Aust’s plans for cannabis market dominance more smoke than fire

Sydney: When Australia said this month it would allow exports of medicinal cannabis in a bid to dominate a global market set to be worth US$55 billion (FJ$110.96bn) by 2025, investors scrambled to buy shares in marijuana companies - pushing several of them, and the sector as a whole, to record highs.

But convoluted and restrictive licensing demands, substantial finance requirements and a guarded medical profession means even Australia’s largest marijuana companies are at least a year away from a commercial crop. And doubts linger about the prospects for smaller entities, belying the government’s ambitious plans to be the world’s leading exporter. “There will be more cannabis used in Australia and overseas over the next 10, 20 and 50 years but it is not clear that any of the local market can capture that, let alone make money from it,” said Scott Phillips, director of research at investment company Motley Fool.

“Look at the gold rush: sure, some made money, but the biggest winners were the sellers of the shovels.”

Australia’s medicinal cannabis sector, with 12 listed companies, produces a range of products that include chronic pain management and acne creams with extracts of marijuana to aid the removal of acne.

The businesses acknowledge some barriers to growth but say they are primed to profit from a maturing market.