Grandview Research anticipates a compound annual growth rate of around 33.6 percent between 2024 to 2030, driven in part by the introduction of new products like edibles and topicals and new formulations.
Although Australia's medical cannabis industry is growing, the market’s full potential is limited by current regulations as recreational cannabis remains federally illegal and reform efforts face obstacles.
However, a federal election, along with contests in key states, could bring changes. This report from the Investing News Network examines the potential impact of these events on the Australian cannabis market in 2025.
Today's Australian cannabis landscape
Pennington’s most recent report reveals that Australians spent approximately AU$400 million on medicinal cannabis in the first half of 2024, more than double the amount spent yearlong in 2022.
A previous (2023) report showed a surge in medicinal cannabis approvals, driven by the Authorised Prescriber (AP) pathway and streamlined Special Access Scheme Category B (SAS-B) processes, which simplified prescriptions. Increased spending reflects a continuation of this trend.
This rapid growth in demand brings the complexities of Australia's nascent cannabis industry into sharp focus. Currently, only about a dozen licence holders in Australia are growing cannabis commercially on a larger scale, according to Cann Group's (ASX:CAN) Angus Murray, whose company is a key player in the Australian market and one of the first to receive a Medicinal Cannabis Cultivation Licence from the Australian Government's Office of Drug Control (ODC).
Despite these domestic efforts, the majority of cannabis consumed in Australia is still imported, primarily from Canada, which has been experiencing a surplus of products in its own overcrowded market.
In October 2024, a group of Australian cultivators expressed concerns to the Sydney Morning Herald about the increasing difficulty of competing with imports.
“I have no issue with imports coming here; the issue is that because they have surplus product, they’re dumping it here, which makes things difficult for local cultivators,” Nan-Maree Schoerie, managing director of major supplier ECS Botanics (ASX:ECS), told the Herald. Schoerie’s company reported a 50 percent increase in crop yields grown in its new protective crop enclosures in December, a promising sign heading into 2025.
Expanding domestic cultivation is not the only key to market success; effective distribution is also crucial.
Vitura, for example, is working toward expanding access in 2025 with its telehealth platforms by moving CanView, a platform that streamlines the process of managing medicinal cannabis, to its own website, giving the company more control and integrating it with Doctors on Demand, its platform which provides virtual consultations with Australian registered healthcare practitioners.
While the Australian market grows, some cultivators are also looking outward. Australia’s export market is small, but records show year-on-year growth. Little Green Pharma’s (ASX:LGP) latest quarterly report highlighted a 60 percent increase in flower sales in key European markets. The company expects continued demand in the UK, Germany and France and is developing strategies to leverage its position in these key markets. Little Green Pharma is also planning to subcontract some of its Australian cultivation operations to further realise cost savings.
Furthermore, the Australian hemp industry is exploring innovative applications for hemp. AgriFutures, an Australian government statutory corporation that is involved in Australia’s rural industries, is exploring applications for hemp like carbon sequestration and bioplastics.
Direction of Australian cannabis regulation
While Australia's medicinal cannabis market thrives, the regulatory landscape remains complex, with potential for future shifts.
Revenue in Australia’s recreational cannabis market, which is limited to the Australian Capital Region (ACT), is forecasted to reach US$2 billion in 2025, according to projections from Statista.
Beyond the immediate revenue generated by the ACT, the prospect of nationwide legalisation holds even greater economic potential, with varying projections highlighting the scale of this emerging market.
The Parliamentary Budget Office (PBO) offered a particularly optimistic outlook, estimating that legalising cannabis in Australia could generate AUD28 billion in revenue for the government over the first 10 years.
Researchers for The Conversation, while still forecasting a substantial market, outlining a more conservative figure of AU$13 billion, with 3.4 million users entering a legalised recreational market in its first year.
It's also crucial to acknowledge the persistent presence of the illicit market. A May 2024 analysis using data from the 2019 National Drug Strategy Household Survey revealed the estimated size of the illicit retail cannabis market at around AUD5 billion. This thriving illicit market persists despite annual law enforcement spending exceeding AUD2.1 billion, indicating that current efforts have had little effect on cannabis supply or price.
Penington CEO John Ryan argues that these findings indicate Australia’s cannabis policy is “adrift” due to a disconnect between public opinion and behaviour and existing policies, leading to what he described as a “policy muddle” where the legal status and accessibility of cannabis varies significantly depending on individual circumstances and how they choose to access it.
With evident demand, regulatory reform would play a pivotal role in reshaping Australia’s cannabis market. Unfortunately, attempts to change the country’s drug laws have failed thus far.
Australia’s most recent attempt at establishing a recreational market failed when, on November 27, Australia's Senate voted on a cannabis legalisation bill introduced by the Australian Green Party’s David Shoebridge in August 2023.
The bill would have created a statutory agency to oversee and regulate activities relating to the cannabis industry, including the importation and exportation of cannabis, setting rules for growing and owning cannabis plants, manufacturing and retail standards and a regulation system for operating cannabis cafes.
The motion was ultimately blocked by the Labor, Liberal and National parties, with a final tally of 24-13. “The Labor and Coalition parties joined together to try and hold Australia back in the 1950s by blocking this desperately needed reform,” said Shoebridge in a statement after the vote.
The 2025 Australian Federal election, in which all 150 House of Representatives seats and probably 40 of the 76 Senate seats will be contested, may present another opportunity. According to parliamentary convention, the latest possible date is May 17, 2025, as House and Senate elections are typically held concurrently.
Western Australia, a historical swing state, has seen a rise in support for cannabis reform, with the Legalise Cannabis Party winning seats in the Western Australian Parliament in the 2021 state election.
Additionally, in 2019, Western Australian Premier Roger Cook implemented a policy allowing general practitioners to prescribe medicinal cannabis to adults in 2019, resulting in a significant increase in approved prescriptions.
While Cook has taken a slightly softer approach to cannabis than his predecessor Mark McGowan, admitting to his past personal use, Cook and the Labor Party publicly oppose legalisation.
Western Australia's 2025 state election is set for March 8. On January 13, the Legalise Cannabis party introduced 10 candidates for the assembly, running on a platform of cannabis reform.
Meanwhile, a national Resolve poll held in July 2024 showed that support for the Coalition had increased, while support for Labor had remained relatively steady. While the governing Labor Party and the opposition Coalition have historically opposed cannabis legalisation, federal elections may provide a new opportunity to address this issue.
Investor takeaway
As Australia considers its future drug policies, events like ACannabis 2025, taking place from August 11 to 13, and the UIC 2025 Australian Medicinal Cannabis Symposium, which runs from from February 21 to 23, offer valuable insights and networking opportunities for investors and industry players to come together and promote the growth and development of the Australian cannabis industry.
You can also follow us @INN_Australia for real-time news updates!
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
View original content: https://www.prnewswire.com/news-releases/curaleaf-to-report-first-quarter-2022-financial-and-operational-results-301518880.html 
View original content to download multimedia: 
View original content to download multimedia: 
View original content to download multimedia: 
View original content to download multimedia: 
View original content to download multimedia: 
View original content to download multimedia: