Top 3 Australian Marijuana Stocks to Follow in 2021

What are the best Australian cannabis stocks to keep an eye on this year? Find out in this article.

The Green Fund's Paper Portfolio has enjoyed a 103% increase since we first chose ten stocks to invest in during 2019, suggesting that the cannabis industry is enjoying a comeback.

Admittedly, most cannabis industry stock gains were felt in the U.S., Given the recent Democrat wins in the House of Congress and with Joe Biden taking the Presidency.

However, Australia's cannabis industry is far newer than in most states in the U.S., and therefore we are less likely to see the same kinds of errors that befell the U.S. and Canada, including taxation, supply, and regulatory issues.

Moreover, as Prohibition Partners highlighted, Australia's medical cannabis industry will comprise approximately 40 percent of the US$1.55 billion total cannabis industry in Oceania, making it a hot-spot for those who wish to invest in the region.

Tommy Huppert, the founder, and CEO of the Australian cannabis company Cannatrek said:

"Australia is one of the fastest-growing medicinal cannabis industries in the world today, based on the historical fact that the majority of Australians are comfortable with the benefits of cannabinoid therapeutics for wellness and quality of life choices. An additional feature of the Australian cannabis industry is that it is still in its infancy with a strong global brand Australia presence being clean, green and innovative, allowing tremendous upside for savvy investors to join advanced projects that are now being commercialised."

So, without further ado, here are 3 cannabis stocks we think investors should keep an eye on.

1. Botanix Pharma (ASX:BOT)

Botanix Pharma is an Australian medical dermatology company engaged in the development of cannabinoid-based products for the treatment of a range of skin conditions and are working to get the first cannabinoid products approved by the FDA. If successful, they could dominate a multi-billion dollar dermatology market which has seen few new products approved in the last 20 years.

All products made by Botanix Pharma utilise synthetic CBD in conjunction with Permetrex skin delivery technology. Permetrex is a dermal delivery formulation technology that allows 10 to 20 times more of the active ingredient to get through the skin to better treat the disease. BOT has exclusive rights to this technology, developed by Dr Eugene Cooper, for all drugs that treat dermatological conditions.

BOT's leading clinical trial currently targets moderate to severe acne, using a formula called BTX1503. In July, Botanix held a meeting with the FDA regarding its acne formula, and the company has since begun designing a phase 3 trial for BTX1503.

According to Botanix Pharma's website "Acne is the most common skin disorder in the US affecting 40-50 million Americans and it is estimated the market will grow to a value of US$5.9m by 2025."

BOT is also attempting to tackle Staphylococcus Aureus and Methicillin Resistant Staphylococcus Aureus (MRSA) via its antimicrobial formula known as BTX1801. Botanix Pharmaceutical's current research finds that synthetic CBD kills MRSA within 10 minutes of exposure, while also not leading to antibiotic resistance.

This is important given that the World Health Organisation (WHO) has stated that "Antibiotic resistance is one of the biggest threats to global health, food security, and development today."

In November 2020, Botanix successfully completed a Pre-Investigational New Drug meeting with the FDA for its BTX 1801 synthetic CBD antimicrobial product. The Pre-IND meeting provided Botanix an opportunity to seek advice and clarification from the FDA on the development plan and data package required to initiate clinical studies for BTX 1801 in the US.

Botanix is tackling several multi-million dollar markets with its unique synthetic CBD formulations, and currently, BOT is well-financed with roughly $22 million in the bank, giving the company roughly 8.6 quarters of cash runway. Should the company achieve positive endpoints in one or more of its trials, Botanix will be sitting on a goldmine.

Disclaimer: Past performance is not an indicator of future performance.

2. Zelira Therapeutics (ASX:ZLD)

Zelira Therapeutics' stated goal is to build a portfolio of clinically-validated assets (typically cannabinoid-derived formulas) to treat a wide range of diseases. In pursuing this goal, Zelira has formed a series of strategic partnerships throughout Australia and abroad, such as with SUDA Pharmaceuticals, Ilera Healthcare, SprinJene and Emyria.

Through its partnership with Ilera, Zelira recently released its HOPE 1 & 2 product ranges in Louisiana and Washington, D.C. in the U.S., as well as in pharmacies throughout Australia. The HOPE ranges are designed to assist those suffering from autism, allowing users to focus more, while also reducing stress.

On top of the HOPE ranges, Zelira released Zenivol, which the company describes as "the world's most clinically validated cannabinoid-based treatment for chronic insomnia."

Zelira Revenue

Zenivol was approved by the Therapeutics Goods Administration (TGA) for prescription to patients in Australia via its Special Access Scheme, providing Zelira's Zenivol products access to the 10% of Australians that suffer from chronic insomnia.

Lastly, Zelira partnered up with SprinJene to produce and distribute over-the-counter (OTC) proprietary CBD toothpaste in the U.S.

The CBD toothpaste will be distributed in the U.S. through SprinJene's existing distribution channels such as Bed Bath & Beyond, Central Market, Sprouts, Lassen's, Haggens, VitaCos, and e-commerce platforms such as Amazon. 

Through its growing range of commercial partnerships and products, Zelira is accessing markets across the U.S. and Australia, and will likely expand to other countries such as France, Russia, UK, Singapore and more over the next 24 months.

Thanks to an oversubscribed AUS$8.75 million placement in August last year, Zelira remains well-funded to continue its 'Launch, Learn and Develop' model.

Disclaimer: Past performance is not an indicator of future performance.

3. Incannex Healthcare (ASX:IHL)

Incannex Healthcare (ASX:IHL), formerly known as Impression Healthcare, started life as a manufacturer and supplier of custom-fit mouthguards, and other dental equipment, however, the company has since shifted to become a rapidly expanding Medicinal cannabis business with four unique clinical trials ongoing.

IHL is focused on tackling several conditions across four major multi-billion-dollar markets, including sleep apnoea, concussion & traumatic brain injury, Acute Respiratory Distress Syndrome (ARDS), and Temporomandibular Joint Disorder.

IHL's cannabinoid drug discovery brand Incannex Pharmaceuticals is a collaboration with an EU-based cannabinoid drug design company named Linnea SA. The EU-based company will serve as IHL's supply partner for the base cannabinoid materials in four novel cannabinoid formulations.

In addition to progressing clinical trials for each of these conditions, the company sells a range of products with varying ratio's of THC to CBD, titled Cannagesia, Releafia, Nutralesic, and Inflammex, which aim to provide relief for epilepsy, inflammatory bowel disease, migraine, insomnia, opioid reduction, and arthritis.

IHL has secured Australian licenses in place to import, export, and distribute cannabis products and access to Cannvalate – the largest network of cannabis medicine prescribers in Australia.

During the September quarter last year, the company sold a record $695,000 in solely cannabinoid products

"The September 2020 quarter is the first quarter in which cannabinoid products were the sole contributor to our revenues," Incannex's CEO and Managing Director Joel Latham stated.

"Therefore, I am delighted to report that our most significant quarter of cash sales has come immediately after Incannex finalized its transition into a pure-play pharmaceutical development company," Mr. Latham concluded.

With clinical trials progressing and increasing pharmaceutical revenues, IHL is shaping up for a very solid 2021.

Disclaimer: Past performance is not an indicator of future performance.

A Bright Future for 2021

With various U.S. states set to legalize cannabis this year, in addition to several countries set to do the same, the global cannabis industry is certain to enjoy several gains in 2021, the least of which could be Joe Biden's federal decriminalization of the plant.

Similarly, the Australian cannabis index is experiencing an upturn, in part likely due to the TGA's decision to increase the dosage threshold for over-the-counter CBD to 150 mg per day. As such, it looks like the Aussie cannabis industry is going to come back strong throughout this year.

Investors may wish to keep their eyes peeled when it comes to pot stocks down under and abroad, as all signs are looking positive for the industry at large.

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Louis O'Neill
Louis O'Neill

Louis is a writer based in Sydney with a focus on social and political issues. Having interviewed local politicians and entrepreneurs, Louis now focuses on cannabis culture, legislation & reform.