While there may be consolidation – and even business failures – Cronos Australia CEO and executive director Rodney Cocks says Australia’s medicinal cannabis industry is here for the long term.
History is replete with examples of hypergrowth industries and market bubbles.
From the Dutch tulip craze of the 17th century, when prices rose so high amid ‘tulip mania’ that a few cherished bulbs cost the same as a house, through to the dot-com bubble and tech crash of the late 1990s, we have repeatedly witnessed the inevitable business cycle of boom and bust.
And so it is in 2022. Amid the still-fledgling Australian cannabis industry, there are rising concerns about the future after the share prices and valuations of some players experienced a dramatic decline over the past year. Like tulip mania and the dot-com bubble, we even have a catchy name for it. Cue references to the ‘green rush’.
And there has never been a better time to learn the lessons of history.
Like any hyper-growth industry, the Australian cannabis industry has seen a lot of people move into it and establish operations since 2016. From the initial rush to invest, many of those have struggled. It’s no different to any new sector, whether it be the graphite industry, the rare earths industry, or major investments in hydrogen power and energy.
The fact is, some will succeed, some will not, and others will merge.
This is the cycle that has repeated itself in other sectors. But those who do succeed will be the leaders of an industry that is here to stay.
I am optimistic about the Australian medicinal cannabis industry and believe it will thrive for the long term.
It is evident that Australia is developing medicinal cannabis professionals who will lead and take the industry forward. That knowledge is coupled with passion. I see people who come to work each day with the knowledge that they are underpinning access and helping patients who are prescribed medicinal cannabis, some in very vulnerable health situations.
The data we see at Cronos also points to a very healthy outlook for the broader industry. We have now completed phase one of our growth strategy in FY22. Under that program, we were successful in onboarding more than 50% of all the pharmacies in Australia to the CanView platform.
“Some [firms] will succeed, some will not, and others will merge… But those who do succeed will be the leaders of an industry that is here to stay.”
Currently, we have approximately 2.2% of all GPs in Australia on CanView. As that number rises, the runway for the entire industry will be built. The feedback from healthcare practitioners to our medical science liaison team is clear – medicinal cannabis is mainstreaming, with many more doctors willing to learn and prescribe.
As an industry we are also coming together through the formation of the Emerging Therapeutics Association of Australia (ETAA). The ETAA has a solid base of 17 of the leading companies in the industry and has emerged as a rallying point and voice for our sector.
As a final note, it’s worth looking back at those past ‘bubbles’. Almost 400 years on from the oft-cited tulip mania crash, the Netherlands is now the centre of the global flower trade, producing more than 8.5 million bulbs per year.
The industry is estimated to be worth 10% of the country’s gross domestic product.
By the end of the dot-com crash, more than $US5 trillion had been wiped from the market capitalisation of US stocks.
Now, 20 years later, Silicon Valley is home to almost a third of all the investment capital in the United States.
