FreshLeaf Analytics H1 Report Predicts Cannabis Industry Revenue Will Reach $200 Million in 2021

However, the report cautioned that Australia may be in danger of potentially losing a billion-dollar industry if the medicinal cannabis market is not adequately regulated.

Earlier this week FreshLeaf Analytics—which operates as a division of Southern Cannabis Holdings (SCH)—released the latest edition of its Patient, Product and Pricing Analysis report for H1 2021.

The report revealed a number of major findings, including that the Australian medicinal cannabis market's total revenue for 2021 is expected to double from the $100 million generated in 2020.

Interestingly, about three quarters of patients are on a dose that is less than 150mg per day. They're spending on average just $8 per day. This is a cohort we expect to move to over-the-counter CBD as soon as these products become available. Once these products hit the market, we believe they will take the lion's share of this group of roughly 10,000 patients.FreshLeaf Analytics Managing Director, Cassandra Hunt

However, the report cautioned that Australia may be in danger of potentially losing a billion-dollar industry if the medicinal cannabis market is not adequately regulated.

FreshLeaf also found that the number of authorized prescribers had grown to 179—from just 29 in December 2019—after collecting product and pricing data in January and February 2021 from 45 suppliers.

At the same time, the number of active cannabis patients in Australia was found to have grown by a factor of 15 over the last two years and is currently expected to swell from 45,000 to 75,000 by the end of 2021.

Although, there has also been a slowdown in delivery format innovation over the last six months, with only one new product type rolled out—specifically sublingual wafers—while differentiation between competing brands remains challenging.

According to cannabis industry thought leader, Rhys Cohen, Australian producers are finally beginning to realize that, "the holy grail of large export markets has evaporated." While this may sound like bad news, it can actually be seen as a positive development, as investors are now taking the pharmaceutical research side more seriously.

"I am hesitant about moving too quickly in that direction [recreational legalization] in Australia," Cohen said.

"If you look at most of the places that have introduced recreational sales, the medicinal side tends to get thrown by the wayside and patients are left in the dark."

Interestingly, the report also predicted that if cannabis is made more accessible—and users are able to transition from the black market to legal channels—then the industry could spike in value, eventually growing to $1.5 billion in yearly revenue.

This prediction was based off of data from the National Drug Strategy Household Survey 2019, which found that up to 600,000 Australians are utilizing cannabis to treat a medical condition.

However, only 3.9% of this cohort were found to have obtained the drug via a legal prescription, which means that more than 555,000 patients are acquiring cannabis via the black market. 

"The CAMS18 survey reported median spend on illicit cannabis was $50 per week. Applying this spend to both the legal and illegal patients groups across a year would indicate total market revenue today could be as high as $1.5B per year," the report stated.

"The test for the legal industry is transitioning as many of these 555,000 patients who are still accessing medicinal cannabis illegally to legal channels. The challenges are many: regulatory hurdles, stigma, doctor education and willingness to prescribe, patient awareness and experience, and of course price."

Additionally, the Patient, Product and Pricing Analysis also estimated that Australia's nascent pharmacy-only CBD market will eventually reach $250 million in product sales once it reaches market maturity, as almost one in four medicinal cannabis patients currently use CBD products with a daily dose below 150mg.

Once low-dose CBD products become available over the counter the majority of these patients are expected to migrate to the pharmacy channel, which means that the first company to get its products on the shelves will enjoy a first mover advantage in a market that will be worth $29 million per year.

If you'd like to learn more the report can be read in its entirety here.

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Hugo Gray
Hugo Gray

Hugo Gray is a Melbourne-based journalist with a body of work that covers a diverse range of topics, including immigration law, sex technology, and now the rapidly expanding cannabis industry.