Trends in Australian Cannabis to Watch

- November 25th, 2019

It’s early days, but trends in Australian cannabis like export and clinical research are starting to shape the industry. Read on to learn more.

With the cannabis sector developing across the world, trends such as cannabidiol (CBD)-infused beverages and cannabis products for pets have started to spring up.

It’s a different story in Australia, however. The country still has fairly strict laws that limit cannabis use to specific medical purposes.

But even though the Australian cannabis market is in its early stages, players in the space are gravitating towards a variety of trends that are shaping the country’s cannabis industry as a whole.

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Here the Investing News Network looks at the biggest movements in the marijuana market down under.

Trends in Australian cannabis: CBD research

The growing popularity of CBD and its derivatives has been a success story in countries such as the US with its passing of the farm bill, which legalized hemp-derived CBD. Australian cannabis companies and researchers have taken notice.

There’s been hesitation in Australia around prescribing cannabis, though, due to a lack of information about the safety and efficacy of the drug. Save for one product, medical cannabis products aren’t registered medicines in the country. To access medical marijuana, patients must go through special pathways, which can be a lengthy process.

To attempt to get more information about the plant and about CBD, the Australian government established the Australian Centre for Cannabinoid Clinical and Research Excellence (ACRE) in 2017. It was the first federally funded research centre for medical cannabinoids.

In an interview with Health Europa, ACRE Director Jennifer Martin spoke about the research centre’s goal of demystifying the use of the drug through basic and clinical research.

Martin explained that the “knowledge gap” surrounding the cannabis plant has been a driving motivator for the research centre to improve doctor and patient knowledge about the drug.

“We wanted to build good links with pharmacy and pharmacology groups, clinical networks and government, in order to be able to quickly translate the evidence we were gathering into policy and clinical practice,” said Martin.

Similarly, researchers at the Lambert Initiative for Cannabinoid Therapeutics at the University of Sydney are conducting clinical trials to look at the effect of cannabis on conditions like gastrointestinal disorders, cancer and insomnia.

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Aside from medical research, the University of Technology Sydney partnered up with Australian cannabis company Bod Australia (ASX:BDA) and released research in August about the benefits of an anti-aging skin cream infused with CBD.

Trends in Australian cannabis: International export

Since legalizing the export of medical cannabis in 2018, the Australian government has expressed its desire to become a force within cannabis export space. Australian Health Minister Greg Hunt said the country wants to be the foremost supplier of cannabis globally.

Before export was legalized, Hunt said in a press release that the decision was meant to combat increasing competition from international imports to Australia’s domestic cannabis industry.

“By helping the domestic manufacturers to expand, this in turn helps to ensure an ongoing supply of medicinal cannabis products here in Australia,” Hunt added.

Most cannabis in Australia is imported, making it an expensive commodity. Improving the country’s ability to produce and ship the drug out of Australia could give the nation’s nascent cannabis market a boost, especially in a country with such a robust agriculture sector.

Since export was legalized, Australian marijuana companies have not hesitated to reach beyond the country’s borders to establish themselves overseas.

In July, Bod Australia signed an agreement with UK-based medicine manufacturer PCCA to import and distribute its medical cannabis across the UK and Ireland.

Another player in Australia’s cannabis space, Althea Group Holdings (ASX:AGH), announced in mid-2019 that it will be supplying medical cannabis to the UK’s first national pilot for the drug.

Since July, Althea’s subsidiary, Althea MMJ UK, has been working with an independent scientific committee to provide Althea products to patients with ailments like chronic pain, post-traumatic stress disorder and multiple sclerosis.

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THC Global Group (ASX:THC) has also forged its way into the international cannabis space by aiming to address a global shortage of pharmaceutical-grade cannabis product after receiving licenses for cannabis export and manufacturing over the summer.

In an interview with Australia’s ABC News, THC Global CEO Ken Charteris said with the new licenses, the company is well positioned to export into a larger medical cannabis market.

“Right now there’s a shortage globally for pharmaceutical (good manufacturing practice) produced product,” said Charteris.

“We’re really at the forefront with the capacity growing plants here to meet the shortage and forecast shortage for the next several years of high-grade, good manufacturing practices,” he added.

Australia’s geographical proximity to Asia could also play a large part in the expansion of its exports. Asia’s medical marijuana market is expected to be worth over US$5.8 billion by 2024, according to a report from Prohibition Partners, making it an attractive arena for the Oceanic country.

Trends in Australian cannabis: Recreational use and international investment

Though only medical cannabis use is legal in the country, recreational use remains high. According to the Australian Institute of Health and Welfare, cannabis is the most widely used illicit drug in the country.

A report from Prohibition Partners projects that the recreational market in the country could be worth over AU$8 billion by 2028, noting that there have been ongoing attempts at legalization.

Some international cannabis companies have taken note and have been positioning themselves within the country ahead of the possible legalization of recreational cannabis.

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Last year, Canopy Growth (NYSE:CGC,TSX:WEED) launched Spectrum Cannabis Australia in the state of Victoria to allow for domestic cannabis cultivation and production, as well as to serve as a hub for the surrounding geographic jurisdictions.

Canopy also took out patents in Australia for a variety of marijuana products via its Tweed brand of medical and recreational cannabis earlier in 2019, according to a Four Corners investigation.

In an interview with Australia’s ABC News, former Canopy Co-CEO Bruce Linton said recreational use will soon be a reality in Australia.

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

In May, MediPharm Labs (TSX:LABS,OTCQX:MEDIF), an Ontario-based cannabis extraction company, was awarded a license to manufacture cannabis in Australia, helping it to get a foothold in the Asia-Pacific region. The company has since begun shipping medical cannabis concentrate into the country.

In July, MPX International (CSE:MPXI,OTC Pink:MPXOF) furthered its stake in Australia’s cannabis space by buying the remaining C$4 million worth of MPX Australia’s shares.

Trends in Australian cannabis: Investor takeaway

Australia’s current marijuana market is well positioned to become an attractive arena, quickly growing into a varied and lucrative space.

The country is set to benefit from international export as well as medical research. International interest is also going to help bolster the country’s global cannabis reputation.

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

Editorial Disclosure: MediPharm Labs is a client of the Investing News Network. This article is not paid-for content. 

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

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