What Investors Should Know About Australia’s New CBD Rules

A big change is in store for the Australian cannabis market thanks to a new rule recently approved by the country’s health regulatory agency. 

In December, the Therapeutic Goods Administration (TGA) confirmed it would begin allowing the sale of low-dose cannabidiol (CBD) products over the counter by a pharmacist.

Thanks to this update, companies may soon see their products have an easier time reaching consumers. While there’s still a long road ahead, the Australian medical cannabis market could receive a boost, and companies in the space are excited for what’s ahead.

The much-anticipated change came into effect on Monday (February 1), but it isn’t without strict rules — interested marijuana producers will have to apply to the TGA in order to have their products become available via the new process.

According to the regulator, approved products will require a limit of up to 150 milligrams for use per day.

“The decision limits over-the-counter supply to only those products that are approved by the TGA and included on the Australian Register of Therapeutic Goods (ARTG),” the TGA indicated in December.

In a January 15 email to the Investing News Network (INN), a TGA spokesperson said that no products had yet been approved by the ARTG.

The spokesperson added that due to a matter of “commercial-in-confidence nature,” they could neither confirm nor deny how many applications were under consideration under the new rule. “If such an application is received and approved, details will be published on the TGA website.”

In a statement, Australian cannabis research firm FreshLeaf Analytics notes that companies will need to prove their products are high quality, safe and efficacious.

“So while products could technically become available to consumers from February 2021, we may not see them on shelves until 2022,” FreshLeaf explains.

In the document, Tony Whittaker, regulatory specialist with FreshLeaf, said the TGA has exacting standards that will “present a significant challenge to this young industry.”

Cassandra Hunt, managing director of FreshLeaf, said it’s likely the first movers in the space will benefit from the regulation changes.

“The race is now on to get products in the market as quickly and cost effectively as possible, assuming companies are able to overcome the challenge of proving efficacy,” Hunt said.

Various Australian companies have expressed their intentions to apply to offer their products this way.

“That’s very exciting for us here in Australia and I think we’re going to benefit from it,” Brett Schwarz, CFO and corporate advisor with privately held firm Cannatrek, previously told INN.

The executive highlighted how this regulation change shows growing maturity and changing perspectives in the Australian cannabis market as a whole.

Similarly, AusCann Group Holdings’ (ASX:AC8,OTCQX:ACNNF) CEO Nick Woolf said his company has started working on developing compliant items to meet the TGA’s criteria.

Following the announcement from the TGA, Althea Group Holdings (ASX:AGH) CEO Josh Fegan said his company will work towards making its products available through the new method as well.

Bod Australia (ASX:BDA) went so far as to form a new medical advisory board to help guide the company as it pursues the market opening created by the TGA’s rule change.

As companies prepare for the new policy, an expert told INN there’s still much room for the Australian cannabis market to grow.

Stephen Murphy, co-founder of drug research firm Prohibition Partners, told INN that in terms of regulatory changes, the upcoming policy change from the TGA represents one of the most important developments in the past five years.

“I think what it does is gives the industry and products additional credibility — it builds a level of trust with patients in the market,” Murphy said.

When asked about the chances of this regulation change kicking off conversations about adult-use legalization in Australia, Murphy said the country has a very medical-first approach at the moment.

The data expert told INN he wants to see more education efforts in the Australian market to help both patients and doctors know more about the drug.

“If you look at the access points for patients, where are they going to get it from? Well, they go to their pharmacy, and they go to the doctors,” he said.

“Unless those touch points are provided with the information and knowledge required to make informed decisions and informed support, all the work of these producers and manufacturers going through licencing and going through all the approval processes, it’s not worth diddly,” Murphy continued. He believes regulation changes ultimately need to be accompanied by information campaigns to succeed.

In the most recent version of the Oceania Cannabis Report, prepared by Prohibition Partners in April 2020, the research firm estimates that there are approximately 2.1 million cannabis users in the country.

The legal medical market in Australia got a boost near the end of 2020 when the TGA approved a bulk patient count representing the addition of 6,200 applications for access to medical cannabis products.

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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.