ASX pot stocks are getting high after TGA interim ruling

Cannabis stocks were one of the rare groups in the green on a dismal day for the ASX on Wednesday following an interim ruling by the Therapeutic Goods Administration that could boost the industry.

The TGA is proposing to allow Australians to obtain low-dose cannabinoid (CBD) oils and pills from pharmacists, rather than forcing them to obtain a doctor’s prescription.

“It is a big deal,” Cassandra Hunt, managing director of FreshLeaf Analytics in North Sydney, said. “We expect it will expand the market of people who use medicinal cannabis products.”

Shares in Althea Group (ASX:AGH), THC Global (ASX:THC), Elixinol Global (ASX:EXL), Cann Group (ASX:CAN, Creso Pharma (ASX:CPH) and ECS Botanics (ASX:ECS) all closed up between 7 and 11 per cent, while Cannpal Animal Therapeutics (ASX:CP1) rocketed 20 per cent and Bod Australia (ASX:BDA) soared 24 per cent.

“It’s a huge development for the industry,” Althea managing director and founder Josh Fegan told Stockhead.

“You have a big-time regulator in a way endorsing medicinal cannabis as a therapeutic. They wouldn’t have made a decision like this lightly.”

Under the interim ruling, cannabis manufacturers and importers could apply to register CBD oils and softgel capsules as Schedule 3 drugs — “pharmacist only” — downgrading them from Schedule 4, substances that require a doctor’s prescription.

“What it means is, a patient can walk into any pharmacy and the pharmacist would be able to present advice and give CBD drugs without a prescription, rather than going into a doctor’s office and requiring long-winded process” under the TGA’s Special Access Scheme, Fegan said.

As of August 31, the TGA said it had approved over 61,000 applications for access to unapproved medicinal cannabis, most of them coming since the agency provided a special pathway for such access in 2016.

Althea, a medical marijuana importer and supplier, said in its annual report last month that it ended FY2020 with 7,294 patients in Australia, up from 1,142 as of June 30, 2019.

Treating anxiety and insomnia

Wednesday’s interim ruling would only apply to drugs taken orally, not vaping or topical ointments.

Packets could contain a maximum of 1,800mg of CBD — a 30-day supply at a maximum daily dose of 60mg.

FreshLeaf Analytics’ Hunt described that as a low dose, not enough to treat serious ailments like epilepsy. Still, the CBD products could be used to treat things like anxiety, pain and insomnia, she said.

The products would need to be 98 per cent pure CBD, meaning they could only contain very trace amounts of THC, the psychoactive ingredient in marijuana that gets users “high”.

There would also be restrictions on advertising.

The TGA said it had received 5,409 submissions on the proposal, most as part of a campaign.

The regulator said it would make a final ruling on the issue by November 25, and if approved it would come into effect on June 1, 2021.

Hunt said that it would then take cannabis companies time to apply for their CBD products to be listed on the Schedule 3 register, so consumers shouldn’t expect them in pharmacies until the end of next year or even later.

Still, FreshLeaf expects the over-the-counter CBD market in Australia to grow rapidly and exceed $200m in revenue.