How to Invest in Australia’s Medical Cannabis Market


Ryan Allway

June 28th, 2018

Policy


Canada and the United States may be the two most well-known cannabis markets, but Australia’s changing laws could pave the way toward becoming an industry leader. After legalizing the export of medical cannabis, the country could become one of just three countries that are exporting high-quality product en masse. The domestic market could also break the $1 billion mark by 2020, making it a significant opportunity in its own right.

Becoming a Cannabis Leader

Australia’s federal government legalized medical cannabis back in February 2016, making it one of the first developed countries to embrace the drug’s medicinal benefits — and some experts believe that the country’s domestic medical cannabis market could hit $1 billion by 2020. In January, the country further announced that it was legalizing the overseas export of medical cannabis in a bid to capitalize on a market projected to reach $55 billion by 2025.

Unfortunately, the country’s arduous licensing process and substantial finance requirements have slowed the rollout of domestic production and consumption. Many cultivators may still be at least a year away from a commercial crop and medical practitioners are still somewhat hesitant to prescribe medical cannabis, although the U.S. Food and Drug Administration’s approval of GW Pharmaceutical plc’s (GWPH) Epidiolex is certainly a positive development.

The largest producers of medical cannabis for export right now are Canada and the Netherlands. With federal level medical and adult-use legalization, Canada has become the leader in the space while the Netherlands has the best known cannabis brands and the longest track record in the space. The largest importers of medical cannabis are Germany and Croatia, but many European markets are entering into the fold as laws liberalize.

Where to Invest in the Country

Investors looking for exposure to Australia’s medical cannabis industry have many different options, but some companies are closer to commercialization than others.

The Hydroponics Company Ltd. (ASX: THC) recently announced the import of the first medicinal cannabis products from its European strategic partner — Endoca. After securing import permits, the company is ready to immediately distribute the products to Australian patients under the government’s Special Access Scheme or through an Approved Prescriber using the Medical Cannabis Medicines Portal (MCMP) that streamlines the process.

“THC’s program to bring Endoca products to Australia is the first step in providing Australia with high quality medicinal cannabis solutions, which will extend to local organic growing and pharmaceutical GMP manufacture as we roll out our partner and domestic production strategy,” said Hydroponics Co. Chairman Steven Xu.

These products will provide medical practitioners with non-psychoactive cannabis-based products, including its CBD+CBDa raw product that’s unique in Australia. In addition to the high-quality products, the company is positioning itself to generate near-term revenue before it can begin domestic cultivation.

Looking Ahead

Australia’s medical cannabis market is slowly maturing and the country has the potential to become a leading exporter over time. While the market is maturing, investors may want to consider companies with near-term commercialization potential, such as The Hydroponics Company Ltd. (ASX: THC), which recently imported the first batch of medical cannabis products into the country.

Ryan Allway

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.


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