Australia’s cannabis space has been moving forward, and progress continued in the first half of 2021.
The country has seen the growth of domestic players, as well as critical changes to the rules surrounding CBD. But at the same time, there are still serious challenges present in the industry.
In this update, the Investing News Network (INN) takes a closer look at the Australian cannabis market in the first part of the year.
Australia cannabis update: Domestic market makes progress
Australia’s cannabis industry is defined by its domestic medical market and the international opportunities available for companies in the country. When it comes to the country itself, the sector has grown off the back of increasing patient numbers.
In its 2021 half-year update, analytics firm FreshLeaf Analytics said the country was home to 45,000 active patients, with that number expected to reach 75,000 by the end of the year.
“The Australian medicinal cannabis market continues its strong growth trajectory,” Cassandra Hunt, managing director of FreshLeaf Analytics, said in a statement, according to a report from MJBizDaily.
The document indicates that 2021 is set to bring “evolution in the regulatory landscape,” alongside further focus on product quality. The researchers also expect to see additional investment in research and development, as well as “further industry consolidation.”
There’s been rapid growth in the number of products available to patients and in revenue for the industry, according to the Australian researchers.
“Year-to-date sales in 2021 have already surpassed full year revenues in 2019,” the report states.
New research also shows the potential for more consumers to appear if cannabis were to be fully legalised.
Research from the National Drug and Alcohol Research Centre and UNSW Sydney indicates that 4 percent of Australians would try the drug if it was legalised.
Australia cannabis update: CBD rule changes provide key progress
Changes confirmed by the Therapeutic Goods Administration at the end of 2020 came into effect in 2021 as Australia moved forward with allowing the sale of low-dose CBD products over the counter.
The new rules, which went into effect in February of this year, signalled an evolution in the methodology and evaluation of cannabis in the country.
“I think what it does is gives the industry and products additional credibility — it builds a level of trust with patients in the market,” Stephen Murphy, co-founder of Prohibition Partners, previously told INN.
However, there are still stringent guidelines for how consumers can access these products. The other current challenge is the arduous process for getting CBD products approved.
That means this victory for the market won’t factor into the industry’s financial results this year. Indeed, in its half-year report, FreshLeaf Analytics indicates that it did not count CBD products in its 2021 calculation.
“It should be noted that these forecasts exclude Schedule 3 low-dose CBD products given that it is unlikely products will be available in 2021,” the firm explains.
The researchers did provide an expectation for these products — they expect to see “pharmacist-only CBD” reach AU$250 million in value at its peak thanks to 2 million consumers.
“Speed to market will be a critical competitive advantage for those looking to tap into this new and lucrative market,” the report from FreshLeaf Analytics notes.
Australia cannabis update: Ongoing challenges in the industry
“There’s limited opportunities here in Australia, because of the regulatory restrictions and mandates,” Patterson said.
Dr. Ben Jansen, a clinical director and founder of cannabis provider and consultancy CDA Clinics, told Business Insider Australia the industry is just now emerging.
“We’re now moving to a point where there are less barriers for people to access cannabis products and CBD products in Australia,” Jansen said.
The struggles are also affecting patients. According to a report from the Australian Associated Press, the Chronic Pain Australia group has found doctors tend to shy away from recommending cannabis medicine.
A survey of 2,233 Australians shows that despite questions and interest from patients, general practitioners struggle to provide cannabis solutions.
A medical expert noted that Australian doctors today may not feel comfortable talking about and recommending cannabis to patients if they didn’t learn about it in school.
“Education around the therapeutic activity of cannabis and the endocannabinoid system should be embedded in the medical curriculum and not just offered as a postgraduate choice,” Justin Sinclair, a naturopath from Western Sydney University’s NICM Health Research Institute, said.
Australia cannabis update: Investor takeaway
Expectations for the Australian cannabis market continue to bubble up as significant changes take place.
In its half-year report, the team at FreshLeaf said:
These shifts are beginning to take shape: multiple regulatory changes are underway impacting patient access and product quality, there has been a flurry of M&A activity, and some industry players have altered their focus in the value chain as the market begins to move away from vertical integration.
Investment interest in Australian cannabis will continue to oscillate depending on results seen in the market, but halfway through 2021 it’s clear it has been one of the industry’s most important years industry so far.
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Securities Disclosure: I, Bryan Mc Govern, 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.