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

Jo Patterson, CEO of Bod Australia (ASX:BDA), told Business Insider Australia that regulators in the country are directly responsible for the delays holding back 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.

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

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.

US cannabis received a boost this week with a policy move that may hint at future changes.

Meanwhile, Amazon (NASDQ:AMZN) threw its full support behind cannabis reform in the US by way of a public post confirming the company’s acceptance of the drug.

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  • Avicanna’s proprietary formulation showed promising pre-clinical results in reducing seizures and will be developed through the company’s pharmaceutical development pipeline as an epilepsy drug candidate.

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAWS/

Avicanna Inc. (” Avicanna ” or the ” Company “) (TSX: AVCN) (OTCQX: AVCNF) (FSE: 0NN) a biopharmaceutical company focused on the development, manufacturing and commercialization of plant-derived cannabinoid-based pharmaceuticals is pleased to announce that it has filed a provisional patent application with the United States Patent and Trademark Office, entitled “Methods for Reducing or Eliminating Incidence of Seizures and Sudden Unexpected Death in Epilepsy”, on the use of a novel cannabinoid formulation (the “ Formulation Candidate ”).

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Cannabis legalization in Canada helped kickstart a financial revolution in the stock market with the launch of a diverse portfolio of marijuana firms.

With the boom of public cannabis businesses in full swing, are you thinking about investing in cannabis companies? If so, consider starting your journey here.

A wide spectrum of marijuana stocks have made their mark in the global industry thanks to the amount of money raised from investors and the attention the sector is getting from established industries.

 

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What’s to come is anyone’s guess, but it seems this new and burgeoning industry is still in its early days, with diverse nations beginning to move forward with plans for legalizing marijuana.

That means there’s likely still money to be made in cannabis stocks as the market builds and cannabis products expand in availability over the next few years.

There are many differing opinions about how much the global legal cannabis market will be worth in the years to come, with estimates including US$70.6 billion by 2028 and US$91.5 billion by that same year.

But one thing is almost certain: The market is set to grow as opinions surrounding the plant evolve over time and as platforms crop up to supply different consumption preferences. And all of that will mean more cannabis investment opportunities with both existing companies and future entries to the market.

For now, let’s take a look at where you can invest your money at this point in time.

How to invest in cannabis: Canadian cannabis stocks

First thing’s first: Canada. This is the obvious place to start as marijuana is legal at the federal level and Canadian cannabis stocks are less likely than their US counterparts to suffer from political volatility.

That said, due to the uncertainty of investing in the US marijuana space, where the drug is not legal at the federal level, Canadian firms have been forced to make choices about how they operate. For example, Canada’s senior exchanges do not allow companies with American cannabis assets to list.

While the Canadian cannabis space continues to face challenges, investors are eagerly watching as companies move into the edibles and beverages markets and develop new products.

For lists of Canadian marijuana stocks to consider, click here.

 

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How to invest in cannabis: US cannabis stocks

Although some US states have legalized cannabis, American cannabis stocks may be riskier than those in Canada due to federal restrictions on the sale and cultivation of cannabis.

However, as the saying goes, the greater the risk, the greater the possible reward. The US market could grow up to US$43 billion by 2025, and that’s not even including the size of the market if nationwide legalization happens. It’s easy to see that US cannabis stocks could inherit a huge chunk of the pie if federal law finally legalizes the commodity.

All in all, picking the right US cannabis stocks could mean massive gains if the plant is ultimately legalized federally. It’s worthwhile for investors to do their research and to be aware of the risks and potential benefits involved in investing in the space.

For a list of US cannabis stocks to consider, click here.

How to invest in cannabis: A side note

Many companies in the cannabis space have begun to veer in one direction or another.

For example, some of the largest marijuana producers have moved towards deals with beverage or pharmaceutical companies for the production of novel new products. Others in the space continue to pursue innovation in the recreational market.

The beverage side in particular has seen interest from companies, with cannabis firms partnering with brew businesses. One example is Canopy Growth (NYSE:CGC,TSX:WEED), which has teamed up with Constellation Brands (NYSE:STZ), a leading producer in the alcoholic beverage industry.

It’s important to be aware that each niche has its own possibilities and challenges. For instance, while many market participants are convinced of the promise in beverages, these drinks have been hampered by strict marketing rules, among other factors.

Another aspect to consider is whether to pursue big caps or small caps. That has a lot to do with personal comfort. While big caps are often regarded as more stable than small caps, in the cannabis industry there’s been considerable volatility.

 

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How to invest in cannabis: Cannabis ETFs

If you really know your cannabis companies, then you could enjoy larger gains by simply investing in those specific firms. However, if you aren’t overly familiar with the cannabis space or you are new to it, it could be a good idea to check out the cannabis exchange-traded funds (ETFs) available.

A cannabis ETF gives you exposure to several different cannabis stocks and takes the guesswork out of cherry picking which stock to bet on. One issue with ETFs is that like any other group dynamic, if one stock drops off it brings the whole fund down proportionally with it. Of course, the opposite is also true.

Recently investors have seen the addition of new ETFs offering exposure to the US market, including firms with entries into the hemp space, thanks to the sales of CBD products.

For a list of cannabis ETFs to consider, click here.

How to invest in cannabis: Final thoughts

No matter which way you slice it — or grind it, in this case — the cannabis market is an exciting business to invest in right now. Whether you invest in cannabis ETFs or Canadian or US marijuana stocks, or if you’re still waiting on the sidelines for more maturity from the types of cannabis companies trading, this industry is one to watch, and one that looks like it’ll keep climbing in the future.

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