Australia's emerging medical cannabis sector says it is set to dominate the global market after the federal government approved their therapeutic marijuana products for export. Thursday's decision prompted an extraordinary investor rush on ASX-listed Australian cannabis producers, with some stocks jumping more than 50 per cent.
Health Minister Greg Hunt said allowing export licences for medicinal cannabis products would improve the viability of domestic producers, thus securing supply for Australian patients. AusCann's shares soared 53 per cent to $1.26, adding $120 million to company's market value in one day. There were also significant gains on Bod Australia (up 39 per cent), Cann Group (35 per cent), The Hydroponics Company (up 30 per cent), and Creso Pharma (20 per cent).
AusCann managing director Elaine Darby said allowing exports would see AusCann grow to a commercial scale quicker, and lead to a more cost-effective product for patients. She said AusCann, which listed on the ASX in February, would start producing products to treat chronic pain, chemotherapy-induced nausea and childhood epilepsy this year, with exports starting as soon as late 2018. "We are one of the biggest producers in the opiates space, [and] we do have such high quality standards when it comes to producing pharmaceuticals - we're very well known and respected for that," Ms Darby said. "We are one of the biggest producers in the opiates space and I think we can really become the leader in this area too".
Peter Crock, chief executive officer of the Cann Group, which has a research and cultivation centre in Melbourne that provides medication to Victorian children with epilepsy, said exports would immediately open the door to commercial viability. He said Cann Group would now go ahead with plans to plant 16,000 to 20,000 square metres of cannabis plants this year, up from the 600 square metres it currently has. "We know there is a global shortage of medicinal cannabis and that's going to continue for some time, and that's where we're going to focus," Mr Crock said. Canada is one of the global leaders in medicinal cannabis production, but Mr Crock said it could become an export market given recreational marijuana use will be legalised there this year, possibly leading to shortages.
AusCann has been working on the assumption that it had a potential target market of three million Australians who suffer chronic pain. That potential market was now been blown wide open, Ms Darby said, with around 7 to 8 per cent of adults suffering from neuropathic pain world wide. Ms Darby said large markets like Germany were currently being supplied only by Canada and the Netherlands. Chris Macdonald, principal and investment adviser at Morgans Chatswood, said it was a positive policy change but that investors should look carefully at how it will affect each of the ASX's sky-rocketing pot stocks.
"It's important for us to have a look through and assess how this affects their ultimate revenue - that's what should underpin their share price and market capitalisation," he said. "We're seeing a growing recognition of the medical benefits and that underpins the long-term opportunity for Australia to leapfrog countries like Canada to become one of the primary exporters globally, and doing what we do very well, which is grow very, very high quality agricultural products."
The federal government legalised access patient access to Australian-grown and manufactured medicinal cannabis in 2016, while states and territories have their own legislation controlling its prescription and use. The federal health department says 350 patients have accessed Australian-grown medicinal cannabis products. However, there are some concerns doctors are reluctant to prescribe the products. Mr Hunt said it would be a condition of export licenses that products are made available to Australian patients first if there is a local shortage.
- with AAP
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