Western Australia Swaps Coal For Cannabis

Another multi-billion-dollar resources sector is bubbling away in WA, with the state government thinking outside of mining and into cannabis.

The mining boom is over, but the cannabis boom has only just begun with businesses from all over the nation jumping in on the cash crop.

Perth-based Little Green Pharma (ASX:LGP) announced a $300,000 grant for the construction of a new manufacturing facility in the South West of Western Australia. Located in the states' wine region, the manufacturing facility will produce medical-grade cannabis products for Australian and European patients.

Coming as part of the much larger $4.2 million Value Add Agribusiness Investment Attraction Fund, WA Agriculture and Food Minister Alannah MacTiernan said the new facility will be a first for the South West, helping to establish the area as a frontier for medicinal cannabis production and processing in Australia.

"The project is supporting up to 40 jobs during construction and is estimated to create eight direct positions to support growing and processing of medicinal cannabis products," she said.

"It can also provide opportunities to leverage the regional processing capability of the facility, either by local hemp growers already operating in the region or potential medicinal cannabis crop cultivators."

Cannabis Trialled In Uni

Perth is also playing host to a new clinical trial for a phytocannabinoid-derived medicine for the treatment of Alzheimer's disease.

Called Cognicann, ASX-listed MGC Pharmaceuticals has teamed up with the University of Notre Dame to trial the drug on a total of 50 patients with dementia or Alzheimer's disease over the age of 65 at various aged care facilities across Perth.

While results won't be available until the end of Q3 2021, Co-Founder and Managing Director of MGC Pharma, Roby Zomer, believes the "Trial will provide the healthcare community with more evidence on the performance and the benefits of phytocannabinoid-derived medicines".

"If successful, CogniCann has the potential to positively impact the lives of patients and their carers around the world, and contribute to a novel avenue of clinical research and development for contending with the challenges of the effects of dementia and Alzheimer's disease."

Having just acquired Medicinal Cannabis Clinics, MGC is expanding its capacity for the import and distribution of medicinal cannabis products.

"The acquisition of 100% of the MCC Assets will expand MGC Pharma's direct distribution network and enable a direct supply chain of MGC Pharma's proprietary medicinal cannabis products to customers, cementing the Company's fully vertically integrated Nature-to-Medicine business model."

Hemp Saves Coal Town

Back in May, the struggling coal town of Collie was thrown a potential lifeline, with the McGowan government announcing a hemp processing plant.

Sending $35,000 to WA Hemp Growers Co-op (HempGro) to develop the business case for the facility, which is expected to service 37 industry growers with wholesale hemp as well as hemp-derived products including bio-char and fibreboard.

Coming as part of a larger $20m Collie's Futures Fund aimed to diversify Collie's economy, the investment could see up to 200 new jobs added in 2021 across the 65-hectare hemp operation.

Set to be built by private company Cannaponics, founder Rod Zakostelsky claims cannabis is "quickly replacing the automobile industry by three times".

"Obviously with the story around the mining industry on the downward slope and all the focus on diversification to sustain and build upon the town, this was a big driving force for our vision in Collie."

Speaking with Stockhead, LGP COO Paul Long believes government support is critical to building the medicinal cannabis industry in WA.

"To receive a $300,000 grant under the state government's Value Add Agribusiness Investment Attraction Fund is a huge sign of support," he said.

Pointing out tough regulations in the industry, Long wants the support of the WA government in order to compete with interstate competitors like NSW and Victoria who are "providing significant grants and making access to medicinal cannabis easier through the state health departments".

"Harnessed correctly West Australia has a significant opportunity to play leading roles in the Australian market and throughout Europe and Asia as that market opens."

Putting Patients First

Growing speculation around West Australia's burgeoning cannabis market follows the conclusion to a 3-year study into the now-previous prescribing regime of medical cannabis by the Department of Health.

Underpinned by a commitment of "putting patients first," the McGowan government has cut through a lot of red tape to improve cannabis regulations. Now more closely aligned with Queensland, New South Wales, and Victoria, the updated cannabis regulations will allow local GPs to prescribe medicinal cannabis to their patients.

Embracing the decision, which will reduce costs and time pressure for local patients, Fleta Solomon, the Managing Director of LGP said: "when considering many using medicinal cannabis products have serious illnesses and are sometimes financially strained, the previous access regime unnecessarily added a number of months and additional costs to the process."

With access wait times drastically reduced, the next hurdle appears to be the Department of Health, claiming there is only limited evidence of a variable quality that supports the use of medicinal cannabis.

Police are also opposed, arguing any changes to cannabis regulation would endanger motorists and "legitimise" crime syndicates, allowing them to generate "significant profits".

"The WA police force is of the view that the loosening of any restrictions on cannabis would have significant and far-reaching detrimental impacts on the community," said WA Assistant Commissioner Gary Budge.

Drawing parallels with the United States, Budge believes legalisation will enable "organised crime networks to either legitimise their cannabis businesses and/or continue to sell cannabis on the unregulated black market".

WA Cannabis Law

Despite WA cannabis laws allowing 10 to 100 grams or less than 20 cannabis plants for personal use, anything above that will see you cop an intent to sell charge.

While first offenders will smaller amounts may avoid conviction through the Cannabis Intervention Requirement Scheme, the maximum penalty for personal use is generally a $2,000 fine, or a two years maximum imprisonment. If you're caught with more than that, expect a $5,000 fine or four years maximum imprisonment.

Take Griffin v The State of Western Australia (2020), which saw a 53-year-old man charged with possession of with intent to sell or supply. Found with 20 plants on his property, and 1.874 kg of cannabis material, Griffin told officers during the search that he did not sell cannabis.

"The appellant then said, 'I blow out mates, but you know'. Later in the interview, the appellant was asked what he meant by that statement, to which he replied 'Oh, they come over, I go there, and we have big sessions'."

The verdict: "the jury must have accepted that the appellant intended either to sell or supply at least a portion of the cannabis." During sentencing, however, the Honourable Justice Buss stated there was "no indicia relating to commercial dealing in cannabis."

Just two days earlier Emerald Clinics floated on the ASX on 12 February after raising $6 million through its initial public offering. Next would be WA-based Little Green Pharma after they raised $10 million in an oversubscribed IPO.

Perth-based TetraMed is also planning to go public this year.

With cannabis law enforcement costing Australia over $2 billion per year, and a cannabis market expected to hit $2.162 billion by 2024, perhaps it's time to bet on WA and cannabis.

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Elliot Nash
Elliot Nash

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