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Australia’s cannabis market is moving along as regulations fall into place for sector expansion.
Under the current rules, the market may appear to be at a standstill, but recent approvals show there is momentum for a vibrant medical cannabis industry that will carry on in 2021.
Even though companies on the ground don’t expect to see recreational use become legal next year, Australia’s medical cannabis market is still expected to continue ahead with stronger numbers.
Here the Investing News Network (INN) offers some key points on what may be ahead for the Australian cannabis market in 2021, with insight from expert market watchers.
Australian cannabis outlook 2021: Medical still responsible for growth
As part of its Oceania Cannabis Report: Second Edition, international drug research firm Prohibition Partners indicates that the entire cannabis industry in Oceania is expected to be worth US$1.55 billion by 2024, with medical cannabis accounting for approximately 40 percent of that amount.
“Let’s build a very successful business based on medicinal cannabis … we’ve got to ride the global wave of global acceptance,” Brett Schwarz, CFO and corporate advisor with privately held firm Cannatrek, told INN.
Schwarz explained that it’s hard to project when exactly Australia may legalise recreational use, a key catalyst for the development of a cannabis market.
“We will one day, but we can’t say whether it’s in one year or five years,” said Schwarz. “There are more politicians talking about it, there are more doctors talking about it — that I think that it will come in time.”
The Cannatrek executive was cautious about expecting recreational cannabis to open anytime soon, instead opting to place his emphasis on what’s ahead for the medical market.
A study from FreshLeaf Analytics pegs Australian medical market sales at AU$95 million in 2020.
“Australia is a maturing market — not mature, but maturing, and I think the patients are seeing that, so they’re feeling more comfortable,” Schwarz said.
In the Prohibition Partners report, Roby Zomer, co-founder, managing director and CEO of MGC Pharma (ASX:MXC,OTC Pink:MGCLF), states that more education is driving up patient interest in cannabis; meanwhile, medical professionals are becoming more comfortable prescribing it.
“This is not only driving legislation change around the world, but driving demand for quality medicinal cannabis products,” the MCG Pharma executive said.
The growth trajectory is clear to see for medical cannabis in Australia. According to FreshLeaf Analytics, product availability rose quickly in the latter half of 2020 with 150 items now available for patients.
The research firm also indicates that at the end of 2020 there were 30,000 registered patients allowed to purchase medical cannabis in the country.
“Recent price decline has brought the illegal and legal markets to parity and has put us in line, from a pricing perspective, with more mature markets such as Canada,” the study explains.
Australian cannabis outlook 2021: CBD set for new year push
In December, the Therapeutic Goods Administration (TGA) gave the green light for low-dose cannabidiol (CBD) to become available through over-the-counter methods without a prescription. The Australian regulatory agency is in charge of the rules for medical cannabis.
In the document, the TGA indicates that this new ruling will officially come into effect in February.
“That’s very exciting, that’s the maturity,” Schwarz told INN about the TGA approval.
Any CBD products will need to be approved by the TGA and make it into the Australian Register of Therapeutic Goods. According to the regulatory agency, no products have yet been added.
Althea Group Holdings (ASX:AGH) CEO Josh Fegan said his company was glad to see the TGA’s decision to allow these products for sale over the counter, and also to increase the maximum recommended daily dose.
“This decision provides confirmation of that marketplace,” Fegan said; he confirmed that his firm will be working to make products available through this ruling.
Australian cannabis outlook 2021: Investor takeaway
Investors in the Australian cannabis market have watched the sector slowly develop over time.
Thanks to an expanding medical market, the industry has much to look forward to. What’s more, the growing potential for international exports has become available to companies as well.
Schwarz told INN cannabis companies in the country want to prove that their operations can serve Australia even as this international opportunity follows closely behind — he explained that his firm specifically is eyeing exports to Europe and throughout Asia.
As companies continue to expand according to market needs, growing pains could be expected as marijuana players set themselves up to capitalise on patient growth in Australia. But overall the sentiment from key players is that the future looks bright for cannabis in the country.
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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.