Australia’s medicinal cannabis industry has grown faster than most, but is likely to shrink as more countries legalise recreational use and local firms are locked out of the party.
Industry consultant and former FreshLeaf Analytics MD Cassandra Hunt told delegates at the Australian Medicinal Cannabis Symposium patient numbers fall where adult use is legal, meaning the country’s export base could get smaller as more countries liberalise their laws.
Hunt and Cann Group senior corporate communications manager Rhys Cohen compared the growth of patient numbers in Australia after medicinal legalisation to Israel, Canada and Germany.
While it took Israel 22 years from legalisation in 1999 to reach 100,000 patients, and Canada 15 years, Australia hit the milestone at the beginning of 2022, just six years after the medicine was legalised. Germany, meanwhile, took four years.
Hunt said regulatory reform, improved access and increasing awareness of cannabis as a treatment option among patients and doctors have all helped boost numbers.
However, she warned: “The question we need to be asking is, ‘are we keeping pace as the global market starts to shift around us?’ If we don’t keep pace, we fall behind.”
“One of the things that’s having the biggest impact on the global environment is the legalisation of adult-use cannabis. And this is where the picture starts to get very interesting.”
Hunt said in Canada, patient numbers peaked at 377,000 in 2020, two years after adult use was legalised and five years after the move was first mooted by prime minister Justin Trudeau. Patient numbers have since fallen away, with the most recent data from Health Canada in September 2021 putting the figure at 265,000.
She said this could partly be explained by patients using retail channels to access cannabis to treat minor medical complaints, “but it’s had a pretty big impact on the market in terms of spending on medicinal cannabis”, which hit a five-year low in H1 2021.
In that period, C$242 million was spent on medicinal cannabis, compared to just under $2 billion in the adult-use market.
“So medicinal was 12% of what people spent on adult use, [it] has quite quickly dwarfed the medical market in Canada,” added Hunt.
The only area of the medical market in Canada which is growing is personal cultivation, although the numbers remain small, she added.
Hunt said it would have a significant impact on the Australian industry if the trend was repeated in Germany, where the new coalition government has committed to legalising adult use.
“We don’t know yet when that’s going to happen, how it’s going to be regulated and what it’s going to look like. But if we took the Canadian model as a hypothetical, and it takes three years from intent to legalisation, then we might begin to see medical cannabis patient numbers in Germany shrink by 2026.”
“Germany is one of the biggest export markets for Australia, and with current legislation it’s going to stay that way because local producers, cultivators and manufacturers aren’t allowed to export for adult-use purposes.
“We are effectively shutting ourselves out of what could be, and will likely be, the biggest cannabis market globally.
“And we’re locking ourselves into a pure medical market, which has the potential to shrink. That could have a pretty significant impact on the industry here in Australia.”
Hunt said two other key export markets — Israel and Portugal — are also considering adult-use legalisation, with pilot projects and debates underway in the Netherlands, Spain, Mexico and Switzerland.
“It’s happening all over the world,” she added.
Not only does the trend present a threat to companies in the sector, according to Hunt, it could also drive up prices even further if the local industry is unable to manufacture at scale and get the efficiencies it needs to keep costs down.
She called on the industry to start a dialogue with the federal government about opening up the export pathway for adult-use cannabis.
“We need to do that to get the type of scale that will help our industry be sustainable,” she said.
“And the benefits will be many. We will be able to help a lot more patients, we will be able to create more jobs, we will be able to grow market value and attract more investment.
“This is a really important thing to be on the agenda as we move forward as an industry.”
In the meantime, she said it was vital to shore up the domestic market which, while robust and growing quickly, remains small in global terms.
“We have a market here that is thriving. [But] we need to make sure we are doing everything we can to grow [it] so we can support more patients with high-quality and affordable medicine.”
