Medicinal cannabis manufacturing becomes a key focus for WA

Several moves in the cannabis space in Western Australia in recent months show the government is becoming more serious about the industry as it looks for moneymaking opportunities outside of its multi-billion-dollar resources sector.

The latest step forward comes with the award of a $300,000 grant to Little Green Pharma (ASX:LGP) to help fund a new manufacturing facility in the wine region in the South West of Western Australia.

The manufacturing facility will produce medical-grade cannabis products for Australian and European patients.

The grant is part of a much larger $4.2m pool of funds being injected into the broader agriculture sector.

Little Green Pharma’s goal is to become the first Australian producer to establish a fully vertically integrated, ‘seed-to-sale’ value chain for medicinal cannabis.

WA Agriculture and Food Minister Alannah MacTiernan said the new medicinal cannabis processing facilities would be a first for the South West and help establish the region as a leader in medicinal cannabis production and processing in Australia.

“The project is supporting up to 40 jobs during construction and is estimated to create eight direct positions to support growing and processing of medicinal cannabis products,” she said.

“It can also provide opportunities to leverage the regional processing capability of the facility, either by local hemp growers already operating in the region or potential medicinal cannabis crop cultivators.”

Little Green Pharma COO Paul Long told Stockhead the company expected to have the new $6.5m facility fully compliant with Therapeutic Goods Administration (TGA) good manufacturing practice (GMP) guidelines and operational by the end of this year.

Long says government support is critical to building the medicinal cannabis industry in WA.

“To receive a $300,000 grant under the state government’s Value Add Agribusiness Investment Attraction Fund is a huge sign of support,” he said.

“Medicinal cannabis is a very heavily regulated industry and with states like Victoria providing significant grants and making access to medicinal cannabis easier through the state health departments, without the support of the WA government it will be very challenging for companies in this state to compete with their interstate counterparts.

“Harnessed correctly West Australia has a significant opportunity to play leading roles in the Australian market and throughout Europe and Asia as that market opens.”

WA more than just mining

Stewart Washer, the executive chairman of another WA-focused medicinal cannabis player — Emerald Clinics (ASX:EMD), says it’s good to see the state government is now thinking outside of mining.

“They had an amazing mining win and we keep enjoying that mining win, but of course we want to turn some of that into other industries,” he told Stockhead.

“So manufacturing of medicinal cannabis is a good one and looking at what we can do in terms of the novel medical side as well [in WA].”

WA was one of the first states to allow GPs to prescribe cannabis without having to refer patients to a specialist.

Little Green Pharma’s Long said while Australia was moving relatively quickly on the legislative front, patient access was still a hurdle.

“If you compare Australia to other countries it has moved relatively quickly, but I know if you were to speak to any number of patients they would tell you it hasn’t been moving quickly enough and that there is still a huge amount of red tape which impacts both access and price,” he said.

“It will however be interesting to see how the regulation evolves in the coming months now that there is sufficient locally grown product to support Australian patients, given the TGA’s requirement for products produced in Australia to be GMP-certified like all other medicines, while imports from other countries such as Canada are often not manufactured under GMP conditions.

“You would have to assume this loop hole will be closed both improving patient safety as well as levelling the playing field for Australian companies.”

Hemp to revitalise dying coal mining town

In May, the McGowan government announced that Collie, a coal mining town 200km south of Perth, could be getting its own hemp processing plant.

Hemp is a variety of cannabis popular because of its fibre and it is less likely to get people ‘high’. This is because it has low levels of tetrahydrocannabinol (THC — the part that gets you stoned) and slightly higher levels of cannabidiol (CBD).

The WA Hemp Growers Co-op was given $35,000 to develop a business case for the facility.

Private firm Cannaponics Australia wants to build a $15m cannabis and hemp operation on a 65-hectare block in Collie.

If it goes ahead, the plant will service 37 industry growers, supplying wholesale hemp as well as hemp-derived products including bio-char and fibreboard.

Bio-char is charcoal produced from the slow pyrolysis (heating in the absence of oxygen) of biomass. It is a product that has shown it can improve and maintain soil fertility and increase soil carbon sequestration.

Emerald Clinics’ Washer told Stockhead hemp could be a “real growth industry” because of its multiple uses including in nutraceuticals and wellness products.

“Hemp where you can get fibre, CBD and potentially even biofuels could be an absolute boom industry for places like [Collie],” he said.

More hard data needed

However, medicinal cannabis is still far from “mainstream”.

“The reason for that is because doctors have been very sceptical about it as a real medicine,” Washer said.

“You can’t wake up one day and say it’s an illegal illicit drug and then the next it’s a valid medicine, there’s some work to be done in the middle.

“The federal government has made good changes as you know over the last few years, and the medical community is coming up to speed as more evidence is produced.

“Obviously Emerald works very closely with the federal government and doctors to provide convincing evidence where it works and where it doesn’t work.”

Emerald has a network of clinics where it captures and aggregates data that can be used to evaluate the safety and efficiency of cannabinoid medicines.

As more clinical trials are undertaken and there is more supporting evidence that medicinal cannabis works for various ailments, the more likely it is to hit the big time, according to Washer.

“At the moment medical cannabis hasn’t broken into mainstream medicine because if you look at the sales, they’re still tiny,” he said.

“They’re hundreds of millions of dollars but that’s not even a small percentage of something like Lipitor (cholesterol lowering drug) or one of the big pharmaceutical drugs.

“So if you say ‘look we’ve got a treatment for insomnia’ and have real clinical evidence around that you can potentially crack through into mainstream medical markets.”

Emerald Clinics is working with Zelira Therapeutics (ASX:ZLD) to provide more clinical evidence supporting medicinal cannabis as a treatment for insomnia.

“Emerald has worked with Zelira in the insomnia area and they’re getting some good data in that and that moves you towards being a mainstream medicine,” Washer said.

“That’s where it’s got to go if it’s going to really succeed or else it’s going to always be a niche sort of alternative medicine rather than a mainstream.”