The TGA’s decision to down schedule CBD before Christmas will see medicinal cannabis manufacturing revenue grow by more than six times in FY21, according to consumer research firm IBISWorld.
It predicts revenue will grow to A$31.2 million in FY21, up from $5.4 million in FY20.
IBISWorld Senior Industry Analyst Will Chapman said: “The strict regulatory framework regarding the manufacture of medical cannabis products has limited the sector’s growth over the past five years.
“However, the recent determination by the TGA to allow over-the-counter CBD products to be sold without a prescription is expected to drive significant revenue growth in the years ahead.”
“Domestic production is still ramping up and rising demand for medical cannabis products in both domestic and export markets is anticipated to support strong growth in 2021.
“It will take time for new medical cannabis products to be approved, but medicines… will eventually appear on pharmacy shelves,” he added.
IBISWorld predicts increased clinical research globally will encourage domestic regulators and doctors to expand the range of conditions treatable with medical cannabis and that custom cannabinoids for specific conditions will further boost market acceptance.
“Medical cannabis manufacturing revenue is projected to rise at an annualised 79.1% over the five years through 2025-26, to $575.2 million. IBISWorld anticipates employment in this industry to reach 1,500 by 2025-26,” added Chapman.
IBISWorld cites figures from the Australian Institute of Health and Welfare stating around 600,000 Australians use cannabis for medical purposes and singles out Little Green Pharma and Cann Group as companies set to capitalise on its increasing availability.
While acknowledging the sector is still in start-up mode, Chapman anticipated profitability will improve as more local manufacturers launch and establish their products domestically and overseas, bringing more interest from investors.
“The growth opportunities in the budding cannabis industry have not gone unnoticed by Australian financiers,” he added, noting how CannaPacific and Cann Group secured large debt facilities from Westpac and NAB respectively in 2020.
Chapman insisted the outlook for the sector remains bullish, even if recreational use remains illegal: “It is uncertain if Australia will follow the path of Canada and some American states by legalising cannabis for recreational use over the next five years,” he said.
“However, this legislative hurdle is unlikely to prevent the growth of a strong domestic medical cannabis industry.”