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High Barriers, High Opportunities: Australia’s Cannabis Extract Market

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.

The resulting short-term high barriers to entry in Australia’s medicinal cannabis sector are an opportunity for early-entry cannabis companies to establish a foothold into an industry that is on track to become the world’s fifth-largest legal cannabis market.

“While the valuations seem rather high in Australia, the country is in the early stages of its federally legal medical cannabis program — and it’s moving in the right direction,” said Alan Brochstein, the Cannabis Capitalist.

Australia’s cannabis extract market

In a country of 24 million, forecasts for growth in Australia’s legal cannabis industry show its value increasing from $52 million in 2018 to $1.2 billion by 2027. The significant size of this opportunity is also attracting Canadian cannabis companies looking to expand their global reach, especially in the cannabis extracts sector which is overtaking dried flower in the medical cannabis market.

In February 2018, Cronos Group (NASDAQ:CRON,TSX:CRON) launched Cronos Australia, a joint venture with New Southern Capital, which in June obtained a manufacturing license from the Australian Office of Drug Control. The license grants Cronos Australia the ability to manufacture value-added cannabinoid-based products, including those for Australia’s cannabis extract market. Tilray (NASDAQ:TLRY), through a distribution agreement obtained by its subsidiary Tilray Australia New Zealand Pty. Ltd., is exporting CBD extracts to three hospitals in the Australian state of Victoria for use by children with intractable epilepsy. MediPharm Labs Corp. (TSXV:LABS) has also completed the application process for a license to extract and import medical cannabis products in Australia which the company anticipates receiving in Fall 2018. These cannabis oil products will be used for research studies with healthcare and educational partners.

Cannabis oil extracts outdo dried flower

In a medical cannabis market like Australia, cannabis extracts have the potential to become a bigger market than cannabis dried flower. Medical cannabis consumers who are looking to ease pain, anxiety or inflammation to improve their health and wellbeing most likely want to avoid the negative health impacts of smoking cannabis, and prefer a more discreet treatment option. Cannabis extracts also allow medical practitioners to better control proper dosing for patients, and the extraction process allows manufacturers the ability to isolate specific cannabinoids meaning patients can get the medical benefits of cannabis without the high.

While stats are limited in Australia’s emerging market, we can look to Canada’s maturing medical cannabis market as an example of the medical cannabis consumer’s preference for cannabis extracts.

Health Canada’s most recent statistics show that sales of cannabis oil in the first three months of 2018 bested those of dried flower by 56 percent. In terms of year-over-year (YOY) growth, extracts surpassed dried flower with a substantial increase of 82 percent over the same period in 2017 compared to a scant 13 percent in YOY performance for dried flower.

What is attractive about Australia for a cannabis extract company?

While Canada’s cannabis climate has warmed to the point of legalizing recreational use nationwide this year, Australia is a country where cannabis is just beginning to emerge from the realm of the taboo. Not surprisingly, Australia initially took a conservative approach to cultivation, manufacturing and distribution licenses as well as stock exchange listing conditions. As of July 2018, the Australia’s Office of Drug Control (ODC) has only issued 18 cultivation licenses, 10 research licenses and 13 manufacturing licenses. At the same time, however, the ODC received 171 applications, most of which were new entrant cultivators. As most early-entrants are vertically integrated, this presents a significant opportunity for cannabis extracts manufacturers, as cultivators must now align to a manufacturing partner in order to obtain a license.

In January 2018, looking to reflect the country’s agricultural prowess, Australia joined the handful of nations that permit cannabis exports internationally, including Canada, Uruguay and the Netherlands. Australia’s medical products are quality controlled by the nation’s Therapeutics Goods Association (TGA), which is seen as the gold standard of GMP. As such, Australia is on its way to becoming one of the largest exporters of medicinal products globally.

For those cannabis companies that have been able to secure footing in the tight Australian market, the ability to export cannabis products into the Asia-Pacific region and other markets on the global stage offers further expansion opportunities. An export license also lowers the risk of a slow in the build of a domestic market for companies with Australian based operations.

Overcoming challenges and growing Australia’s medicinal cannabis sector

Long wait times for access being addressed

The absence of recognized qualifying medical conditions for cannabis treatment in Australia is one of the challenges holding back growth in this market. However government funded research is allowing Australia’s Therapeutic Goods Administration (TGA) — which oversees the country’s medical cannabis access framework — to better understand how cannabis can be used in palliative care as well as to treat epilepsy, multiple sclerosis and pain.

In March 2018, the New South Wales government reduced the approval process for medical cannabis access to a single clinical assessment by the TGA, drastically cutting the wait time for patients; additional Australian states are following suit.

Securing a domestic supply chain

While imports (such as those delivered by Tilray) are important to the nation’s nascent medical cannabis supply chain, medical cannabis supporters and industry leaders say it’s crucial that Australia further develop its domestic production. Doing so will bring about the reduced costs and improved access necessary to bring more patients out of the black market, away from dangerous opioids and into the Australian medical cannabis market.

Australian-produced medical cannabis would also improve access for the research studies needed to fully convince medical practitioners and policymakers about the safety, efficacy, and benefits of medical cannabis extracts for a wide range of indications.

“(When importing) you have to consider the laws of each state and countries and there’s so much extra paperwork and red tape,” said Australian Medical Association (AMA) Council of General Practice chair Dr. Richard Kidd. “If it was produced locally and rigorously and legally and was a great quality product then it might lead to good studies to help people in the future.”

Victoria, the Australia’s most populated state and the first to legalize access to medical cannabis patients, is becoming the major hub for medical cannabis in the country. An example of the state’s proactive stance toward improving access for medical cannabis, government leaders recently signed a MOU with Canopy Growth (TSX:WEED) “to further develop research and technical capabilities in the production of medical cannabis in Australia.”

MediPharm Labs Australia Pty Ltd is constructing a 10,000-square-feet state-of-the-art extraction facility near Melbourne, Victoria. The company is a subsidiary of MediPharm, the first cannabis company in Canada to become a Health Canada-approved licensed producer of cannabis oil without first receiving a cannabis cultivation license. MMJ PhytoTech Ltd. (ASX:MMJ), an Australian company with a diversified portfolio in Australia’s emerging cannabis market, is a strategic shareholder in MediPharm Labs.

MediPharm Labs’ Ontario, Canada based operation consists of a 70,000-square-foot facility designed and built to European GMP standards with ISO rated critical environment clean rooms. The Victoria, Australia based facility is designed to the same standards. MediPharm Australia anticipates receiving its cannabis oil manufacturing license from the Office of Drug Control in the fall of 2018 and the facility is slated to begin commercially producing pharma-grade cannabis oil extracts by spring 2019.

“There are different parts of this industry, whether it’s cultivating or growing these particular plants or turning them into the oils and other products that can be lifesaving,” said Victoria Premier Daniel Andrews. “We’ve seen very exciting announcements from some very big multinational companies who are making Victoria their base for medicinal cannabis production and medicinal cannabis growing.”

Looking forward

Australia’s leaders are serious about further decriminalizing cannabis use, as evidenced by a recent bill proposal aimed at legalizing cannabis for personal use. Australians themselves are becoming more open to cannabis as both a medicine and an adult-use product. A recent national survey, nearly 85 percent of Australians support legal medical cannabis, while support for recreational cannabis has increased from 26 percent in 2013 to 35 percent in 2016.

Australia’s legal medical cannabis market is in its early stages and the challenges its facing is par-for-the-course. Industry analysts expect regulators to slowly but surely open the pathway to further legalization of cannabis much in the same way as we’ve seen in Canada, the US and Germany. There are increased growth opportunities ahead, especially for domestic cannabis product producers and those interested in investing in cannabis extraction.

This article was written according to INN editorial standards to educate investors.

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Robotics is an area of investing that is growing in Australia ― but is it a sector worth investing in?

The global robotics industry is expected to grow at a compound annual growth rate of 7.8 percent through 2028 according to the Global Industrial Robotics Market Analysis 2020. Robotics is an area of investing that is growing in Australia ― but is it a sector worth investing in?

Broadly speaking, robotics is the design and construction of robots. This can include core automation and production, industrial software, robot technology and integration of robotics. From drones to self-driving cars to toys ― robotics is a growing industry that is beginning to permeate our daily lives.


The distinction between robotics and AI can be a little confusing, but essentially think of robotics like the body and AI like the brain. Both can exist separately, and they are powerful when combined. The goal of a robot is to complete a task faster and more efficiently than a human.

What does the market look like?

The COVID-19 pandemic has seen technology sectors such as robotics accelerate as businesses have faced global challenges. Robotics has been able to help keep spaces safer by replacing humans with robots on factory lines, in eCommerce warehouses or on healthcare frontlines taking temperatures or disinfecting spaces.

What is Australia doing to support the robotics sector?

In early 2020, the Robotics Australia Network was formed to accelerate growth of the domestic robotics industry. The network aims to strengthen global competitiveness and cement Australia as a global leader in robotics.

How does the Australian robotics sector stack up?

According to the International Federation of Robotics, in a ranking of the world's most automated countries it's not even in the top 10. Number one is Singapore, followed by South Korea then Japan.

The investment space for pure robotics companies is relatively small, with greater opportunities to invest in more broader technology, AI and automation stocks.

Who are the big players in robotics stocks?

Robotics stocks in Australia are companies with a strong crossover to other technology sectors like artificial intelligence and virtual reality.

Vection Technologies (ASX:VR1)
Market Cap AU$77.56 million

Vection is a multinational software company with offices in Western Australia as well as Subiaco and Casalecchio di Reno in Italy. The company uses robotics technology as well as 3D, virtual reality, augmented reality, industrial IoT and CAD solutions. The business is split into two sections: IT development and outsourced services. The company also collaborates with Autodesk Technology Centers, the Microsoft Mixed Reality Team and Cisco Systems Italy.

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What are the other ways to invest in robotics?

Another way to get into the robotics sector is investing in robotics exchange traded funds (ETFs), a popular choice that offers exposure to the industry of robotics and artificial intelligence rather than a single company. Two major ETFs in the robotics sector are:

  • BetaShares Global Robotics and Artificial Intelligence ETF (ASX:RBTZ)
  • The ROBO Global Robotics and Automation ETF (ARCA:ROBO)

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

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

carbon emissions

Following international pressure, the Australian government has promised to reach net zero emissions by 2050.

In a last-minute commitment after months of debate, the Australian government has promised to reach net zero emissions by 2050, expecting to meet the goal largely through technology development.

The move comes following international pressure as Australia had previously refused to join countries in pledging to meet the target ahead of the United Nations' COP26 climate conference in Glasgow.

However, the plan unveiled on Tuesday (October 26), which includes a government investment of AU$20 billion, does not strengthen the target set for 2030, with Prime Minister Scott Morrison saying Australia is on track to beat its Paris Agreement goal, cutting emissions by 30 to 35 percent by that decade.


"We will do this the Australian way," Morrison said ahead of a press conference, announcing investments in new energy technologies like hydrogen and low-cost solar.

An Australian hydrogen industry could be worth more than AU$50 billion in 2050, according to the government. Meanwhile, expanding production and processing of metals like lithium, nickel, copper and uranium could together be worth around AU$85 billion in exports in 2050.

That said, Australia will continue to be heavily dependent on fossil fuels as the plan will not shut down coal or gas production. The country is a major coal player, with the third largest reserves in the world, but its reliance on coal-fired power makes it one of the world's largest carbon emitters per capita.

"We want our heavy industries, like mining, to stay open, remain competitive and adapt, so they remain viable for as long as global demand allows," Morrison said. "We will not support any mandate — domestic or international — to force closure of our resources or agricultural industries."

Australia's desire to achieve net zero emissions by 2050 is a step in the right direction, Prakash Sharma, Wood Mackenzie's Asia Pacific head of markets and transitions, said.

"Our analysis shows that Australia can reach net zero emissions by 2050," he said. The country's major trading partners — China, Japan and South Korea — are already in transition towards that goal.

According to Wood Mackenzie, nearly 83 percent of Australia's power generation will come from solar and wind by 2050, as compared to about 20 percent last year. Natural gas, bio energy, geothermal and small modular reactors will supply the remaining 17 percent in power output. Coal into power is expected to be phased out by 2035.

"Although the pathway requires complete transformation of its traditional energy and export sectors, there are significant opportunities to capitalise on and protect future revenues," Sharma said.

"This will require Australia to become a significant player in low-carbon hydrogen trade as well as being able to offer carbon storage and offset services."

Meanwhile, the Australian Conservation Foundation has welcomed the prime minister's commitment to reach net zero by 2050, but said the mid-century goal is only meaningful with deep cuts to climate pollution this decade.

"Unless the government sets the wheels in motion to cut our emissions in half by 2030, it is making climate change worse and turning its back on the opportunities," said Chief Executive Kelly O'Shanassy.

"Australia can become a global clean energy superpower in the next decade by replacing coal and gas with renewable energy," she added. "We have abundant clean energy, tools and talent, but we cannot delay any longer."

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

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