Interest in CBD in Australia is rising as the country's cannabis industry develops. What should investors know about this growing market?
Over the past five years, awareness about the medicinal properties of CBD has been growing. Although Australia's cannabis industry is still young, CBD hasn't escaped market watchers' attention.
CBD is a cannabidiol, meaning it is a compound found in the actual cannabis plant. It has steadily become a favourite in the development of novel products with various health uses. Part of its attraction stems from the fact that CBD lacks a heavy psychoactive nature, unlike its fellow molecule THC.
Although still in its infancy, research has shown CBD has anti-inflammatory properties, while offering the promise of more developed uses. It is gaining traction as a treatment for illnesses and conditions such as anxiety, post-traumatic stress disorder, depression, eating disorders, attention deficit hyperactivity disorder, migraines and some chronic pain disorders — to name just a few.
With so much potential, it's clear why CBD has entered the spotlight. Read on to learn more about the CBD landscape in Australia, including whether it's legal, how it can be accessed and how big the market is.
Is CBD legal in Australia?
CBD has been legal in Australia since 2015 providing it is at least 98 percent cannabidiol.
The country's CBD rules have developed over the years, indicating Australia's changing understanding surrounding the cannabis compound as it relates to common uses.
Previously, anyone wishing to use CBD in the country had to first find a doctor to make an application to the Therapeutic Goods Administration (TGA). A general practitioner could do this, or patients could visit specialised cannabis access clinics to receive help.
However, on February 1, 2021, low-dose CBD products became legal to purchase over the counter. This development came after the TGA approved a scheduling change for the drug, moving it from Schedule 4 (prescription only) to Schedule 3 (available over the counter at any pharmacy).
Even with this switch, Australia still has significant control measures in place for CBD.
First off, CBD products sold over the counter must be included on the Australian Register of Therapeutic Goods. Another restriction comes in the way of the dosage. CBD products sold over the counter in Australia can't go over 150 milligrams for use per day.
There is also the issue of timing. Despite the change in CBD regulations, Iain McGregor, psychopharmacologist and academic director of the Lambert Initiative for Cannabinoid Therapeutics, told the Guardian he doesn't expect to see any CBD products available in Australia until "six to 12 months" after the February rule change.
Australian cannabis research firm FreshLeaf Analytics has concurred with McGregor, indicating that the TGA's standards will be a significant challenge for CBD companies to clear. Various domestic cannabis producers have told investors they are working on meeting the requirements to begin the sale of CBD products.
Ordering CBD oil from another country to be delivered in Australia remains illegal.
How can CBD be accessed in Australia?
As mentioned, methods of accessing CBD in Australia are currently in flux. While over-the-counter purchases will soon be allowed, they're not possible quite yet.
For now, those who want to purchase CBD in the country must go through the process outlined above — they have to find a doctor to make an application to the TGA, or visit a specialised cannabis access clinic.
There are more than 100 unregistered products (oils, capsules, cannabis flower and buccal sprays) with varying CBD and THC content currently available for prescription through the TGA. Nabiximols (trading and sold as Sativex) is the only registered cannabis-based medicine in Australia.
New analysis published in the International Journal of Drug Policy shows that CBD-containing products in Australia under the original TGA maximum dose of 60 milligrams per day may not be high enough to benefit patients. Research from the Lambert Initiative from the University of Sydney indicates that a CBD dose of 300 to 1,500 milligrams per day is required to see health benefits.
In November 2020, the TGA increased the maximum daily dosage to 150 milligrams, which is set to benefit CBD importers and distributors.
How big is Australia's CBD market?
Australia's CBD market is dominated by a mix of local and international companies. Local players are pushing to increase their consumer base, exports and geographic presence in Australia.
A recent Grand View Research Report puts the size of the country's legal cannabis market at US$235.7 million in 2020, and it is forecast to boom to US$1.9 billion by 2026.
It's expected that the changes in CBD access rules mentioned above will have positive impacts for Australian cannabis companies like Cann Global (ASX:CGB), which has an import permit for two CBD pill products with partner Canntab Therapeutics (CSE:PILL,OTCQB:CTABF).
Last September, Business News Australia reported that shares of medicinal cannabis companies jumped after the news of over-the-counter CBD sales. As well as Cann Global, BOD Australia (ASX:BDA), Elixinol Wellness (ASX:EXL,OTCQB:ELLXF), Althea Group Holdings (ASX:AGH), Medlab Clinical (ASX:MDC), Zelira Therapeutics (ASX:ZLD,OTCQB:ZLDAF), IDT Australia (ASX:IDT) and Little Green Pharma (ASX:LGP) made moves.
As Australia's CBD market continues to develop, investors will be monitoring it closely, especially as the country comes closer to selling CBD products over the counter.
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Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.