Although there is a growing body of medical practitioners around the world who are turning to marijuana as a treatment option, many Australian doctors are still reluctant to prescribe the drug.
Patients also have to deal with prohibitive product costs, and in some cases may not even be aware of how to access the Therapeutic Goods Administration (TGA) SAS approval scheme.
Unfortunately, despite the expanding body of research into its therapeutic and medicinal qualities, much of the local healthcare community is still stuck on the fence when it comes to cannabis. One company that's working to address this is BuddingTech, Australia's first medicinal cannabis consultancy firm aimed at pioneering a tech-oriented approach to the marijuana market.
As part of our coverage of the Hemp Health and Innovation (HHI) Expo, The Green Fund spoke with the founder and CEO of BuddingTech, Adam Miller, in an exclusive interview.
"I came across an application called Eaze, which is a cannabis delivery platform based out of the US. It's kind of like Uber for cannabis."
"Reading about that company I was struck by an insight that cannabis would become available in Australia in some form within the next few years."
"So, I decided to start doing some research into the industry, and eventually built a cannabis advocacy website, before meeting with an ASX-listed company to get some advice and guidance on how to best enter the market," he said.
Miller would subsequently go on to found BuddingTech in 2016, three months before the federal legislation had been amended in the Drugs Narcotic Act to allow for the domestic cultivation of medical cannabis.
However, there was also another motivation that hit closer to home. Miller's mother has been battling a serious illness for a number of years, which eventually led to him to become an advocate for easing patient access and educating doctors. According to Miller, part of the problem is that people like his mother—who may be eligible to legally access cannabis—are often unaware that it is even an option, due to the broader lack of awareness surrounding its medicinal use.
"My mum was quite conservative and didn't really buy into the whole, 'cannabis is good for human health' argument."
"Although there was a wealth of information available at the time online, no larger social or political change had taken place to give people like my mother confidence that cannabis could be used as a medicine," Miller said.
This inspired Miller to create a platform for information, so that his mother—and people like her— could have greater access to the potential medicinal benefits of cannabis.
Hemp Reaches New Highs
The passing of the US Farm Bill in late 2018 has supercharged interest in the hemp industry and has spurred numerous companies to begin tapping into the plant's potential as an industrial material and a legal source of CBD. However, Miller says that we're only just beginning to see businesses develop in this space.
"I think it was in November last year when hemp became available as a food. Prior to that, it was kind of a grey area, where people were consuming it as an oil or a topical," he said.
"But now that the wave of change has occurred, hemp as a food—and generally speaking, the industry at large when you look at medical cannabis—is beginning to receive a lot of attention."
"The hemp plant literally intersects with almost any industry vertical you can conceive of, whether that be textiles, food, building materials or fuel. It has a disruptive potential across all of these industries."
– Budding Tech CEO, Adam Miller
In fact, Miller believes that hemp may be the most "disruptive and potentially financially viable" cannabis space.
This is because most companies are focused on the development of medicinal cannabis products, while few businesses are targeting hemp-based biofuel or plastic alternatives.
"These are multi-billion dollar sectors that are ripe for disruption, not only from an industry-focused perspective, but also a political or environmental one. We're living in a time where we're facing some pretty serious environmental challenges, where we need to start looking at alternatives to plastic and fossil fuel."
"And hemp seems to offer a solution to all of these key challenges, so it's poised to become a multi-trillion dollar industry. In Australia we're really just seeing the beginning of this industry, and over the next decade or so you'll see a proliferation of organizations specializing in various fields, using hemp at their core."
"You only need to look at the media outlets to see that hemp and cannabis are being covered almost every week. So, it's really just a matter of time before Australia is in a position where it can compete on a global scale, not only as a mass producer of hemp, but also of hemp innovation," Miller said.
Aside from its potential as a biofuel, Miller is also excited about hemp's utility as an industrial material.
He pointed to the plant's ability to suck toxins out of the surrounding earth as a ancillary utility which will become increasingly important to environmental conservation efforts as time goes on.
"So, there's an extra utility on top of the end product that hemp can create—the significant benefits that it can bring to the surrounding soil."
"As well as that, it has a three-month growing cycle, so farmers can cultivate these plants at a relatively low-cost scale compared to sourcing paper from trees, which just isn't a viable long-term solution," he said.
Fixing the Medicinal Market
According to Miller, the Australian medicinal cannabis industry is currently facing some huge challenges.
Although more than 6,000 SAS applications have been approved since the drug was legalised in 2017, we are still lagging behind countries such as Germany, which presently has more than 50,00-60,000 medicinal cannabis patients on record.
"I've done some modelling, and will be releasing a report in the next few weeks estimating that the patient population in Australia will surpass 120,000 patients in less than four years, and that's a conservative number."
– Budding Tech CEO, Adam Miller
"I'm very happy that the number is growing, because if you compare the year on year growth of Australia to Israel or to Canada, we're leaps and bounds ahead from a patient prescription perspective."
"But then if you put us next to Germany—which in the first year had more than 15,000 prescriptions—we're just failing in comparison. So, we're doing well, but we could be doing better," Miller said.
However, Miller says that the two greatest issues facing Australian patients are the access model and a lack of education in the healthcare space. Many GPs are unaware of how to even prescribe cannabis, which Miller claims may be because they have a lack of clinical evidence to call upon.
Another unhelpful element is the reluctant stance of national medical bodies such as the Australian Medical Association (AMA), who consider cannabis to be a "last line treatment" where other medicines could be used.
Costing has also emerged as a key hurdle for the medicinal cannabis space to overcome if it wants to continue growing its patient base.
Miller cited as Green Leaf report produced by Cannabis Access Clinics as evidence of this, which found that at the end of last year the average monthly spend of a patient was around $325, before eventually reaching $411 due to the patient's increased tolerance.
"I'm optimistic that Australia is in a position to build a very powerful cannabis sector that serves patients and industries. but there needs to be a review of the education of doctors, and patient access needs to be streamlined in a more effective way."
– BuddingTech CEO, Adam Miller
"In Israel a doctor can prescribe a patient cannabis. Initially—if a doctor is untrained—they will require approval from the ministry of health. But the moment that they have received the appropriate training they can prescribe at their own discretion."
"And in Canada, it's discretionary prescribing. The doctor will, at their own discretion, provide a cannabis product to a patient if they believe that it is appropriate treatment."
"If we look at these overseas models, we can see that Australia's system is still quite broken. But this doesn't mean it won't change. Hopefully we can implement solutions and work with the government to fix these issues," he said.
While the increasing presence of cannabis clinics has begun to somewhat address this issue, Miller says that unfortunately they can only ever be a stop-gap solution. This is because many of these clinics operate with a revenue model that charges on a "company per patient" basis, meaning that they are paid to prescribe certain products over others.
This is a serious issue because it creates a biased healthcare environment, where patients are prescribed "the product that's been paid for", rather than the one best suited to treating their illness.
"I think that the smarter companies in Australia have diversified their revenue strategy and focused on hemp products as well as the medical space. This means that they can capitalize on the short-term—with hemp products and consumable goods that can go to market today—while investing in infrastructure for medicinal cannabis in the future."
– BuddingTech CEO, Adam Miller
However, Miller still believes that there's a lot of opportunity in the Australian market. He points to the number of ASX-listed cannabis companies that have already received funding from overseas companies or secured supplier arrangements with foreign entities.
"There's a company called Burleigh Heads Cannabis—which is a private company that has invested in their own clinic—and all they do is import."
"So, they import, and they have their own clinic. They also sell through that clinic, significantly lowering their investment costs compared companies that have invested millions in infrastructure, such as the Cann Group. Who's going to be the winner at the end of the day? I'm not sure. It's definitely going to be an interesting ride, to say the least."
"But Australia's in a good space. It's very likely that our market is going to grow quite quickly. We just need to address those challenges in regard to accessibility. It's an exciting time, although there's still a lot of work to do," he said.
Sizing Up Cannabis Competitors
While there are already over 20 Australian pot stocks currently listed on the ASX, Miller believes that one to watch out for is Elixinol Global (ASX:EXL), because of their European supply arrangements and historically strong track record operating in the cannabis space.
The company was already developing hemp products before medicinal cannabis was legalised, which means there's "an existing business, an existing understanding of the hemp plant itself and existing revenue, both locally and internationally".
"They're definitely a company that I think has the necessary foundation as a hemp organisation—but is still diversified enough to have consumer products—while also investigating medicinal cannabis," Miller said.
"It speaks to what I said before about starting off with a hemp product, getting short-term wins on the board, generating revenue and then diversifying with a medicinal cannabis strategy. So that's one company that I think very highly of."
Another big competitor is Zelda Therapeutics (ASX:ZLD), which Miller describes as a "very credible" long-term investment. This is because the company is focused on the pharmaceutical application of cannabis and is currently heavily invested in clinical research.
And although the share price for Zelda Therapeutics has remained stuck in the 4 to 5 cents range for some time, Miller predicts that in the next few years the company will be in a very strong position to expand internationally, as its products can be "adopted into any market that has medical cannabis legislation in place".
Medlab Clinical (ASX:MDC) was also singled out for praise thanks to its research-driven focus and diversified product offering, which includes several cannabinoid products such as NanaBis and NanaBidial.
"I think that's a very interesting company. It [Medlab] isn't necessarily a cannabis-specific company, but it has incorporated cannabis into its product offering. As well as that, the CEO is Sean Hall—the founder of BioCeuticals—so he's got a good track record in creating commercially viable businesses."
– Budding Tech CEO, Adam Miller
While the business is not publicly traded, Miller also pointed to The Cannabis Company—a Victoria-based hemp product producer—as another exciting player to watch, thanks to its diversified product offering that includes a range of hemp oils, hemp based alcohol and hemp pet products.
He believes that the company has the potential to eventually evolve into a powerful Fast Moving Consumer Goods (FMCG) brand, due to their strong focus on product positioning and branding.
The Cannabis Company recently released its third alcohol product—a hemp-based gin—in a single batch of 250, which Miller characterised as a method of leveraging scarcity to drive further customers to the brand.
"Focusing on alcohol is just genius. Especially in a culture such as Australia, where so much of our social life revolves around alcohol."
"Their branding is absolutely magnificent, and you can tell that their team has thought very deeply about the positioning of their products."
"They're a local company that's focused on developing a consumer brand, and they're well-equipped to integrate CBD into their product offering in the future. I think they're doing it the best," Miller said.
Although our coverage of Hemp Month here at The Green Fund is now drawing to a close, it has become abundantly clear that the party is only just getting started when it comes to Australia's nascent hemp and CBD industries.
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