As first reported by Reuters; last month Australia said it would allow exports of medicinal cannabis in a bid to dominate a global market set to be worth $55 billion by 2025. Causing investors to scramble – buying shares in marijuana companies – pushing several of them, and the sector as a whole, to record highs.
But convoluted and restrictive licensing demands, substantial finance requirements, and a guarded medical profession means even Australia's largest marijuana companies are at least a year away from a commercial crop. And doubts linger about the prospects for smaller entities, belying the government's ambitious plans to be the world's leading exporter.
Table of Contents
"Look at the Gold Rush"
Cannabis use in Australia will undoubtedly rise in the future, but "it is not clear that any of the local market can capture that, let alone make money from it," says Scott Phillips, director of research at Motley Fool. "Look at the gold rush: sure, some made money, but the biggest winners were the sellers of the shovels."
Australia's medicinal cannabis sector acknowledges some barriers to growth but say they are primed to profit from a maturing market.
Already 50 percent of the world's legal poppies are produced in Australia. Last year, it expanded its legal drug market by legalizing medicinal marijuana use, a move that spurred a wave of IPOs and backdoor listings on the Australian Stock Exchange (ASX).
Export Means Demand
Data from the country's Ministry for Health shows that local doctors remain wary of the benefits of marijuana. This reluctance of doctors has curtailed the growth of Australia's cannabis market.
Australian law requires all seven companies licensed to grow medicinal cannabis to produce only enough to meet domestic demand.
Immediate Expansion
When the Australian government said it planned to allow medicinal cannabis exports – perhaps within months – the three largest companies immediately looked for ways to expand production.
But even if new facilities are built, companies might not be allowed to grow an exportable crop right away. Australia has indicated it will only allow exports of processed or manufactured cannabis products such as oil extracts, which require a separate manufacturing license.
Despite licensing issues, Australia's largest medicinal companies say they have secured sufficient capital for expansion.
U.S.A. Spells Uncertainty
Market analysts have warned that capital restraints could inhibit the smaller players as a wave of IPOs, which fueled the growth of Australia's medicinal cannabis industry in the past year, may be threatened by U.S. regulatory uncertainty.
The administration of President Trump has moved to allow federal prosecutors to more aggressively enforce marijuana laws. Throwing uncertainty into what is expected to be the world's most lucrative market.
The Australian Stock Exchange said in December, that it would require would-be public marijuana companies to provide evidence that their business could be lawfully carried out in the United States, under both federal and state law. Lawyers say that could deter potential listings.
Everyone Wants to Export Cannabis
The newfound U.S. government resistance to cannabis bucks a global trend, as a number of countries, like the republic of Georgia, not only legalize its use but also take aim at the export market.
Canada dominates global production and exports, but recent moves to legalize recreational cannabis could create opportunities for other countries to capitalize.
Australia will join Uruguay, Israel and the Netherlands in looking to fill the potential shortfall in supply.
Fine Like Wine
With demand skewed toward North America and Europe, Australia's export supplies will face a freight disadvantage. But it is positioning itself as a producer of a premium product.
"The Australian cannabis market is akin to the wine industry: you'll have your premium, Grange hermitage wines, and then you will have goon bags. We will at the premium end," says Ben Radford of Radford Wines, referring to the difference in price between one of the of the world's top vintages and cheap, boxed wine.
DISCLAIMER:
Content on this site is for reference purposes and is not intended to substitute for advice given by a physician, pharmacist, or other licensed health-care professional. Always seek the guidance of your doctor or other qualified health professional with any questions you may have regarding your health or a medical condition. Never disregard the advice of a medical professional, or delay in seeking it because of something you have read on this Website. You should not use this information as self-diagnosis or for treating a health problem or disease.
Information and statements regarding cannabis and hemp products have not been evaluated by the Food and Drug Administration and are not intended to diagnose, treat, cure, or prevent any disease or health condition. Leafbuyer.com assumes no liability for inaccuracies or misstatements about products.
Save money, subscribe.
Get Exclusive Local Cannabis Deals delivered to your phone and email!!
By checking the box and signing up, you consent to receive cannabis-related informational and marketing text messages from - including texts sent using an autodialer - to the wireless number you provided above. Your consent is not required to make a purchase. You also agree to receive promotional emails.
By checking the box and signing up, you agree to the and - which includes an Arbitration Agreement and Class Action Waiver.
To opt-out of texts, reply STOP. To opt-out of emails, use one of the methods described in our Privacy Policy.
This advertisement is for customer reference only and has no value and is not intended to be exchanged for any product. Leafbuyer (Leafbuyer Technologies, Inc) is not responsible for the content of any advertisement. All advertisements are the sole responsibility of the vendor publishing the advertisement. If an advertisement is not valid, please contact the vendor directly as errors may have been made in the creation of the advertisement. This advertisement is only intended to be viewed by those of legal age and in the state/local area where the product is legally open for sale. Additionally, all state and local laws and restrictions apply to all advertisements. Void where prohibited.
This advertisement is for customer reference only and has no value and is not intended to be exchanged for any product. Leafbuyer (Leafbuyer Technologies, Inc) is not responsible for the content of any advertisement. All advertisements are the sole responsibility of the vendor publishing the advertisement. If an advertisement is not valid, please contact the vendor directly as errors may have been made in the creation of the advertisement. This advertisement is only intended to be viewed by those of legal age and in the state/local area where the product is legally open for sale. Additionally, all state and local laws and restrictions apply to all advertisements. Void where prohibited.
(scroll to see the rest of the message)
Text this deal to me!
Text This Deal To Me
Enter your phone number below to receive this deal via text message.
To get a text with this deal from , please sign up below.
By checking the box and signing up, you consent to receive informational and marketing text messages from or on behalf of - including texts sent using an autodialer - to the wireless number you provided above. Your consent is not required to make a purchase.
By checking the box and signing up, you agree to the and - which include an Arbitration Agreement and Class Action Waiver.
To opt-out of texts, reply STOP. To opt-out of emails, use one of the methods described in our Privacy Policy.