Australia's cannabis industry has been undergoing a transformation in recent years, with growing public support for legalization and a blossoming medical cannabis sector.
The future is bright — Statista predicts that the Australian cannabis space will grow at a compound annual growth rate of 14.63%, reaching a total market size of USD 791.6 million by 2028.
Here, Investing News Network looks at the current state of the Australian cannabis market, exploring its key trends, opportunities, challenges and the outlook for the sector in 2024.
What is the outlook for medical cannabis in Australia?
Accessing medical cannabis in Australia is a complex and highly regulated process, requiring patients and doctors to overcome various administrative hurdles. It is managed by the Therapeutic Goods Administration (TGA), a division of the Australian Department of Health and Aged Care. The TGA is responsible for ensuring the safety, quality and effectiveness of medicines, medical devices and treatments, including biologicals, in Australia. To supply medical cannabis to Australians, cannabis companies must register with the TGA and undergo a rigorous approval process.
Doctors wishing to prescribe medical cannabis must apply for TGA approval through the Special Access Scheme (SAS), which allows them to prescribe on a patient-by-patient basis, or through the Authorized Prescriber (AP) program, which allows them to: Prescribing a specific product to multiple patients with a specific medical condition. The TGA also requires physicians to provide detailed documentation and justification for their prescribing decisions.
Australians with a medical condition that has not responded to other treatment options may be prescribed medical cannabis by an AP or doctor using SAS if they believe it is the best treatment option.
Overall, Australia's medical cannabis regulatory framework is strict, requiring strong oversight and accountability from both suppliers and prescribers, making it difficult to obtain legal medical cannabis. This is particularly true for patients living in many remote communities in Australia. Additionally, medical cannabis products can be expensive and are not covered by the national drug benefit system, a subsidy program aimed at low-income residents, children under 16, and in some cases patients with certain chronic conditions. are.
Nevertheless, the Pennington Institute, an Australian think tank focused on drug policy and harm reduction, notes that Australia's medical cannabis sector is expanding. Approvals to access medical cannabis through the AP pathway have increased dramatically since the process was introduced, with the most significant increase occurring from 2020 to 2022. According to Pennington, this may be due to increased awareness and acceptance of cannabis' medicinal properties among healthcare professionals and patients.
Pennington analysts suggest this trend is likely to continue, as research continues into the benefits of cannabis and other countries, such as Germany and the United States, change their cannabis laws.
What is the outlook for adult-use cannabis in Australia?
Possession and use of cannabis for recreational purposes remains illegal nationwide, except in the Australian Capital Territory, where possession of small amounts for personal use was legalized in 2020.
Adults in the Australian Capital Territory can now legally possess up to 50 grams of dried cannabis and 150 grams of raw cannabis, and can grow up to two plants per person and four plants per household.
In other parts of the country, possession, use, or cultivation for personal use is a punishable crime, but rules vary widely from state to state. Possession of small amounts of cannabis, 50 grams or less, often resulted in lighter sentences, such as fines, the option to attend cannabis intervention sessions in lieu of a conviction, and, for first-time offenders, a citation. Laws are stricter in the Northern Territory and Tasmania. In the Northern Territory, possessing cannabis in public is a crime punishable by imprisonment, and in Tasmania, anyone found in possession of cannabis paraphernalia can be fined nearly A$8,000. However, the harshest penalties are imposed in Queensland, where possession alone carries a maximum sentence of 20 years in prison.
Pennington said cannabis law enforcement costs A$1.7 billion a year.
Despite these risks, the Australian Criminal Intelligence Commission's 2020/2021 Illicit Drugs Data Report outlines that there were 24,255 illegal cannabis detections at Australian borders in 2020/2021, which was the highest in 2019. /Almost double the number detected during 2020. Of these, 90% were Australians attempting to import cannabis by post. The report also cites an analysis conducted by the National Wastewater Drug Monitoring Program that found the highest levels of cannabis in wastewater ever recorded in August 2021.
These statistics demonstrate the huge demand for cannabis in Australia. Unsurprisingly, the possibility of a legal recreational cannabis market in this country has generated significant interest and speculation in recent years, with many experts saying the market could be lucrative if recreational use is legalized. I predict that.
Australia has been working towards some sort of cannabis reform for years. In June 2023, the Cannabis Legalization Party will co-ordinately introduce legislation in Victoria, New South Wales and Western Australia aimed at legalizing the use, possession and cultivation of small amounts of cannabis by adults. I planned something.
In November 2023, the Legislative Council of Victoria met to discuss the state's proposed Drugs, Poisons and Controlled Substances Amendment (Regulation of the Personal Use of Cannabis by Adults) Bill 2023. Meanwhile, Health Minister Ingrid Stitt publicly stated that Victoria: He added that although he did not support the bill, the government was prepared to continue the debate on decriminalizing cannabis.
At the federal level, the Australian Greens introduced an amended version of the Cannabis Legalization Bill 2023 in August this year. At the time of writing, the bill is still under consideration with a reporting date of May 31, 2024. However, not many policymakers are impressed with the Greens' bill, with the Australian Medical Association expressing concerns about the health implications of legalization. .
Key points for investors
As Australia's medical cannabis market continues to grow, legalization for recreational use is in the spotlight.
One of the key arguments put forward by legalization supporters is the potential economic benefits of repealing Prohibition. Cannabis legalization could lead to significant cost savings in Australia by reducing resources spent on enforcing cannabis laws and incarcerating individuals for cannabis-related offences. Additionally, the Australian Greens say the potential tax revenue generated by a legal cannabis market could reach A$36 billion, and that growth in related industries could bring economic activity and job creation. It points out that.
Additionally, a legal market for cannabis could create new business opportunities, attract investment, foster economic growth and give Australian businesses a competitive edge in the emerging global cannabis industry.
As this country's cannabis industry continues to evolve, it will be interesting to see how the regulatory landscape changes and how that impacts cannabis industry growth in the coming years.
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Securities Disclosure: I, Megen Seeter, have no direct investment interest in any companies mentioned in this article.
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