Aussie cannabis exports could soon ignite revenue for medical marijuana plays
Health & Biotech
Health & Biotech
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Aussie cannabis could soon be cleared for export, igniting new revenue streams for ASX-listed medical marijuana plays.
Currently only manufactured cannabis products are allowed to be exported from Australia under tight conditions. Exports of the raw material — the plants — are blocked to ensure Australian businesses and patients have first dibs.
But after the federal Office of Drug Control, prompted by health minister Greg Hunt, found “overwhelming support for allowing the export of medicinal cannabis products” in August, expectations for a policy change are high.
Experts such as Cannacord Genuity analyst Matthijs Smith and Cann Group (ASX:CAN) chief Peter Crock believe an announcement could come as soon as this year as part of legislation to fine-tune regulations.
Mr Crock says the fast-growing cannabis industry — including some 17 ASX-listed producers — needs certainty around exports and patient access to underpin growth at home.
“For us to be able to set up at scale and have a globally competitive operation, we must have an export component to allow us to work at that scale,” he told Stockhead.
“That’s where the ability to export is going to be important for the industry as we grow.
“[But] we absolutely see our first priority as meeting Australian demand, so that will remain our focus first and foremost.”
Cann Group (ASX:CAN) was issued Australia’s first Medicinal Cannabis Research licence in February, allowing cannabis cultivation for research purposes. It was granted the first Medicinal Cannabis Cultivation licence a month later allowing production for for manufacturers.
The Office of Drug Control has awarded nine licences to grow cannabis for manufacturing and six to grow for research only.
Overseas shortages could drive the market
Last month the Senate passed the Medicinal Cannabis Legislation Amendment (Securing Patient Access) Bill, allowing doctors of terminally ill patients to prescribe cannabinoid medicines without waiting for prior approval.
The next industry milestone may be the Therapeutic Goods Association providing guidance for doctors on the use of medicinal cannabis, opening the pathway to greater use in Australia.
But supplying global demand would provide an even bigger boost to the local industry.
Australian producers are slavering over Canada’s plans to legalise marijuana on July 1 next year.
Canadian demand is expected to reach 600,000kg a year — more than the country produces.
To put that in perspective, Mr Smith of Cannacord theorised in an industry report that Australia would need about 4000kg of cannibidiol-producing (CBD) crop and 1600kg of tetrahydrocannabinol-producing (THC) to treat the current restricted access market.
Supplying the 30,000 Australian patients with treatment-resistant seizures, HIV/AIDS and moderate-to-severe multiple sclerosis, could be worth more than $100 million revenue a year.
Mr Smith says prices for medical cannabis in Australia “will need to reference the current street prices for illegal cannabis”, which he averaged at $11.60/g for good quality cannabis, and $9.70/g for medium quality.)
Mr Crock says there are already major shortages globally, as countries such as Germany open up quicker than expected.
The highest quality bud
Two factors are positioning Australia as a global leader in medicinal cannabis: our strict regulations and government-led research labs.
“From an agricultural tech and medical tech capacity, Australia has always punched above its weight. This will be no different,” Mr Crock said.
“The research in Australia… [government and private labs] capability around genomics and the tech side of breeding is going to see us move very quickly into a leading position that will overtake other countries in terms of basic science around medicinal cannabis.”
Medical Cannabis Council general manager Blaise Bratter says rigorous scientific trials means Australian medicinal cannabis is several years away from full access to the local market.
“Allowing export of medical cannabis would be slightly hypocritical of the government — allowing citizens of other nations to access the quality medicine manufactured in Australia while preventing access to Australians,” she told Stockhead.
But exports would also open access to the large markets of Canada, Europe, South America and Asia, and contribute to Australia becoming the world leader in the cultivation and manufacturing of quality medical cannabis.
“If we don’t allow export, many of the medical cannabis companies that have formed in Australia won’t last, and we will miss the window to become a world leader.”