Australian Cannabis Trends 2019: Steady Growth for the Industry

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As the end of 2019 nears, the Investing News Network (INN) is looking back at a year full of critical developments for the emerging Australian cannabis industry.

Though it’s still early days for the cannabis sector in Australia, recent increases in uptake indicate that medical marijuana could quickly become a crucial part of the country’s economy.

The conversation surrounding recreational marijuana use has also been ignited since the Australian Capital Territory legalized recreational use and possession this past September.

A growing patient base, legislative advancements and the country’s ambition to become one of the world’s largest exporters of cannabis all played significant roles in Australia’s cannabis market this year.

Read on to learn what market conditions defined the marijuana space in Australia in 2019.

Australian cannabis trends 2019: Rise in patient numbers

Australia’s medical cannabis space has grown slowly since the drug was legalized in the country back in 2016, but a recent spike in patient numbers has been a marker of the growing acceptance of cannabis as a viable product in the country.

“Although we note the early stage of the sector in Australia and the associated volatility of a nascent industry, over the same period patient numbers domestically have continued to soar,” said Canaccord Genuity analysts Cameron Bell and Matthijs Smith in a recent note sent out to investors.

In November, the Therapeutics Goods Association (TGA) approved 3,404 applications for medical cannabis patients looking to access products under Special Access Scheme-B (SAS-B).

At the time the analyst pair published their note, over 90 percent of the more than 20,000 applications approved under SAS-B had occurred in the last 12 months. Bell and Smith added that the country was on track to have over 25,000 approvals by the end of 2019.

Australian cannabis research firm FreshLeaf Analytics has also pointed to an adoption uptick, saying in a Q3 report on Australia’s medicinal cannabis market that the country’s patient approval rate was up over 1,000 percent for 2019 at that time.

Research indicates that 30,000 to 50,000 new patients could enter the market in 2020.

Sanjay Nijhawan, medical director at Cannabis Access Clinics, said the rise in patient numbers can be chalked up to an increase in the range of conditions approved by the TGA that can be treated with medical cannabis, as well as medical practitioners becoming more comfortable prescribing the drug.

The quick growth of patient approvals could also have been driven by the state of New South Wales (NSW), which eased the requirements for prescribing medical marijuana in September, removing the need for state approval for medical cannabis applications in most cases.

Western Australia joined NSW in November when it announced that unless a patient is under 16 years old or has an established history of drug abuse, general practitioners in the state can prescribe medical cannabis without having to refer to a specialist.

Australian cannabis trends 2019: Move to legalization

Perhaps one of the most critical developments in the cannabis space this year was the legalization of recreational use of the drug in the Australian Capital Territory in September, a first for Australia.

The new legislation, which comes into effect in January, will allow people over 18 to possess up to 50 grams of dried flower and to cultivate two marijuana plants at home with a maximum of four plants per residence. However, the policy will face obstacles, since cannabis plant and seed sales remain illegal at the federal level, alongside smoking the drug publicly.

While recreational use remains high in the country — according to a report from the Australian Institute of Health and Welfare, it is the most widely used illicit drug — the path towards legalization will be tricky.

In an interview with INN, Fleta Solomon, managing director at privately held Australian cannabis firm Little Green Pharma, said the general consensus is that full legalization could be about five years out.

But that hasn’t stopped some leading cannabis firms from establishing themselves in the country and pursuing positions in the meantime.

It’s only a matter of time until the country legalizes recreational use, said Bruce Linton, former CEO of Canadian giant Canopy Growth (NYSE:CGC,TSX:WEED), in an interview with ABC News.

“Every country that’s federally legal (in the future), we think someday will start with medical,” said Linton. “We think it’s just a natural progression.”

The company indicated that its subsidiary Spectrum Cannabis plans to create a division in Australia with operations in Victoria.

This sentiment was echoed by venture capitalist Ross Smith in an interview with ABC News: “There’s no question in my mind that medical cannabis is the Trojan horse for recreational cannabis, and I don’t believe it’s a bad thing,” he commented.

Australian cannabis trends 2019: International export

Another aspect of the development of the Australian cannabis industry comes down to the country’s ambition to become one of the world’s largest exporters of marijuana.

In an interview with ABC Radio, Health Minister Greg Hunt said the country aspires to become a powerhouse for medical cannabis supply, especially after legalizing medical cannabis exports in 2018.

Hunt said Australia’s goal is to eventually become the world’s largest medicinal cannabis supplier. The goal is to help the growth of the country’s international presence in cannabis, as well as to build a successful domestic market for Australia’s medical marijuana users.

“We want to be able to ensure we have safe, legal, high-quality supplies for Australian patients, and if we have an international market as well, that’s the best way of ensuring that we have viable product and viable businesses in Australia,” Hunt said.

Since then, some cannabis firms have begun to ship their product out of the country.

The first company to do so was Little Green Pharma, which sent locally grown medical cannabis products to German cannabis distribution and wholesaler Cansativa for product testing in September this year.

Little Green Pharma’s partnership with Cansativa marked the first step for Australia in bringing domestically produced cannabis to patients around the globe, according to its leading executive.

“Being Australia’s first local producer of medicinal cannabis to have its products reach European soil is a major milestone in the company’s short history,” Solomon said.

Australia cannabis trends 2019: Investor takeaway

By all indications, 2019 served as a shaping year for the market in Australia. Thanks to critical legislative moves and a growing acceptance of the drug as a viable medical treatment, cannabis in Australia is ripe for an increase of investment opportunities moving into 2020.

As the pace of the marijuana sector’s growth quickens, industry players are anticipating that companies that are generating revenue and positive cash flow will begin to pull ahead of their competition.

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

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.