Exports and faster scripts are the next steps for Aussie cannabis in 2018
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California has legalised recreational marijuana and Australians are wondering: when is it going to happen here?
Not anytime soon, says Medical Cannabis Council general manager Blaise Bratter.
“It’s very unlikely, it won’t happen in the foreseeable future,” he told Stockhead. “That’s the kind of conversation that will happen in 10 years time.”
The Federal Government has been extremely conservative, creating strict rules around how cannabis products can be sold and who can get licenses – so the day it opens the doors to everyone is “a long way off”.
California is the eighth US state to legalise the recreational use of marijuana.
But federally, cannabis is still illegal so the country is closed to foreign suppliers.
It means companies cannot legally transport cannabis across state lines — even between weed-friendly neighbours like California and Oregon — and foreign companies can certainly not supply Middle Americans with marijuana.
Canada legalises recreational cannabis use on July 1 and The Hydroponics Company (ASX:THC) and Creso Pharma (ASX:CPH), through subsidiaries, are the Australian businesses with direct access to that part of the market.
The California news didn’t translate into a bounce for Aussie listed cannabis companies on the first day of trading in 2018. After six months of massive share price growth, investors spent December taking profits.
Getting Aussie cannabis into international hands
Mr Bratter says this year two forces will drive the Australian cannabis industry forward: exports and changes to State prescription processes.
Exports were initially prevented to protect Australian-grown supply for Australian use but there’s recognition that the local market is still too small to sustain the over 60 businesses that have emerged.
In August the federal Office of Drug Control, prompted by health minister Greg Hunt, found “overwhelming support for allowing the export of medicinal cannabis products”, and analysts like Cannacord Genuity’s Matthijs Smith are positive that moves are afoot.
Indeed, just last month Cann Group said it would raise a $60 million warchest to ramp up production in its secret Victoria locations in preparation for exports.
Mr Bratter hopes exports will be allowed within the next six months.
“We hear of companies being granted a ‘licence’ to cultivate or manufacture, but only a small handful of these companies have actually been granted approval to start cultivating or manufacturing,” he wrote on the Medicinal Cannabis Council website on Tuesday.
“This is because in order to receive a ‘permit’, they have to demonstrate supply chain – they have to show where, and to whom, they are selling their products.”
“This is exceptionally difficult, considering the Australian market is currently very small, and will remain small until products are approved by the Therapeutic Goods Administration (which we anticipate will take a few more years). Only so much cannabis can be grown for research purposes.”
Opening the local market
Longer term, streamlined State prescription processes will open up the local market, enabling companies to make sustainable revenues at home.
“[Across the country] there are stories of people getting Federal approval for prescriptions and being turned down by States,” Mr Bratter told Stockhead.
“The more expensive products can cost upwards of $50,000 per year.”
“In Western Australia they have a committee of people who meet for a couple of hours once a month to approve prescriptions.”
Mr Bratter holds out hope for Western Australia to streamline its prescription approval processes this year but not NSW, Tasmania or Queensland.