Here’s how pot execs think the UN’s big cannabis shift can affect pot stocks in Australia

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• UN removes cannabis from a convention that treated it as a harmful substance
• Several ASX cannabis stocks rallied yesterday off the back of the news
• Stockhead spoke with several cannabis executives yesterday about the news
• 5 reasons stood out: paving the way for further reform, validating cannabis as a medicine, the potential for a larger market with less red tape, the potential for more research and capping off a great year for the sector.

The ASX cannabis sector got yet another boost yesterday after waking up to a major UN decision.

Overnight on Wednesday, the United Nations formally rescheduled cannabis, culling it from Schedule IV of the 1961 Single Convention on Narcotic Drugs.

This document had classified cannabis as a harmful and addictive substance along with heroin and cocaine among others.

The broader cannabis sector lauded the move and investors did too sending many cannabis stocks up.

Here’s a list of all ASX cannabis stocks and their movements yesterday…

Stockhead spoke to six cannabis industry executives yesterday about why this decision was such a big deal. There were five broad reasons why.

1. Paves the way for further reform

While this may seem merely symbolic for now, it has been argued this could be a catalyst for further reforms at nation state levels. The biggest jumper was a stock whose co-founder played a major part in this move.

Creso Pharma’s (ASX:CPH) Boaz Wachtel told Stockhead yesterday he was involved in this move by submitting research papers to the Commission of Narcotic Drugs. He also attended a number of UN Drug Convention meetings in Vienna.

“The UN ruling to reclassify cannabis is a landmark decision and paves the way for the relaxing of cannabis drug classifications in large markets across the world,” Wachtel said.

“The result of this vote follows 60 years of status quo, three years of scientific review by the world’s leading health organisations, two years of diplomatic discussions and considerable lobbying from NGOs.”

Creso shares gained over 50 per cent yesterday.

Creso Pharma (ASX:CPH) share price chart

2. Validates cannabis’ place in medicine

Two other executives Stockhead spoke with said it validated cannabis’ place.

Althea’s (ASX:AGH) Josh Fagan called it “further validation”.

“Full spectrum medicinal cannabis has a rightful place in pharmacopeia and … quality brands like ours will see further expansion into new, albeit highly regulated markets off the back of this development,” he said.

Another was private company Cannatrek which yesterday also announced an export agreement with European health company Nimbus Health.

The deal will involve Cannatrek supplying 200 kilograms of dried cannabis flowers to be distributed across Europe – particularly Germany.

CEO Tommy Huppert not only said it validated the cannabis industry and its ambitions but was not without historical precedent.

“I think it paves the way for what we want,” he told Stockhead. “We know what will happen is decriminalisation eventually or regulation.

“I believe it [cannabis] will be like the alcohol industry – highly regulated, controlled, some measures of protection in dealing with a product which is a medicine.”

Huppert told Stockhead is company still aspires to an ASX listing but is waiting for the right time.

It has however raised money from investors privately and thinks 2021 will be the breakout year as the Australian industry becomes less reliant on imports.

3. Will lead to a larger market, less red tape

Another two argued the eventual tide of more deregulation would have a further flow-on effect. Specifically, more business opportunities from overseas and less red tape involved in capitalising on them.

One company is ECS Botanics (ASX:ECS) which is developing a medicinal cannabis growing facility in Tasmania.

“We believe these changes will create a much larger global market, and increase research into cannabinoid medicines,” ECS boss Alex Keach told Stockhead.

“Its another step to normalising cannabis and there may also be several flow on effects to the existing Acts and regulations around the scheduling of cannabis, operating and security requirements.”

Also commenting was Blaise Bratter, MGC Pharmaceuticals’ (ASX:MXC) global sales manager.

“This change will reduce much of the red-tape preventing governments around the world relaxing their regulations on the supply of medicinal cannabis, following in line with increasing clinical evidence on the safety of cannabis-derived products,” he said.

Although Bratter did warn it wouldn’t happen particularly fast.

“There will be a lag-time for any changes to be implemented on a country level as it requires regulatory and legislative changes to be implemented,” he said.

4. More research

Emyria (ASX:EMD) is already a unique medicinal cannabis stock in specialising in selling data about cannabinoid medicines.

Its CEO Michael Winlo told Stockhead the decision was “huge”.

“People have already started to shift their perception about what cannabis can be as the world improves its knowledge about its use as a medicine in the right formulation, in the right standards and under the right supervision,” he said.

“And it’s only going to increase interest and research into medicinal cannabis and ultimately grow the market significantly.”

Similar to Cannatrek, Dr Winlo’s company had individual news that came out at the perfect time – launching a new clinical program.

Emyria became one of the few companies researching into how medicinal cannabis could help with irritable bowel syndrome.

5. Caps off a great 2020

While the cannabis sector is still at an early stage, the UN decision has capped off several significant strides the sector has made in 2020.

Cannatrek’s Huppert again admitted long-term growth has been slower than investors anticipated and 2020 was a strange year. But he says it was another big one for the sector and the UN ruling capped it all off.

“I view the industry as going through four evolutions,” Huppert said.

“2016 was about what is the legislation going to look like? 2017 was about paying to get a licence and applying – it was all one dimensional.

“2018 there was a bit of movement as come companies got up and started doing R&D. Last year there was some products arriving.

“This year’s been a COVID year – I don’t know how to describe it, it’s been all of the above. And I think next year we’ll see an Australian industry – it’s happening now.

“The fact that you have companies announcing products going to Europe – it’s wonderful for the Australian industry.”

At Stockhead, we tell it like it is. While MGC Pharmaceuticals, ECS Botanics and Creso Pharma are Stockhead advertisers, they did not sponsor this article.

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