Australian Cannabis Outlook 2020: Legalization on the Horizon

INN takes a look at the current state — and the projected growth — of the cannabis industry in the Oceanic nation for 2020.

Click here to read the latest Australian cannabis outlook.

Australia's burgeoning cannabis market is attracting attention from investors as it develops.

Now, with increasing moves to push for drug legalization and steadily rising numbers of medical cannabis patients, the country is starting to build a lucrative cannabis space.

Here the Investing News Network (INN) takes a look at the current state and rapid growth of the cannabis industry in the nation into 2020.

Australian cannabis outlook 2020: The path to legalization

Australia legalized medical cannabis in 2016, when the Narcotic Drugs Act was amended to allow the drug to be grown for medical and scientific purposes for the first time since it was outlawed in 1938.

The amendment allows businesses to apply for a number of different licences, including cultivation, manufacturing and research.

Despite the substance's illegality, recreational use of cannabis has remained high. A report from the Australian Institute of Health and Welfare shows that marijuana is the most extensively used illicit substance in the country.

As such, full cannabis legalization has been an ongoing movement within Australian parliament.

In some of the country's states, like the Australian Capital Territory (ACT), strides have been made to legalize adult use of the drug.

In the ACT, Labor Party member Michael Pettersson has introduced a bill that would legalize the use of marijuana for recreational purposes. It would allow people to possess up to 50 grams of flower and grow up to four plants outdoors per residence, or two per person.

The bill was passed in September 2019 and will take effect in January 2020, though some industry experts say its conflict with overarching Commonwealth legislation could prove to be a challenge.

More broadly, cannabis legalization has been a big part of the platform of the Australia Greens political party. Prior to Australia's federal election this past May, the Greens were vocal about pushing the Labor Party to take the lead on marijuana.

In an interview with Smart Company, Greens leader Richard Di Natale said the party wants to allow people to grow up to six plants and establish a controlled market for the sale of cannabis products.

Australian cannabis outlook 2020: Increases in medical cannabis research

Save for one medical cannabis product — nabiximols — medical cannabis is not an approved medicine in Australia under Therapeutic Goods Administration (TGA) regulations. The TGA is the Australian equivalent of Health Canada, the regulator for the first G7 nation to legalize recreational use of the drug.

Patients who want to access cannabis products for medicinal purposes can use the Special Access Scheme, the Authorised Prescriber Scheme or a clinical trial.

Alexandra Curley, head of insights at research company Prohibition Partners, told INN that Australia's current system could work to the country's benefit when it comes to expanding the medical cannabis industry in Australia.

“What is very interesting with Australia is that the country is basically trying to get some of those stumbling blocks out of the way to ensure a smooth transition to incorporating medicinal cannabis onto the pharmacopoeia," she said.

With the legalization of medical cannabis, research on the efficacy and safety of the drug has taken off in Australia. In 2017, the federal government established the Australian Centre for Cannabinoid Clinical and Research Excellence (ACRE), the country's first federally funded centre for medical cannabinoid research.

ACRE director Jennifer Martin told Health Europa in April that the country needs to open the path for cannabis research.

“In 2014-15, Australia was in uncharted territory, with a strong push from patients and their relatives for medicinal cannabis to be available before it had become a registered product," said Martin.

Martin added that ACRE's research application is an opportunity for Australia to “establish a world-class pharmacovigilance, data monitoring and collection system."

She continued, “ACRE has already taken critical steps to make this happen and it will enable direct and robust evidence to inform government, prescribers and the public."

Other institutions, including the Lambert Initiative for Cannabinoid Therapeutics at the University of Sydney, have also been at the forefront of researching cannabinoid-based treatments.

The research has been to the benefit of the cannabis industry in the country overall. Initially, doctors were apprehensive to prescribe the drug due to a dearth of information, but research has been pivotal to increasing the use of cannabis.

“Our doctors are more educated about cannabis as a therapy, and also we've got a number of cannabinoid clinics that are actually opening up, so it's easier for our patients to access," Fleta Solomon of Little Green Pharma told INN.

Australian cannabis outlook 2020: Looking toward future development

Moving forward, Australia has been looking to become an export powerhouse in the cannabis space since the export of medical cannabis was legalized in 2018.

That year, Health Minister Greg Hunt said on ABC Radio that the country is aiming to become the world's number one supplier of medical cannabis.

Since then, cannabis companies have been taking advantage of the legal freedom.

In September, Little Green Pharma shipped the country's first locally grown medical marijuana products to Frankfurt-based cannabis firm Cansativa.

Another Australian company, Bod Australia (ASX:BDA), announced in July that it had entered into an agreement with UK-based pharmaceutical company PCCA to import Bod's medical cannabis products across the UK and Ireland.

Solomon mentioned that along with the UK and Germany, Switzerland, New Zealand and Thailand are all countries Australia is looking to establish connections with in the marijuana space.

She added that “regulatory hurdles" are still in the way of these expansion plans. But developments at the federal level may soon make it easier for marijuana firms to solidify themselves in the global cannabis industry.

In September, a report for the Narcotic Drugs Act was tabled in Australian parliament recommending a complete rebuild of the licencing regime to “reduce the regulatory burden" on industry players and allow more support for the development of the industry, according to Australia's health department.

According to the report, as of June 2019 the Office of Drug Control had received 246 licence applications, and had granted 63 licences, including 24 medicinal cannabis licences, 16 cannabis research licences and 23 manufacturing licences.

Australian cannabis outlook 2020: Investor takeaway

Though the Australian cannabis market is still in its infancy, it is well positioned to grow into a contender in the global marketplace for cannabis. Projections from Prohibition Partners put the country's medical cannabis industry at AU$3.1 billion by 2028.

Curley said that Australian companies are well aware of their growing standing in global cannabis.

“The companies in Australia very much see that they have an opportunity to come centre stage, and they can really compete with the Canadian giants," she said. “There's a number of companies that are really ramping up efforts to produce and develop the market."

For Australia, the phrase “Cannabis 2.0" has a much different meaning than it does in Canada, where it describes the shift to edible cannabis-infused products. Experts are expecting to see the Australian sector find its footing during this upcoming stage of development.

“The Australian market has now entered what we call Cannabis 2.0 — a phase of the market defined by real patient volumes, real revenues and real profits," said Tim Drury, CEO of Southern Cannabis Holdings. “In 2020 we expect a shakeup of the market with new group of market leaders to emerge on the back of strong business models."

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

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

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Highlights: Peak Processing Solutions subsidiary of Althea Group Holdings has entered into agreements with BBCCC, Inc., The Boston Beer Company and WeedMD Rx Inc., a subsidiary of Entourage Health Corp. Under the product development agreement, Peak will provide research and development services including laboratory support and the testing of various product formulations and recipes, for the new line of BBC products …

Highlights:

  • Peak Processing Solutions (Peak), subsidiary of Althea Group Holdings (ASX: AGH) (Althea) has entered into agreements with BBCCC, Inc., The Boston Beer Company (NYSE: SAM) (‘BBC’), and WeedMD Rx Inc., a subsidiary of Entourage Health Corp. (‘Entourage’)
  • Under the product development agreement, Peak will provide research and development services including laboratory support and the testing of various product formulations and recipes, for the new line of BBC products
  • BBC will provide Peak with funding of up to USD$2m for capital improvements associated with the development project. In addition, Peak will receive a minimum of USD$285,000 for each year of the Term of the agreement (totalling USD$1.42m )
  • Under the 5 year supply and manufacturing agreement, Peak is the exclusive manufacturer of all cannabis beverages produced or sold in Canada under BBC branding, for the term of the agreement
  • Entourage will be responsible for distribution and sales of the cannabis-infused beverages in Canada

Peak Processing Solutions, a subsidiary of Althea Group Holdings Limited (ASX: AGH) (‘Peak’ or ‘the Company’) is a leading developer, manufacturer, and distributor of cannabis infused edible, topical, and concentrate products is pleased to announce that the Company has entered into agreements with WeedMD Rx Inc., a subsidiary of (TSXV: ENTG) (OTCQX: WDDMF) (‘Entourage’) and BBCCC, Inc., a subsidiary of the Boston Beer Company Inc. (NYSE: SAM) (‘BBC’).

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Sydney, Australia – Medlab Clinical Ltd an Australian biotech using delivery platforms to enhance medicines is pleased to announce the execution of a Master Services Agreement with WEP Clinical Ltd for the exclusive development and delivery of Named Patient Programmes relating to the unlicensed supply of its proprietary NanaBis and NanoCBD to patients in the UK and Europe. This Master Services Agreement is the first …

Sydney, Australia (ABN Newswire) – Medlab Clinical Ltd (ASX.MDC), an Australian biotech using delivery platforms to enhance medicines is pleased to announce the execution of a Master Services Agreement (MSA) with WEP Clinical Ltd (WEP) for the exclusive development and delivery of Named Patient Programmes relating to the unlicensed supply of its proprietary NanaBis(TM) and NanoCBD(TM) to patients in the UK and Europe.

This Master Services Agreement is the first partnership for Medlab to supply their cannabinoid medications outside of its current Australian Special Access Scheme.

Dr Sean Hall, CEO of Medlab stated, “This is a major milestone for Medlab to begin supplying NanaBis(TM) and NanoCBD(TM) on prescription for the first time to patients outside Australia.”

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Everything you need to start investing in Australia’s growing Cannabis market

Are you ready to start investing in Australia’s growing cannabis market?

Dive right in with our FREE Special Report, Australian Cannabis: Forecasts, Analysis and Expert Advice

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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.

Queensland is the 16th most attractive jurisdiction in the world, sneaking in above BC and the Yukon in Canada, and just behind New Mexico in the US.

Queensland is one of the top three Australian jurisdictions for copper.

While it's well behind South Australia, a behemoth in the country for resources and production, Queensland hosts some 12 percent of all known Australian copper deposits, level with its southern neighbour New South Wales.

A premier mining jurisdiction globally, Queensland is ranked third out of all Australian jurisdictions for mining investment attractiveness, according to the Fraser Institute. Globally, it's ranked as the 16th most attractive jurisdiction, sneaking in above BC and the Yukon in Canada, and just behind New Mexico in the US.


The state is renowned for its mining prowess in Australia, and is known as one of the resource states, with a large chunk of its economic heft coming from the mining industry and its operations across the vast state.

Overall, mining accounts for 11.7 percent of Queensland's economy, with coal and liquefied natural gas being the primary focus of output. Together, coal, gas and mineral exports account for over 80 percent of Queensland's exports, according to the state government.

Having said that, copper plays a large role, and Queensland is home to the second biggest producer of copper in Australia in the form of Glencore's (LSE:GLEN,OTC Pink:GLCNF) Mount Isa mining complex in the northwest of the state. There, Glencore owns and operates the Enterprise and X41 mines.

Aside from Mount Isa, Glencore owns the nearby Ernest Henry copper mine. Combined, Glencore's Queensland operations produced 138,800 tonnes of copper in 2020 — accounting for a little over 10 percent of the company's global copper production. Glencore isn't listed on the ASX, but can be found on the LSE.

Besides the Mount Isa complex itself, there's also a handful of other operational mines in the northwestern portion of the state, although most of them are privately owned, such as the Capricorn copper project, which is a joint venture between EMR Capital and Lighthouse Minerals; it secured itself "prescribed project" status in 2017.

Other privately owned projects include Round Oak's Barbara project (in care and maintenance), Chinese-backed CuDECO's Rockland copper project (mothballed, CuDECO in liquidation) and Chinova's Osborne mine — which was originally set up by Ivanhoe Mines (TSX:IVN,OTCQX:IVPAF). There's also the Balcooma mine, which Royal Gold (NASDAQ:RGLD) has copper royalties on, and the privately owned Mount Cuthbert mine.

Many of the mentioned projects ran into trouble in 2020, with the COVID-19 pandemic limiting company operations.

All in all, Queensland has 13 operational copper mines, but as can be seen many are in private hands, making investment opportunities somewhat slim. Aside from previously mentioned Glencore operations, there's Red River Resources (ASX:RVR,OTC Pink:RRRDF), which owns the Thalanga operations near Charters Towers. Red River acquired Thalanga in 2014, and has been working to develop the legacy site back into a viable investment.

From the beginning of production in 2017, the operations have a lifespan of some 10 years, according to Red River, with further development and exploration options on the table. In its most recent quarterly report, Thalanga reported output of 3,086 tonnes of copper concentrate.

The remainder of the options on the table for investors are exploration focused, such as Copper Mountain Mining (ASX:C6C,OTC Pink:CPPMF) with interests in the Eva copper project, which is — unsurprisingly — in the northwest of the state, near the town of Cloncurry. Eva is in the development phase, with a feasibility study completed in early 2020 envisaging a 15 year mine life with an annual expected output of 106 million pounds of copper equivalent.

There's also Global Energy Metals (TSXV:GEMC,OTCQB:GBLEF), which like Glencore isn't on the ASX, but has interests in the Millenium cobalt-copper-gold project and others near Mount Isa — all in the exploration stage.

Aside from that, Strategic Energy Resources (ASX:SER) acquired exploration licences from Newcrest Mining (ASX:NCM,OTC Pink:NCMGF) in May 2021 for licences around Mount Isa, and Zenith Minerals (ASX:ZNC) is exploring the Develin Creek copper-zinc project. Zenith recently divested from another copper project, Flannagans, in June 2021 by selling its interests to a private company for $450,000.

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

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

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