Australia Cannabis Investing: What You Need to Know

INN breaks down everything you need to know about Australia cannabis investing and how you can enter this emerging market down under.

Since the legalisation of medical cannabis in 2016, Australia has been steadily developing its marijuana industry — and it’s been attracting attention from international players and investors.

With a quickly growing population of over 25 million people and a robust agricultural industry, the country is positioned to mould itself into a major force in the international cannabis space.

Here the Investing News Network takes a look at how the cannabis industry in Australia has been shaping up since legalisation and what these developments could mean for investors. Read on to see what you need to know about investing in cannabis down under.


Australia cannabis investing: Market overview

As mentioned, Australia’s parliament passed legislation to allow the cultivation of cannabis for medicinal and research purposes in 2016 by amending the Narcotic Drugs Act 1967. Cannabis companies have been cropping up in the country in the years since then.

While the cannabis industry is still young, Australia’s agricultural sector is well established. According to the Australian Bureau of Agricultural and Resource Economics and Sciences, the nation’s agriculture output is valued at AU$61 billion and is one of the largest contributors to GDP. The country’s agriculture export prowess means it may be able to capitalise on the trend of moving medical marijuana products internationally.

Recreational cannabis use isn’t legal in most parts of Australia. The exception is the Australian Capital Territory, which in early 2020 made it legal to possess and personally use small amounts of cannabis. That said, according to the Australian Institute of Health and Welfare (AIHW), cannabis is the most widely used illicit drug in the country. In a report, the AIHW notes that 85 percent of Australians now favour cannabis use for medical purposes, up from 69 percent in 2013.

Medical cannabis in the country is overseen by the Office of Drug Control, which issues three types of licences: research, manufacturing of a drug or product and cultivation or production of medical cannabis. As of November 2020, a total of 13 research licences, 29 cannabis cultivation or production licences and 33 manufacturing licences were held by medical cannabis companies in Australia.

Medical cannabis users do face a bit of difficulty accessing the drug. Patients can only receive medicinal cannabis products via a specialist and then may have to wait up to a month for government approval.

Some of the largest names in Canada’s cannabis landscape, such as Aurora Cannabis (NYSE:ACB,TSX:ACB) and Canopy Growth (NYSE:CGC,TSX:WEED), have substantial stakes in Australian companies. In 2018, Canopy launched Spectrum Cannabis Australia, a medical cannabis company.

In early 2019, Spectrum received its first shipment of medical cannabidiol (CBD) oil and began sales. Its goal is to support patients through imports until domestic facilities are working at full capacity.

Australia cannabis investing: How to invest

Since the country’s cannabis space is still in its early stages, the Australian market hasn’t yet reached its peak. However, more cannabis stocks are expected to list on the Australian Securities Exchange (ASX) in the future, which means more investment opportunities.

Elixinol Global (ASX:EXL) was formed in 2018, when Colorado-based Elixinol partnered up with Hemp Food Australia to form an international brand and launch an initial public offering.

While Hemp Food Australia manufactures and distributes hemp food and skincare products, Elixinol is a retail provider on the CBD side of things, with dietary supplements and topical cannabis products. Elixinol has focused on building a solid global footprint with operations in the Americas, Europe and Asia.

In its Q3 2020 quarterly report, Elixinol said that revenues across its business units increased by 18 percent over the previous quarter, with 25 percent of the company’s global sales coming from e-commerce and 65 percent of global sales associated with higher-margin products.

Another big player in the Australian space is Cann Group (ASX:CAN,OTC Pink:CNGGF). Established in 2014, Cann Group was the first cannabis company to be issued a cannabis research licence and the first to be issued a medical cannabis cultivation licence by the Australian government.

It’s since worked to develop and supply cannabis, cannabis resin and medical cannabis products to patients for everything from multiple sclerosis to chronic pain.

In an agreement announced in November 2020, Cann Group secured a AU$50 million loan from National Australia Bank to fund a first stage expansion of its new Mildura growing facility in Victoria. Once completed, Cann Group will have the capacity to produce 12,500 kilograms per year of dry cannabis flower for international and domestic medical cannabis markets. This move puts Cann Group ahead in terms of production in a market that is still largely driven by imports.

There is also Althea Group (ASX:AGH), a producer, supplier and exporter of pharmaceutical-grade medicinal marijuana; it received its licence to cultivate medical cannabis in 2018. Currently, the company operates in regulated medical cannabis markets, including Australia and the UK.

In late 2020, the company received approval to sell cannabis products in Germany. The approval made Althea Germany’s first commercial supplier of made-in-Australia medical cannabis products. The German medical cannabis market is expected to be worth approximately AU$2.4 billion by 2025, as per the Market Herald.

Althea has made outreach an important part of its business model, as shown by its Althea Concierge platform, a free online service that allows healthcare professionals to access treatment plans with information about specific Althea marijuana products.

Australia cannabis investing: Future outlook

In 2019, the medical cannabis industry in Australia was valued at a slight US$171.7 million, but a forecast from Prohibition Partners, a market consultancy for the cannabis sector, projects huge growth in value over the next five years. By 2024, the total legal cannabis market in Australia is expected to hit US$1.23 billion.

Australia’s domestic market may be “somewhat capped by the region’s population.” However, Prohibition Partners points out that “overseas exports represent an opportunity for the region to significantly increase its value and establish a strong presence in the global market.”

Alongside the legalisation of medical cannabis was the legalisation of overseas exports in 2018, and Australia has big plans for the growth of its international presence. “We’d like to be potentially the world’s number one supplier,” said Australian Health Minister Greg Hunt on a local radio station.

Because of its proximity to the region, Australia is also well positioned to break into the burgeoning Asian market, which has become more attractive since the legalisation of medical marijuana in South Korea and Thailand. In response, some companies in Australia, such as Cann Group, have already made investments towards building larger facilities to meet the demand.

There’s also been talk about the legalisation of cannabis for recreational use in response to growing support for complete cannabis legalisation across the country. As noted, the Australian Capital Territory recently became the country’s first state to make it legal to grow or possess cannabis for personal use.

Overall, while recreational marijuana is still illegal in Australia, the growth of the country’s medical cannabis industry — and the Australian marijuana companies that exist within it — is a growing opportunity.

This is an updated version of an article first published by the Investing News Network in 2019.

Don’t forget to follow us @INN_Australia for real-time news updates!

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

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Asterion Cannabis Chairman and CEO Stephen Van Deventer says that the government’s support for the company’s project has enabled a fast approval process.

Asterion Cannabis Chairman and CEO Stephen Van Deventer says the special project status granted by the Australian government has allowed the company to fast-track its move into the Australian medical cannabis market.

In November 2019, Asterion received its development application approval for 4.3 million square feet of greenhouse cultivation space in Toowoomba, Australia. Van Deventer says that the speedy application process has been possible for the company in part thanks to the major project status, which has been granted to the company by the Australian government. Major project status means that Asterion’s development has been deemed to be of national importance to the people of Australia.

Asterion is the only agricultural cannabis producer to have been granted major project status. Van Deventer says that the Australian government’s support for Asterion’s project is due to the company’s development of pharmaceutical medical cannabis treatments, giving Australian patients a valuable alternative to smoking cannabis.

Below is a transcript of our interview with Asterion Cannabis Chairman and CEO Stephen Van Deventer. It has been edited for clarity and brevity.

Investing News Network: Please provide our investor audience with an overview of Asterion and its upcoming initial public offering (IPO).

Asterion Cannabis Chairman and CEO Stephen Van Deventer: Asterion is targeting to IPO in quarter one of 2020. However, market conditions pending, because we don’t want to IPO into a weak market.

INN: Please give us an overview of Asterion’s recent business operations.

SVD: With Asterion in Australia, we’ve been fortunate to have finished all of our engineering for our facility. It’s going to be 4.3 million square feet in four different greenhouse modules, almost 1.1 million square feet each. That’s the cultivation. Then there’s going to be another 1.2 million square feet of administration and auxiliary buildings for extractions and processing, packaging, etc. So, it’s a total of 5.5 million square feet. We launched the application with the Toowoomba Regional Council and in early November we received our development application approval. That means that the property that we have and what we are going to build has all been approved so we can develop what we said we’re going to develop.

On top of that, we’ve recently filed our Operational Works permit, which means that we can start digging into the earth and laying all the water pipelines and all the infrastructure for power, etc. We’ve been told to expect that we should have an operational work permit by mid-December.

As for our cannabis licenses, we’ve applied for the whole suite of them. We have cultivation, sales, research and development, import and export and extraction processing. We’ve completed all the questions and answers, they were completed two weeks ago. We were told there are no more questions and our cannabis licenses will be imminent. We expect to have our cannabis licenses any day. Once we have those, we’ll start working to begin purchasing cannabis from other licensed producers (LPs) to import into Australia to start servicing the Australian market, so we can start building our medical patient base while we’re under construction. By the time we come online, we’ll have a solid patient base to be able to deliver the product to.

What has helped us fast track getting this all done has been getting major project status. In Australia, only 14 other companies have major project status. We’re the 15th. We’re the only agricultural cannabis company ever to receive major project status. That means that it is of national importance to the country to get this project done. It eliminates all red tape and gets us the full support of the government in every agency. From here, we’re potentially looking to break ground around middle-to-late January of 2020.

INN: Please explain the significance of the development approval permit and what this means for Asterion moving forward.

SVD: Well, the development is key because when you apply for a development permit, there are multiple different ways to get these permits. You have to supply all the engineering, showing the heights of the building, what the buildings are going to look like, the footprint, etc., so, when you talk about 5.5 million square feet you’re not just sending them a generic plan. It’s a very detailed plan, we spent millions of dollars on engineering to get it done.

Because of our relationships with government and businessmen in Australia, especially John Wagner, the chairman of the Wagner Group, we were able to get this application as a core application rather than as a public consultation. A public consultation would have taken up to two years. We will manage to fast-track the process to six months because we did a core application. This eliminates us having to go to public hearings.

INN: Why did Asterion decide to acquire Sol-Gel and its intellectual property?

SVD: Asterion acquired 51 percent of Sol-Gel. The Australian government really likes the Sol-Gel because they would rather see patients take cannabis medicine in pill form, as a gel cap, transdermal or a nasal spray or sublingual tablet rather than smoking cannabis. With Asterion taking the major position of 51 percent ownership, now we can use the major project status to help accelerate that through the process for approvals.

INN: How has Canopy’s divestment from the Australian cannabis market altered the industry landscape?

SVD: It hasn’t altered it at all, actually. Australia is a huge market. There’s a lot of untapped need for product. And Canopy’s divestment wasn’t because of the landscape. Canopy’s divestment was the result of some major losses of hundreds of millions that they’ve taken each quarter. They’re going to start focusing on the operations that they actually have up and running now and get them profitable because they cannot continue to divest money like that.

INN: Which international markets are Asterion targeting and why those markets in particular?

SVD: So, we’re targeting the Australian market primarily in the beginning. Then, we’re looking through the whole Asia gateway from Australia, because the relationship between Australia and the Asia gateway is very important.

We’ve seen the Asian countries start to open up to cannabis. Thailand, which we never thought would ever allow medical cannabis or cannabis period, has allowed it. Asian markets are opening up fast, so for us, it’s good to have a gateway to the Asian countries.

However, we’re also targeting the European countries because of the premiums over there. I’m currently in negotiations with a major European country, one with around 45 to 50 million people in population, to get a joint venture potentially put together where we would distribute our products in that country for the medical cannabis market there.

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Australia’s cannabis extract market is growing its presence in the country’s medicinal cannabis industry.

The high-barrier to entry in Australia's cannabis extract market is developing a foothold in the country's medicinal cannabis sector and is a growing opportunity for investment.

Australia's cannabis market is still in the early stages of growth, having just legalized cannabis for medical use in February 2016. Similar to Canada's early-stage medical cannabis landscape, Australian lawmakers are still working through the best approach for implementing and improving the regulatory framework and licensing system.

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The novel multi-media campaign, created in partnership with RGA, is built on the concept that consumers can Zip everything around them and pay in four installments Following its global rebrand this summer, digital payment pioneer Zip Co Limited today revealed a new multi-million dollar brand campaign – ‘Zip Now, Pay Later’ – across the U.S., to attract new customers to merchants ahead of the holiday shopping …

The novel multi-media campaign, created in partnership with R/GA, is built on the concept that consumers can Zip everything around them and pay in four installments

Following its global rebrand this summer, digital payment pioneer Zip Co Limited ( ASX: Z1P ) today revealed a new multi-million dollar brand campaign – ‘Zip Now, Pay Later’ – across the U.S., to attract new customers to merchants ahead of the holiday shopping season. From TikTok dance challenges to ‘earworms’ stuck in our heads and glam tips for Zoom calls, ‘Zip Now, Pay Later’ spotlights meme-worthy moments that have captivated millions, all demonstrating that Zip is not only part of the same cultural zeitgeist, but also the payment option of choice for modern consumers who are increasingly shunning credit cards for flexible, transparent digital payment options everywhere they shop.

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Gold isn't all that glitters in the land down under — silver in Australia is a major industry, and the country is home to both large and small players.

When it comes to precious metals, Australia has long punched above its weight — the nation was born riding the wave of a gold rush.

Gold isn't all that glitters through — Australia is also a major global producer of silver. It's among the 10 top producers, and was ranked seventh in 2020, with 1,300 tonnes coming from the many operational mines in the country. By comparison, the world's top producer, Mexico, produced 6,300 tonnes that same year.

Other key players in the silver market are Peru, China and Russia, which produce more silver than Australia, and the US, Argentina and Bolivia, which produce less.


Australia is sitting on quite a lot of the precious metal, with the world's second largest reserves, behind only Peru.

According to Geoscience Australia, one of the country's first mines was a silver-lead mine near Adelaide. Since then, the entire continent has been combed over with a fine-toothed comb, with deposits identified in every state and territory and active mines in every jurisdiction but one (Victoria).

Overall, Australia is well explored when it comes to silver, and since the mid-1800s it's had a constant stream of silver production. Aside from that, the country boasts metals-processing facilities in South Australia that separate the precious metal from its commonly mined counterpart metals, lead and zinc.

Silver companies in Australia

Those looking at the Australian silver market have options. There are plenty of big players with interests in Australian silver, and many smaller players for investors to consider researching too.

Most silver comes from mines dedicated to other metals — Glencore's (LSE:GLEN,OTC Pink:GLCNF) Mount Isa in Queensland produces mainly copper, zinc and lead, but silver is separated by the company's integrated processing streams. Glencore also operates the McArthur mine in the Northern Territory, which is primarily zinc, but between its copper and zinc assets, Glencore produced 7,404,000 ounces of silver in Australia in 2020 — over 200 tonnes.

Elsewhere, BHP (ASX:BHP,NYSE:BHP,LSE:BLT) produces a lot of silver as well at the Olympic Dam operation in South Australia. Perhaps best known for the production of uranium and copper, it also yields significant silver resources to the tune of 984,000 ounces in 2020 (or almost 28 tonnes).

According to Geoscience Australia data from 2016, over 20 mines in Australia produced silver in that year, while there are dozens of other resources identified in each state.

A primary producer of silver is the Cannington mine in Queensland, where South32 (ASX:S32,OTC Pink:SHTLF), a company that was spun off from BHP in 2015, mines silver and lead. Cannington is a big one, producing 11,792,000 ounces in 2020, or 334 tonnes of silver.

Tasmania boasts the Rosebery mine, which has seen 85 years of continuous operations and is currently owned by MMG (ASX:MMG,HKEX:1208). Rosebery, like all the others here, is polymetallic, and besides silver also produces copper, zinc, lead and gold. MMG also has the Dugald River mine in Queensland which also produced silver.

Getting into smaller companies, there are those like New Century Resources (ASX:NCZ) which restarted the Century mine in the Northern Territory for zinc and silver.

The future of silver in Australia

So, you get the picture — there's a lot of silver to be mined in Australia by way of mining everything else.

It's worth noting that because silver operates both as a precious and an industrial metal, and is mined most often alongside base metals, it can be pulled in many directions. However, it traditionally follows (and lags behind) its precious metal sibling, gold, making it a valuable investment commodity to keep an eye on.

Looking forward, the future of the commodity in the land down under — especially given Australia's significant reserves and operator diversity — is as bright as you'd like it, and depends on what investors are most interested in, given the by-product nature of the metal.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

Australia took a stand against Facebook and Google earlier this year, and the move could have long-term implications for tech investors.

It was a ban that sent Australians wild and had the whole world watching.

Back in February, Facebook (NASDAQ:FB) stopped users in Australia from posting news in a week-long blackout, reacting to proposed legislation that would have forced the social media behemoth to pay publishers for content.

What prompted Facebook to "friend" Australia again, and what are the potential long-term implications of the squabble? Read on to learn what tech-focused investors in Australia should know about the situation.


Australia squares off against Facebook

On February 25 of this year, Australia's federal government passed the News Media and Digital Platforms Mandatory Bargaining Code. It was developed after extensive analysis by the Australian Competition and Consumer Commission, and is aimed at ensuring that news media businesses are fairly remunerated for their content.

It stipulates that digital platforms such as Facebook and Google (both named in the documentation) must pay news outlets whose content they feature — for example, if content is shared on Facebook or shows up in Google search results. The idea is that this will help to sustain journalism in Australia.

Unsurprisingly, Facebook and Google didn't react well to the code, which was first introduced in 2020.

Google didn't make any moves after it passed, but Facebook quickly made it impossible for Australian users to share news content, and pages for both local and international news organisations went blank — a major concern given the COVID-19 and wildfire concerns that were circulating at the time.

Australian Prime Minister Scott Morrison was scathing about Facebook's decision — which he ironically shared in a Facebook post — declaring the tech giant's actions "as arrogant as they were disappointing." He added, "These actions will only confirm the concerns that an increasing number of countries are expressing about the behaviour of BigTech companies who think they are bigger than governments and that the rules should not apply to them."

Despite strong feelings from both Australia and Facebook, the dispute was resolved fairly quickly, with the country agreeing to make four amendments to the legislation and Facebook restoring Australian's access to news.

Implications for Big Tech and news organisations

Both Australia and Facebook have claimed victory in the dispute, with a Facebook representative saying the company will be able to decide if news appears on the platform — meaning it won't automatically have to negotiate with any news businesses. Changes were also made to the arbitration process.

Tech experts have pointed out that larger news companies may ultimately benefit from the changes, but smaller ones could be pushed to the side. Major publishers that have struck agreements with tech giants, such as News Corp, Nine Entertainment (ASX:NEC,OTC Pink:NNMTF), Seven West Media (ASX:SWM) and Guardian Australia, may be able to increase their market share while smaller independent players lose out.

A business that is in full support of the laws is Microsoft (NASDAQ:MSFT). During the conflict, President Brad Smith came out loudly in favour of Australia's law, and advised that his company is willing to step up with search engine Bing should Google and/or Facebook pull out of the Australian market.

"In Australia, Prime Minister Scott Morrison has pushed forward with legislation two years in the making to redress the competitive imbalance between the tech sector and an independent press. The ideas are straightforward. Dominant tech properties like Facebook and Google will need to invest in transparency, including by explaining how they display news content," he said in a blog post.

"The United States should not object to a creative Australian proposal that strengthens democracy by requiring tech companies to support a free press. It should copy it instead."

Global reach and tech investor impact

Six months down the road from Australia's landmark legislation, it's tough to say what the long-term impact may be.

That said, market watchers do believe the country is part of a new precedent of forcing Big Tech into paying for journalism — something giants Facebook and Google are not used to.

Countries looking to pursue similar legislation include Canada, where Facebook agreed in May to pay 14 publishers to link to their articles on its COVID-19 and climate science pages, as well as other unspecified use cases. Canada is pursuing other avenues too. Meanwhile, in France, Google said it will pay publishers for news content after the country took up new EU copyright laws that make digital platforms liable for infringements.

For investors, the takeaway is perhaps that while companies like Facebook and Google may seem too big too fail, they too can fall subject to new regulations that can change how they do business. As nations around the world look to take back control from these mega companies, it's important to be aware of possible effects on their bottom lines.

Don't forget to follow @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

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