This week, the news of billionaire Gina Rinehart expanding her portfolio to include Medicinal Cannabis ignited interest within the medical industry and the mainstream media alike. For a business mogul who has amassed her extreme fortune through the likes of iron, coal, and cattle, the move may have come as a surprise. As the smoke clears, however, there are some valuable lessons that if understood could shape the Australian cannabis landscape for the foreseeable future.
High Profiles & High Profits
For many Australians, the news of Rinehart’s $15M investment into WA born cannabis company Little Green Pharma for a conservative 10% holding came as a surprise. For magnate known for her shroud business acumen to be investing into an industry seemingly removed from her existing portfolio illustrated the financial potential of the industry. An industry the Australian population is largely unaware even exists.
The reality, the domestic cannabis industry has been in steady growth since 24 February 2016, when Australia legalised growing of cannabis for medicinal and scientific purposes at the federal level. In the five years following, researchers, doctors, farmers, legislators and advocates have been engaged in an ongoing conversation around expanding patient access, especially now that cannabis has been linked to treating several medical conditions. A conversation largely ignored by the mainstream, until…
A Cannabis Economy
A recent report from FreshLeaf Analytics has predicted that domestic medical marijuana sales could surpass $200M in 2021, doubling from the previous year. This growth is being driven by an increase in high quality products which, in turn, is simultaneously driving down prices. Further, the broader industry is expected to $1.5B by 2025. Ironically, it just may be the extremely rigid quality control domestic cannabis companies are held to that are driving the Australia market globally.
Green and Gold
While Rinehart’s investment was with a Western Australian company, it will go to the purchase of an existing cultivation and manufacturing site based out of Denmark which already has European licences for creating medical products. Further, Little Green Pharma (ASX:LGP) was the first Australian producer to export medicinal cannabis to Germany, one Europe’s largest markets. Moreover, the announcement of the world’s largest medicinal cannabis facility in Toowoomba should provide an indication of how in-demand Australian grown cannabis is internationally.
This should not come as a surprise, given Australia’s stellar reputation for both farming and extremely high-quality control standards. A sentiment echoed by the Minister of Industry, Science and Technology, Karen Andrews, who stated: "Australia's trusted reputation for medical products combined with our top-quality agriculture sector will propel this new domestic industry into the global market."
While it is to be applauded for Australian companies to be successfully competing in the global market, the increasing export demand can result in a supply shortage here in Australia. This was a reality in March when whole flower was widely unavailable to domestic patients for a period of weeks.
As the industry grows, so will investment which, in turn, will bring media attention. This will unlock much needed research dollars, facilitate facility expansion and, perhaps most importantly, lobby domestic policy makers to increase patient access. It will be up to the public, however, to ensure focus remains on patients not just on profits.