The Oceania market is set to quadruple in the next 10 years. Yes – you read that right!
With an overall population of 40 million, and comprising over 30 countries, this is a large and strategic market for Cannabis.
It is also a market that already displays significant usage. The latest report from Prohibition Partners, notes a usage rate of between 9% and 16% for users aged 16-64 years, across the region. This is significantly higher than the Global Average of around 3% for the same demographic.
The Oceania regions is also a cultivation hotspot. It provides the optimum conditions to grow and nurture certain premium-grade, high THC content, strains. Strains that require a lot of sunshine (most commonly Sativa in nature).
With strong sunshine almost year round, access to fresh water and arable growing conditions, the Oceania region could well become the launching pad for Premium-Grade exports into Asia (China in particular).
It is estimated that by 2028, the region will be worth $8.7 billion. $6.2 billion of this will be recreational sales (with the estimates based on only 7% of the population using for recreational purposes).
However, it is not all sunshine and roses, as the region is notoriously conservative when it comes to the issue of drugs. Strong jail terms (and even the Death Penalty) are enforced on individuals seen to be transporting or dealing in commercial quantities of cannabis.
The region is dominated by the two larges countries – Australia and New Zealand – which account for over 75% of the region.
The production and distribution hub for Asia-Pacific. Australia legalised marijuana for medicinal use in 2016. Australia is the largest markets in the region, accounting for over 60% of the Oceanic population.
The medical market has gotten off to a very slow start though. To date, there are around 1,400 patients (as at October 2018) which is extremely low in comparison to other medicinal markets. Research has shown that on average, around 1.4% of a country's population will use cannabis for medicinal usage.
The report states that the potential patient numbers in the overall Oceana Region could rise to almost 400,000 by 2028. Based on the current population numbers, this is around 1%.
Taking this 1%, and applying it to Australia's current population of $24.6 million (as at October 2018), the projected number of medicinal patients could be as high as 246,000. That's about 175 times bigger or around 17,000% growth in the coming 10 years.
Those are phenomenal numbers, and clearly articulate the meaning of the Green Rush.
Iain McGregor, a psychopharmacologist at the Lambert Initiative For Cannabinoid Therapeutics at Sydney University, estimates that as many as 100,000 Australians may be using illegal cannabis for medical purposes.
The medicinal market in Australia (which commenced on October 30, 2016) is still extremely regulated. This, in turn, has severely limited the number of patients able to gain access to medicinal marijuana products.
Medicinal Cannabis products are currently rated as Schedule 8 on the Poisons Standard.
This represents the highest a drug can be rated on the Standard. Currently, the only qualifying conditions are for patients undergoing Chemotherapy for Cancer, patients that are terminally ill with less than 12 months to live, and for certain aggressive childhood-epilepsy conditions.
In 2018, a trial conducted by the Sydney Children's Hospital found that 39 of the 40 children taking medicinal marijuana for epilepsy, saw a significant reduction in the number of seizures.
However, Marijuana is currently not found on the Australian Registry of Therapeutic Goods (ARTG) and hence cannot be prescribed like a normal pharmaceutical drug found on this list.
Until it is rescheduled to 4D or 4, it cannot and will not be readily accessible via the GP's. As it stands now, a GP needs to be an Authorised Prescriber (under the Authorised Prescriber's Scheme) meaning they have to be both trained and knowledgeable on the subject and the drugs themselves.
This "Authorised Prescriber" GP can then apply to the Australian Therapeutic Goods Administration to gain permission to prescribe and supply to the patient.
Patients can also be granted the use of medicinal marijuana under the Special Access Scheme, but again, this is not an easy process to navigate.
The Legislation as it stands
Australia has the potential to be a production powerhouse and the leading exporter of Cannabis goods to the Asia Pacific. Licenses to cultivate and produce are granted by the ODC. Currently, around 70% of all Australian exports are to Asia, with 30% of all exports going to the Chinese market, a medicinal marijuana market estimated to be worth $150 billion in under 15 years. Mind boggling!
Australia has an established pharmaceutical brand in the region (milk powder to the Chinese market is just one example) and is very well positioned to be the ideal export platform (this would be particularly relevant for the extracts market). In August of 2018, the first Medicinal Grade marijuana was exported from Australia to Canada.
Medicinal cannabis may be exported from Australia, provided regulatory statutes are met and domestic supply is not adversely affected. Until the Australian domestic cultivation is further developed, with a consistent supply of medicinal-grade cannabis, medical cannabis products may be imported by those with the required approval.
Both the importation and exportation of medical cannabis are subject to international drug conventions under the United Nations Single Convention on Narcotic Drugs 1961; therefore, any shipment must be pre-approved by both importing and exporting countries.
Although there are no limits on the number of licenses that can be issued, there is a limit based on the Australian (and to a certain extent, global) demand.
Australian Cannabis companies are not allowed to stockpile, and can only produce enough cannabis to support their supply contracts (with a 10% buffer of excess production allowed). Once a company holds an ODC license, they then require a permit to actually start production and harvest.
The Recreational Market
Recreational use in Australia is currently illegal. However, the government has adopted a "treatment rather than punishment" approach to the matter. People found with minor quantities of cannabis are given a warning and/or fine without any arrest or jail time associated with the "crime".
Australia will be a big market for recreational cannabis, as it currently boasts a usage rate of ~10% of the population. Peter Comerford (the CEO of Auspec) was quoted as saying that around 750,000 Australians use low-grade marijuana sourced from the black market, every week.
Although Australia presents a medicinal market to the world, in reality, it is an export market it will find itself in for the coming few years.
Australia seems to be positioning itself to be a premium grade exporter to the global market – of both medicinal and recreational marijuana, just as it positioned itself in the fruit industry.
New Zealand could well be the "legal leaders" of the Oceanic Region. In the recent Federal Elections, the Labour Party and the Green Party formed a coalition, and in doing so took control of the government.
In return for their support, the Green Party made the Liberal Party promise to have a binding referendum on whether Cannabis should be completely Legalised, by 2020.
Recreational Marijuana is currently illegal under New Zealand law.
This referendum could mean a fully legalised and regulated market in New Zealand by 2021.
This would be a significant milestone for Australia's biggest neighbour and should greatly contribute to an increase in tourism and government taxation.
The total estimated market for cannabis (medicinal and recreational) is estimated to be around $85 billion by 2028.
Medicinal legalisation is set to be put in place later this year (2018) under the Misuse of Drugs (Medicinal Cannabis) Amendment Bill. The first cultivation license was recently granted to the Hikurangi Cannabis Company. The wheels are firmly in motion.
Medical Cannabis can be prescribed (and has been by Doctors since 2016) through special permits or licenses, but only for very strict conditions, and is not covered by Health Insurance.
Currently, only Epidiolex and Sativex have been imported, but at significant expense to the patients.
Once the New Zealand Medical Cannabis Council regulates the industry and approves the prescription of medicinal marijuana under a more regulated (and less strict) regime, patient access and numbers should grow steadily for the coming 10-15 years.
Not to mention the fact, that they could be opening the Oceania Recreational Market, a market thought to be worth about $6.2 billion by 2028. I'll take that.
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