Australian Cannabis Outlook 2021: Medical Leads the Way

2021 is set to be a crucial year for Australia's medical cannabis industry as new products hit the market and patient numbers rise.

Click here to read the previous Australian cannabis outlook.

Australia's cannabis market is moving along as regulations fall into place for sector expansion.

Under the current rules, the market may appear to be at a standstill, but recent approvals show there is momentum for a vibrant medical cannabis industry that will carry on in 2021.

Even though companies on the ground don't expect to see recreational use become legal next year, Australia's medical cannabis market is still expected to continue ahead with stronger numbers.


Here the Investing News Network (INN) offers some key points on what may be ahead for the Australian cannabis market in 2021, with insight from expert market watchers.

Australian cannabis outlook 2021: Medical still responsible for growth

As part of its Oceania Cannabis Report: Second Edition, international drug research firm Prohibition Partners indicates that the entire cannabis industry in Oceania is expected to be worth US$1.55 billion by 2024, with medical cannabis accounting for approximately 40 percent of that amount.

“Let's build a very successful business based on medicinal cannabis … we've got to ride the global wave of global acceptance," Brett Schwarz, CFO and corporate advisor with privately held firm Cannatrek, told INN.

Schwarz explained that it's hard to project when exactly Australia may legalise recreational use, a key catalyst for the development of a cannabis market.

“We will one day, but we can't say whether it's in one year or five years," said Schwarz. “There are more politicians talking about it, there are more doctors talking about it — that I think that it will come in time."

The Cannatrek executive was cautious about expecting recreational cannabis to open anytime soon, instead opting to place his emphasis on what's ahead for the medical market.

A study from FreshLeaf Analytics pegs Australian medical market sales at AU$95 million in 2020.

“Australia is a maturing market — not mature, but maturing, and I think the patients are seeing that, so they're feeling more comfortable," Schwarz said.

In the Prohibition Partners report, Roby Zomer, co-founder, managing director and CEO of MGC Pharma (ASX:MXC,OTC Pink:MGCLF), states that more education is driving up patient interest in cannabis; meanwhile, medical professionals are becoming more comfortable prescribing it.

“This is not only driving legislation change around the world, but driving demand for quality medicinal cannabis products," the MCG Pharma executive said.

The growth trajectory is clear to see for medical cannabis in Australia. According to FreshLeaf Analytics, product availability rose quickly in the latter half of 2020 with 150 items now available for patients.

The research firm also indicates that at the end of 2020 there were 30,000 registered patients allowed to purchase medical cannabis in the country.

“Recent price decline has brought the illegal and legal markets to parity and has put us in line, from a pricing perspective, with more mature markets such as Canada," the study explains.

Australian cannabis outlook 2021: CBD set for new year push

In December, the Therapeutic Goods Administration (TGA) gave the green light for low-dose cannabidiol (CBD) to become available through over-the-counter methods without a prescription. The Australian regulatory agency is in charge of the rules for medical cannabis.

In the document, the TGA indicates that this new ruling will officially come into effect in February.

“That's very exciting, that's the maturity," Schwarz told INN about the TGA approval.

Any CBD products will need to be approved by the TGA and make it into the Australian Register of Therapeutic Goods. According to the regulatory agency, no products have yet been added.

Althea Group Holdings (ASX:AGH) CEO Josh Fegan said his company was glad to see the TGA's decision to allow these products for sale over the counter, and also to increase the maximum recommended daily dose.

“This decision provides confirmation of that marketplace," Fegan said; he confirmed that his firm will be working to make products available through this ruling.

Australian cannabis outlook 2021: Investor takeaway

Investors in the Australian cannabis market have watched the sector slowly develop over time.

Thanks to an expanding medical market, the industry has much to look forward to. What's more, the growing potential for international exports has become available to companies as well.

Schwarz told INN cannabis companies in the country want to prove that their operations can serve Australia even as this international opportunity follows closely behind — he explained that his firm specifically is eyeing exports to Europe and throughout Asia.

As companies continue to expand according to market needs, growing pains could be expected as marijuana players set themselves up to capitalise on patient growth in Australia. But overall the sentiment from key players is that the future looks bright for cannabis in the country.

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

Securities Disclosure: I, Bryan Mc Govern, 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.

Featured

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.

read more Show less

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.

read more Show less

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’).

read more Show less

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.

Top News