Can Australia be a global leader in Medicinal Cannabis?
In August 2016, PharmOut tendered and won a contract to assist a client to obtain a Therapeutic Goods Administration (TGA) Good Manufacturing Practice (GMP) Licence for a manufacturing facility, and in April 2017 they received their licence. This was not an unusual assignment as we routinely assist manufacturers with GMP licensing around the world. However, after four years, we should reflect on our journey and experience working to modern pharmaceutical GMPs and how to bring high quality, safe medicines to patients at affordable prices.
The table below (extracted in August 2020) tells a story of an industry ready to invest – the size of this proposed investment astonishes me. Through the application process to achieve Major Project Status (MPS) the Medicinal Cannabis industry has declared in formal, considered submissions to the Australian federal government, that they will be investing close to A$3.3bn and creating over 3,000 new direct jobs. This excludes numerous facilities below the benchmark to achieve MPS, or the A$50m investment project announced on the 1st of June by the Canadian company Valens.
Why all this interest in cannabis?
Well, it’s big business. If you take a state like Colorado, medical sales in the month of June 2020 exceeded US$40m, whilst retail sales exceeded US$158m. The forecast is that it will exceed US$2bn in 2020. As an aside in 2019, the state passed a milestone with over a US$1bn of taxes being collected. Adjusting for population sizes and doing some simple math (Colorado 5m and Australia 25m), this could be a $10bn industry in Australia, should Australia follow a New Zealand debate/referendum, and similarly hold a referendum on the permitting the legalisation of cannabis in Australia.
Growth in the Australian Medicinal Cannabis Industry
Aside from the “adult use” market, there has been tremendous growth in the Australian Medicinal Cannabis market. Based on the year-on-year growth using data released by the TGA, in July there were 5564 new SAS B approvals, with an increase of over 250% from July 2019. The month-on-month growth from June to July 2020 was made up of over 900 new patients, which is the largest single month-on-month increase on record.
Can we do more?
Everyone would agree that we could have done better in Australia and there is a lot to improve. We could have designed, built and commissioned faster; there are only a handful of licensed medicinal cannabis facilities up and running, and even fewer exporting. Complex regulatory requirements and cost impost barriers have been significant. The broader and highly regulated landscape has been challenging for potential investors and patients.
Our direct experience working with clients in say New Zealand and South Africa, is that the authorities are informative, flexible and responsive (i.e., immediate), and it therefore comes as no surprise that investment dollars are being diverted to these alternative locations.
The key question in a post Covid-19 world is:
Do we want to enable this industry?
Do we want to create investment opportunities and jobs?
Our Health Minister the Honorable Mr Greg Hunt said this to reporters in Melbourne earlier this year.
“OUR GOAL IS VERY CLEAR: TO GIVE FARMERS AND PRODUCERS THE BEST SHOT AT BEING THE WORLD’S NUMBER ONE EXPORTER OF MEDICINAL CANNABIS”
Down in the trenches working with clients doing things, it is easy to talk about doing things, but it takes hard work to really do things!
Below is a table outlining the companies who have successfully applied for Major Project Status in Australia.
| Project proponent | Description | State / Territory | Web link | Published Investment Value | New jobs FTE |
| Althea Group Holdings Ltd | A vertically integrated medicinal cannabis cultivation and manufacturing facility in Victoria. Althea plans to supply its customer base in Australia and the UK from the facility.
Althea has developed Althea Concierge, an online customer portal as well as an online education portal, MEDIC, which provides free online educational services on medicinal cannabis to assist in its distribution network. The project has a projected capital expenditure of $0.150 billion and would create approximately 200 construction jobs and 150 full-time equivalent positions. |
VIC | Althea Group Holdings Ltd | $ 150m | 150 |
| Asterion (Australia) Pty Ltd | A high-tech medicinal cannabis cultivation, research and manufacturing facility.
The project involves construction of a 40 hectare glasshouse to produce 20,000 plants per day at full capacity. Medicinal grade cannabis grown at the facility will be manufactured into a range of medicinal products, including single patient packs, cannabis oils, gels, salts and related products, destined solely for the medicinal market. This facility is anticipated to be the largest facility of its kind in the world. The project has a projected capital expenditure of $450 million and would create approximately 800 construction jobs and 150 ongoing jobs. |
QLD | Asterion (Australia) Pty Ltd | $ 450m | 150 |
| PhytoGro Pty Ltd | PhytoGro plan to develop a vertically integrated medicinal cannabis business and aims to be the first medicinal cannabis company in Australia to provide chronic pain relief to sufferers without using medicinal cannabis oils.
PhytoGro will manufacture and distribute cartridges for the Syqe Inhaler. Syqe Medical is an Israeli pharma-tech company which has developed the Syqe Inhaler to provide a cost-effective, low dose treatment. The 4.67 hectare facility will consist of 16 sealed medicinal cannabis growing chambers, cultivating 368,000 plant per year, as well as a facility to manufacture the Syqe Cartridges for distribution to the Asia-Pacific region. The project has a projected capital expenditure of $1.7 billion and would create approximately 1,200 construction jobs and 500 ongoing jobs. |
VIC | Phytogro Pty Ltd | $ 1,700m | 500 |
| Hydroganics Pty Ltd | Hydroganics plan to develop a medicinal cannabis cultivation and processing facility.
The project will consist of approximately 10 hectares of greenhouses attached to a 5000m² Good Manufacturing Practice certified automated head house where the plant material will be processed. Hydroganics estimate that at full capacity the project will cultivate an estimated 3,630,000 plants per annum. Hydroganics plan to manufacture a range of cannabis oils to supply domestic and international markets. The project has a projected capital expenditure of $333 million and would create approximately 140 ongoing jobs and 152 construction jobs. |
QLD | $ 333m | 140 | |
| LeafCann Group Pty Ltd | LeafCann is a vertically integrated biotech company that plans to produce high quality, pharmaceutical grade medicinal cannabis ingredients and medicines.
LeafCann will build a state-of-the-art cultivation and Good Manufacturing Practice production facility with a forecast production capacity of up to 16.2 tonne per annum of whole plant extract. The project will also include the development of cultivation facilities that will be leased to independent medicinal cannabis cultivators. LeafCann have established a Registered Training Organisation to provide training and qualifications to the medicinal cannabis industry. The project will also include the development of cultivation facilities that will be leased to independent medicinal cannabis cultivators. LeafCann have established a Registered Training Organisation to provide training and qualifications to the medicinal cannabis industry. The project has a projected capital expenditure of $350 million and would create approximately 856 construction jobs and 1,400 ongoing jobs. |
SA | LeafCann Group Pty Ltd | $ 350m | 1400 |
| Medibis Pty Ltd | Medibis Pty Ltd intend to develop a medicinal cannabis cultivation and manufacturing facility in Toowoomba, Queensland.
Medibis plan to produce high-grade, Good Agricultural and Collection Practice (GACP) compliant medicinal cannabis (raw flower) and associated refined cannabis extracts for medicinal use. The project has a projected capital expenditure of $0.187 billion and would create and would create approximately 486 ongoing jobs. |
QLD | Medibis Pty Ltd | $ 187m | 486 |
| Cannatrek Ltd | Cannatrek Limited will establish a 16 hectare medicinal cannabis cultivation and manufacturing facility in regional Victoria.
During Phase 1, Cannatrek will develop a one hectare glasshouse for initial cultivation as well as processing and site infrastructure. Phase 1 is expected to produce 10-20 tonne of cannabis biomass worth an estimated $30–100 million per annum for domestic and export markets. Cannatrek will contribute to medicinal cannabis research and training in collaboration with the ARC Research Hub for Medicinal Agriculture, La Trobe University in Melbourne. The project has a projected capital expenditure of over $160 million and would create approximately 400 ongoing jobs. |
VIC | Cannatrek Ltd | $ 160m | 400 |
| Total | $3,330m | 3,226 |
*Source the Major Project Status Projects in Australia
https://www.business.gov.au/Grants-and-Programs/Major-Project-Status/Current-Major-Projects
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