuana market has seen significant growth since then.

A study from FreshLeaf Analytics pegs Australian medical market sales at AU$230 million in 2021, while research firm Prohibition Partners indicates that Oceania’s cannabis industry is expected to be worth an impressive US$1.55 billion by 2024; medicinal cannabis in Australia is expected to account for 40 percent of the industry.

Despite that growth, the country’s marijuana industry is still young. Legal recreational use is not yet in sight, and even medical access remains limited and highly regulated. Even so, public support for legalisation is growing, almost doubling in six years.

Currently only two medicinal cannabis products, Sativex and Epidyolex, are registered with the Therapeutic Goods Administration, and none are subsidised through the country’s Pharmaceutical Benefits Scheme. Patients who want access to medicinal cannabis must go through special pathways, and doctors who want to prescribe medicinal cannabis have to apply to do so.

The situation gets more complex at the state and territory level, as each area of Australia has different rules that must be followed. Read on for a breakdown of the laws for medicinal and recreational cannabis in Australia’s six states and two territories.

Guide to Cannabis in Australia: New South Wales

Use, supply and possession of cannabis is illegal in New South Wales (NSW), but first-time offenders with a small amount on hand may only be issued a caution. Up to two cautions can be received; they often come with a referral for drug-related information.

The NSW government recognises the potential of medicinal cannabis to treat debilitating or terminal illnesses. Any doctor can prescribe medicinal cannabis if it is determined an appropriate treatment and the doctor has the approvals required to do so.

In another show of support for the drug, the NSW government has established the Centre for Medicinal Cannabis Research and Innovation to educate the community and monitor clinical trials. Over AU$9 million has been allocated to the centre by the NSW government. It is researching key areas to help children with epilepsy; cancer patients who require pain management, appetite inducement and reduction of nausea; and spinal cord injury patients with chronic pain.

Guide to Cannabis in Australia: Victoria

Recreational marijuana possession and use is a criminal offence in Victoria, but similar to NSW, those caught with a first offence of 50 grams or less are typically given a caution and directions to attend drug counselling. It’s more serious if there are additional charges or if a person is found with over 50 grams; 250 grams, or 10 plants, is considered a trafficable quantity of cannabis.

Medicinal cannabis can be prescribed by any doctor for a patient with any condition if they believe it is clinically appropriate, and if they have obtained approval from the Commonwealth or state. Victoria was the first state to legalise medical marijuana use, and young children suffering from epilepsy were the first to gain access.

Guide to Cannabis in Australia: Queensland

In Queensland, growing cannabis and recreational use are illegal under four different acts. Under the Drugs Misuse Act 1986, unlawful possession, supply, production and trafficking have maximum penalties of up to 20 years imprisonment, depending on circumstances such as how much cannabis is involved.

Medicinal use is less frowned upon in Queensland as any registered medical practitioner in the state can prescribe medicinal cannabis if clinically appropriate. Previously, the medical practitioner had to have obtained Commonwealth approval in most circumstances; however, after new legislation changes in June 2020, any Queensland doctor can prescribe Schedule 4 CBD or Schedule 8 THC or CBD oil products without formal approval from state health authorities.

Medicinal cannabis can be administered via vapour, capsules, sprays or tinctures — smoking cannabis is not allowed in Queensland. Advertising medicinal cannabis is restricted to the medical, wholesale and pharmaceutical professions only.

Guide to Cannabis in Australia: South Australia

Cannabis, cannabis oil and cannabis resin are all illegal to keep, use, grow, sell or give away in South Australia. Possession for personal use can be penalised with an expiation, which means a fine that does not attract a criminal conviction. Large-scale trafficking or selling can attract big penalties of up to AU$1 million, 15 years to life imprisonment or both.

Those looking for medical cannabis products can obtain them via prescription from an authorised medical practitioner in the region. Approval under South Australian Controlled Substances legislation is also often required, although there are exemptions for elderly and terminal patients.

Guide to Cannabis in Australia: Western Australia

Even though Western Australia (WA) officially decriminalised cannabis in 2004, Liberal Premier Colin Barnett repealed the decision in 2011 as part of a “tough on crime” approach.

Possession of 10 grams or less can result in a cannabis intervention requirement (CIR), which means the person in question is required to attend a cannabis intervention session. If they are 18 or older, they may receive only one CIR; younger people can receive two. More than 10 grams results in a fine of up to AU$2,000, two years in jail, or both.

Penalties are larger for possession of over 100 grams. Driving with THC in your system is an offence in WA, regardless of whether it is medicinal or recreational. Personal cultivation is illegal, but medicinal cannabis is available via prescription from any doctor in WA providing they have the required government approval. Prescriptions can be dispensed at any pharmacy.

Guide to Cannabis in Australia: Tasmania

Prior to July 1, 2021, obtaining medicinal cannabis was fairly complicated in Tasmania — patients had to be referred to a specialist by their general practitioner, and then the specialist would make a decision. Generally cannabis would only be provided by specialists in limited circumstances once conventional treatment had been unsuccessful. Now general practitioners can fill out prescriptions if they believe it is clinically appropriate and if they have both Commonwealth and state approval to do so.

Possession of cannabis is illegal in Tasmania — in fact, any utensil or appliance for preparation, smoking or inhalation of cannabis is illegal and can attract a maximum fine of AU$7,950. Trafficking an amount of 25 grams of oil or 1 kilogram of plant material carries a serious imprisonment term of up to 21 years.

Guide to Cannabis in Australia: Northern Territory

Cannabis is largely decriminalised in the Northern Territory (NT), but possession of a small quantity in a public place still carries an imprisonment penalty. Possession of less than 50 grams in your own home is penalised with a fine only. The penalty for cultivating, even small amounts of less than five plants, is 200 penalty units or two years imprisonment. A commercial quantity of more than 20 plants results in life imprisonment, as does “cultivation in front of a child.”

The first NT medicinal cannabis patient to fill a script did so in November 2019, but uptake has been slow since then and the NT has a low number of users. That’s largely because there are few doctors who are authorised prescribers in the NT, and as the area is remote, travel to those clinics is not feasible for all residents.

Guide to Cannabis in Australia: Australian Capital Territory

In September 2019, the Australian Capital Territory (ACT) passed a bill to legalise the possession of small amounts of cannabis for personal use as of January 31, 2020, if the possessor is 18 years of age or older. It's important to note that the ACT’s state laws conflict with federal laws, which still prohibit the recreational use of cannabis.

ACT residents who are over 18 can carry up to 50 grams of dry cannabis, or 150 grams of wet material, and can grow as many as two plants per person (or four per household). Exceeding limits precipitates a fine, not criminal charges. Plants must also be grown outdoors only, leaving them open to theft.

Medicinal cannabis is available for patients with a number of conditions on a case-by-case basis. Doctors must have approval from the ACT chief health officer and the Therapeutic Goods Administration to prescribe.

This is an updated version of an article first published by the Investing News Network in 2021.

Don’t forget to follow @INN_Australia for real-time updates!

Securities Disclosure: I, Ryan Sero, hold no direct investment interest in any company mentioned in this article.

Additional information on Cannabis stock investing — FREE

Top 3 ASX Cannabis Stocks of 2023

Cannabis companies in Australia face a tricky market, as regulations for the plant vary from state to state. While medical cannabis is federally legal, recreational use is still illegal in all states but the Australian Capital Territory.

The future for recreational use may be hazy, but the Australian cannabis market continues to grow. The ASX hosts cannabis stocks that don't focus on recreational sales, such as medical cannabis providers, medical researchers and holding companies.

Below the Investing News Network has gathered the top ASX cannabis stocks by year-on-year gains. The following information was collected on January 19, 2023, and market capitalisations were above AU$10 million at the time.

1. Cronos Australia

Year-over-year gain: 66.67 percent; market cap: AU$278.27 million; current share price: AU$0.50

Cronos Australia (ASX:CRON) is a medical cannabis company that was spun off from Cronos Group (NASDAQ:CRON,TSX:CRON). The company services medical cannabis patients with nationwide distribution of its products.

As of June 30, 2022, when its latest annual report was released, Cronos Australia encompassed 24 companies in seven locations following a merger with CDA Health in December 2021. CDA Health, now a wholly owned subsidiary of Cronos Australia, has divisions such as CDA Clinics, wholesaler BHC and CanView, an online platform for doctors.

For its 2022 financial year, Cronos Australia’s product sales and medical consultation revenue reached AU$67 million compared to AU$20 million the prior year. It became the first ASX medical cannabis company to pay a dividend last August.

On January 16, 2023, Cronos announced that three CDA Clinics physical locations would be moving fully to telehealth to save on costs, as 95 percent of appointments were already taking place via telehealth.

2. Hygrovest

Year-over-year gain: 27.27 percent; market cap: AU$16.1 million; current share price: AU$0.07

Hygrovest (ASX:HGV) is an investment company with three cannabis companies in its portfolio. The company was previously known as MMJ Group Holdings and operated strictly within the cannabis space, but widened its lens in December 2021 alongside its rebranding to target other medical companies as well.

The cannabis investments in its portfolio are Southern Cannabis Holdings, an unlisted Australian company that operates business “across the cannabis value chain;” Weed Me, a vertically integrated Canadian cannabis producer; and Sequoya, a European CBD product company.

3. Neurotech International

Year-over-year gain: 24.14 percent; market cap: AU$55.23 million; current share price: AU$0.072

Neurotech International (ASX:NTI) is bringing cannabis-based medicines through clinical trials. Its leading treatment is NTI164, a cannabis-based medicine featuring a high amount of the cannabinoid CBDA, alongside other minor cannabinoids. The company has performed clinical trials for the treatment of children with autism spectrum disorder using NTI164, and 93 percent showed symptom improvement. Neurotech intends to begin Phase II/III trials next.

On January 19, 2023, the company announced it has scheduled a meeting with the US Food and Drug Administration for March to discuss Neurotech's future investigational new drug submission in order to begin a clinical trial in the US.

Don't forget to follow us @INN_Australia for real-time news updates!

Securities Disclosure: I, Lauren Kelly, hold no direct investment interest in any company mentioned in this article.

Additional information on Cannabis stock investing — FREE