A comprehensive review of the cannabis industry in Australia 

April 2023

The cannabis industry in Australia has been rapidly evolving over the past few years, driven by changing legislation, shifting public attitudes, and increasing recognition of the potential benefits of cannabis for medicinal, recreational, and industrial purposes. In this comprehensive review, we will delve into the current state of the cannabis industry in Australia, including an overview of the legislation, regulatory framework, market trends, challenges, opportunities, and the future outlook.

1. Overview of Cannabis Legislation in Australia

Cannabis is classified as a controlled drug in Australia under the federal law, and its use, possession, cultivation, and distribution are regulated by the Commonwealth Narcotic Drugs Act 1967 and the Commonwealth Therapeutic Goods Act 1989. However, the legal landscape around cannabis in Australia has been evolving rapidly, with several key developments in recent years.

1.1 Medicinal Cannabis

In 2016, Australia legalized the cultivation, manufacture, and distribution of medicinal cannabis under the Narcotic Drugs Amendment Act 2016. This allowed for the establishment of a regulated medicinal cannabis industry in Australia, with a focus on providing access to cannabis-based products for patients with certain qualifying medical conditions. The regulatory framework for medicinal cannabis is overseen by the Office of Drug Control (ODC), which is responsible for issuing licenses for cultivation, manufacturing, and research, as well as monitoring compliance with regulations.

Under the current medicinal cannabis framework in Australia, patients must obtain a prescription from a registered medical practitioner to access medicinal cannabis products. These products must be manufactured to Good Manufacturing Practice (GMP) standards and be listed on the Australian Register of Therapeutic Goods (ARTG) or obtained through the Special Access Scheme (SAS) or the Authorised Prescriber Scheme (APS). However, access to medicinal cannabis products can be challenging for patients due to factors such as cost, availability, and limited awareness among healthcare practitioners.

1.2 Recreational Cannabis

Recreational cannabis remains illegal in Australia at the federal level, and its possession, use, cultivation, and distribution are prohibited under the Commonwealth law. However, some states and territories in Australia have implemented their own laws regarding the decriminalization or legalization of small amounts of cannabis for personal use.

For example, the Australian Capital Territory (ACT) legalized the possession, use, and cultivation of small amounts of cannabis for personal use in 2019. This means that individuals aged 18 or older in the ACT can possess up to 50 grams of dried cannabis or grow up to four cannabis plants per household for personal use, without facing criminal charges. However, the sale, purchase, and supply of cannabis remain illegal in the ACT.

Other states and territories in Australia, such as New South Wales, Victoria, Queensland, South Australia, Western Australia, and Tasmania, have implemented decriminalization measures that focus on diversion programs, fines, and civil penalties for minor cannabis offenses, rather than criminal charges. However, it's important to note that these laws vary by jurisdiction, and cannabis-related offenses can still result in criminal charges in some cases.

1.3 Industrial Hemp

Industrial hemp, which refers to cannabis plants with low levels of THC (tetrahydrocannabinol, the psychoactive compound in cannabis), is regulated separately from medicinal and recreational cannabis in Australia. The cultivation and processing of industrial hemp are allowed under the Industrial Hemp Act 2017, which sets out the licensing requirements, testing standards, and other regulations for the hemp industry.

Industrial hemp has various industrial applications, including fiber production for textiles and paper, seed production for food and oil, and potential uses in construction materials, biofuels, and other industries. The industrial hemp industry in Australia has been growing steadily, with increasing interest in its potential economic, social, and environmental benefits.

2. Regulatory Framework for the Cannabis Industry

The regulatory framework for the cannabis industry in Australia is complex, involving multiple levels of government, including federal, state, and territory governments, as well as various regulatory agencies. Let's take a closer look at the key regulatory aspects of the cannabis industry in Australia.

2.1 Licensing and Permitting

The cultivation, manufacture, and distribution of cannabis in Australia for medicinal and industrial purposes require licenses and permits from the relevant regulatory authorities. The Office of Drug Control (ODC) is the main regulatory body responsible for overseeing the cultivation, production, and distribution of medicinal cannabis in Australia. The ODC issues licenses for cultivation, production, and research of cannabis for medicinal purposes, and monitors compliance with regulations such as security, record-keeping, and GMP standards.

The licensing process for medicinal cannabis involves a rigorous assessment of the applicant's suitability, including their financial capacity, security arrangements, personnel, and compliance with relevant laws and regulations. The ODC also conducts regular inspections and audits of licensed facilities to ensure ongoing compliance with regulatory requirements.

The licensing requirements for industrial hemp cultivation are regulated by state and territory governments, and may vary depending on the jurisdiction. Generally, industrial hemp cultivators need to obtain licenses or permits for cultivation, processing, and distribution, and comply with regulations such as THC limits, record-keeping, and testing standards.

2.2 Quality and Safety Standards

The quality and safety of cannabis products in Australia are regulated by the Therapeutic Goods Administration (TGA), which is responsible for overseeing the safety, efficacy, and quality of therapeutic goods, including medicinal cannabis. Medicinal cannabis products must be manufactured to GMP standards, and must be listed on the Australian Register of Therapeutic Goods (ARTG) or obtained through the SAS or APS.

The TGA also sets out testing requirements for cannabis products, including testing for THC and CBD (cannabidiol) content, as well as other contaminants such as pesticides, heavy metals, and microbial contaminants. These testing requirements aim to ensure that medicinal cannabis products are safe, effective, and of consistent quality.

2.3 Patient Access and Prescription

Access to medicinal cannabis products in Australia is regulated by the TGA, which has established pathways for patients to access these products through prescription from registered medical practitioners. Patients with certain qualifying medical conditions, such as chronic pain, epilepsy, multiple sclerosis, and chemotherapy-induced nausea and vomiting, may be eligible to obtain medicinal cannabis products with a prescription.

However, patient access to medicinal cannabis products can be challenging due to various factors, including the limited awareness and knowledge among healthcare practitioners, the high cost of medicinal cannabis products, and the lack of subsidies from the Pharmaceutical Benefits Scheme (PBS). Additionally, the availability of different cannabis products, such as different strains, formulations, and delivery methods, can also impact patient access and choice.

2.4 Import and Export

The import and export of cannabis products in Australia are regulated by the Department of Health, which oversees the import and export permits for cannabis, including medicinal cannabis products. Import permits are required for the importation of cannabis products into Australia, while export permits are required for the exportation of cannabis products from Australia.

The import and export of cannabis products are subject to strict regulatory requirements, including compliance with GMP standards, testing requirements, and record-keeping obligations. These requirements aim to ensure the quality and safety of cannabis products that are imported into or exported from Australia.

2.5 Research and Innovation

Research and innovation in the cannabis industry in Australia are regulated by the ODC, which issues licenses for research and development activities related to cannabis. Research licenses allow for the cultivation, production, and possession of cannabis for the purpose of conducting scientific research, including clinical trials, pharmacological studies, and other scientific investigations.

Research and innovation in the cannabis industry are crucial for advancing our understanding of the potential benefits, risks and safety of cannabis products, as well as for developing new therapeutic options for patients. However, the regulatory landscape for cannabis research in Australia can be complex and challenging, with requirements for ethics approvals, permits, and compliance with various regulations and guidelines.

Despite the regulatory challenges, there has been a growing interest in cannabis research in Australia in recent years, with several universities, research institutes, and private companies conducting studies on various aspects of cannabis, including its medicinal properties, safety, efficacy, and potential therapeutic applications. This research has contributed to the growing body of evidence supporting the use of medicinal cannabis for certain medical conditions and has helped to shape the regulatory framework for the industry.

2.6 Industry Challenges and Opportunities

The cannabis industry in Australia faces several challenges that impact its growth and development. One of the major challenges is the complex and evolving regulatory landscape, which can be a barrier to entry for businesses, particularly small and medium-sized enterprises (SMEs). The licensing requirements, quality standards, testing requirements, and other regulatory obligations can be costly and time-consuming, making it challenging for businesses to enter the market and compete effectively.

Another challenge is the limited patient access to medicinal cannabis products due to factors such as lack of awareness among healthcare practitioners, high costs, and limited subsidies from the PBS. This can impact the demand for medicinal cannabis products and limit the market potential for businesses in the industry.

Furthermore, the stigma and perception of cannabis as a recreational drug can also be a challenge for the industry, particularly in relation to public perception, education, and acceptance of medicinal cannabis. Despite the growing body of evidence supporting the use of medicinal cannabis for certain medical conditions, there are still misconceptions and misunderstandings about cannabis, which can impact patient access, public perception, and industry growth.

However, despite these challenges, there are also significant opportunities for the cannabis industry in Australia. The increasing acceptance of medicinal cannabis as a legitimate therapeutic option, coupled with the growing body of evidence supporting its efficacy for certain medical conditions, presents opportunities for businesses to develop and manufacture high-quality medicinal cannabis products to meet the demand of patients in Australia and potentially in global markets.

Moreover, the industrial hemp sector presents opportunities for businesses to tap into the growing demand for hemp-derived products, such as textiles, paper, food, and construction materials. Industrial hemp has a low THC content and is distinct from medicinal cannabis, and its cultivation and use are regulated separately. The industrial hemp sector has the potential to provide economic opportunities for farmers, processors, and manufacturers, and contribute to the development of a sustainable and environmentally friendly industry.

Additionally, research and innovation in the cannabis industry offer opportunities for businesses and researchers to develop new technologies, formulations, and delivery methods, and contribute to the scientific understanding of cannabis and its potential therapeutic applications. This can help drive innovation, create intellectual property, and position Australian businesses and researchers as leaders in the global cannabis industry.

3. Market Overview

The cannabis market in Australia is still in its early stages of development, with both challenges and opportunities. The market is primarily focused on medicinal cannabis, with limited patient access and availability of products through the regulated channels. However, the market has been growing steadily, with increasing patient numbers, product availability, and investment in the industry.

According to the latest data from the Australian Therapeutic Goods Administration (TGA), as of September 2021, there were approximately 17,000 patients approved for medicinal cannabis in Australia, a significant increase from previous years. The most common conditions for which medicinal cannabis is being prescribed include chronic pain, epilepsy, multiple sclerosis, and palliative care.

The market for medicinal cannabis products in Australia is dominated by imported products, as local production is still limited due to regulatory challenges and the time required to establish local cultivation and production facilities. However, there has been a growing interest and investment in local cultivation and production, with several licensed cultivators and manufacturers in Australia aiming to increase the domestic supply of medicinal cannabis products.

The market for industrial hemp-derived products is also growing, with increasing demand for hemp-derived textiles, food products, and construction materials. The industrial hemp sector has the potential to provide economic opportunities for farmers, processors, and manufacturers, and contribute to the development of a sustainable and environmentally friendly industry.

In terms of market participants, the cannabis industry in Australia is comprised of various stakeholders, including licensed cultivators, manufacturers, wholesalers, retailers, healthcare practitioners, patients, researchers, and regulators. The industry includes both large multinational companies and small to medium-sized enterprises (SMEs), with a mix of local and international players.

In recent years, there has been a significant increase in investment and capital raising activities in the Australian cannabis industry. Several licensed cultivators and manufacturers have secured funding from investors to expand their operations, develop new products, and enter international markets. The increasing investment activity in the industry reflects the growing interest and potential of the cannabis market in Australia.

4. Legislation and Regulation

The legislation and regulation governing the cannabis industry in Australia are complex and involve multiple levels of government, including federal, state, and territory governments. The regulatory framework is constantly evolving, with changes and updates being made to address the challenges and opportunities of the cannabis industry.

4.1 Federal Regulation

At the federal level, the Therapeutic Goods Administration (TGA) is the regulatory body responsible for regulating medicinal cannabis products in Australia. The TGA is part of the Department of Health and is responsible for the evaluation, registration, and monitoring of therapeutic goods, including medicinal cannabis products.

Under the current regulatory framework, medicinal cannabis products are classified as Schedule 8 (controlled drugs) under the Poisons Standard, which is a national classification system that regulates the availability and use of certain substances in Australia. This classification imposes strict requirements for licensing, permits, manufacturing standards, quality control, and labeling of medicinal cannabis products.

To access medicinal cannabis in Australia, patients must obtain a prescription from a registered healthcare practitioner who is authorized to prescribe medicinal cannabis. The prescription must comply with the requirements of the TGA's Special Access Scheme (SAS) or Authorised Prescriber Scheme (APS), which outline the conditions and criteria for prescribing medicinal cannabis products.

Licensed cultivators and manufacturers of medicinal cannabis in Australia must also comply with the Good Manufacturing Practice (GMP) standards, which are internationally recognized standards for the production of pharmaceuticals, including medicinal cannabis products. GMP certification is required for the cultivation, processing, and manufacturing of medicinal cannabis products, and is a significant regulatory requirement for businesses in the industry.

In addition to the TGA regulations, other federal agencies, such as the Australian Taxation Office (ATO) and the Office of Drug Control (ODC), also play a role in regulating the cannabis industry. The ATO regulates the taxation and financial aspects of cannabis businesses, while the ODC is responsible for issuing licenses for the cultivation, production, and export of cannabis for medicinal and research purposes.

4.2 State and Territory Regulation

In addition to federal regulation, cannabis is also regulated at the state and territory level in Australia. Each state and territory has its own legislation and regulations governing various aspects of the cannabis industry, including licensing, cultivation, manufacturing, distribution, and retail.

Some states and territories have established their own regulatory frameworks for medicinal cannabis, which work in conjunction with the federal regulations. These frameworks may include additional requirements, such as state-level licensing, permits, and reporting obligations for businesses involved in the cultivation, production, and distribution of medicinal cannabis products.

For example, the state of Victoria has its own Medicinal Cannabis Scheme, which includes regulations for licensing, cultivation, manufacturing, and distribution of medicinal cannabis products. Other states, such as New South Wales, Queensland, and Western Australia, also have their own regulations in place for medicinal cannabis, which align with the federal requirements but may have additional state-specific requirements.

In some states and territories, there are also regulations in place for the cultivation and use of industrial hemp for non-medicinal purposes. These regulations may include licensing, permit requirements, and limits on the THC content of hemp plants.

It's important to note that the regulatory landscape for cannabis in Australia is constantly evolving, and changes to legislation and regulations can impact the industry significantly. It's crucial for businesses, patients, healthcare practitioners, and other stakeholders to stay up-to-date with the latest developments and ensure compliance with all relevant laws and regulations.

5. Challenges and Opportunities

The cannabis industry in Australia faces various challenges and opportunities as it continues to develop and mature. Some of the key challenges include:

5.1 Access to Medicinal Cannabis

Despite the legalization of medicinal cannabis in Australia, access to medicinal cannabis products can still be challenging for patients. The regulatory requirements, including the need for prescriptions from authorized healthcare practitioners and the limited availability of approved products, can create barriers to access for some patients. Additionally, the cost of medicinal cannabis products can be prohibitive for some patients, as they are not covered by the Pharmaceutical Benefits Scheme (PBS) and are not eligible for reimbursement through private health insurance.

Improving access to medicinal cannabis for patients who could benefit from it remains a priority for the industry and regulators. This includes streamlining the regulatory processes for prescribing and obtaining medicinal cannabis products, increasing the availability of approved products, and addressing affordability issues for patients.

5.2 Regulatory Compliance

The complex and evolving regulatory landscape for cannabis in Australia can be challenging for businesses operating in the industry. Compliance with the TGA's requirements for licensing, permits, manufacturing standards, quality control, and labeling of medicinal cannabis products, as well as other federal, state, and territory regulations, can be time-consuming and costly.

Businesses in the cannabis industry need to invest in robust compliance systems and processes to ensure that they meet all regulatory requirements and maintain their licenses and permits. This includes implementing strict quality control measures, maintaining accurate record-keeping, and conducting regular audits to ensure ongoing compliance.

5.3 International Competition

As the cannabis industry continues to expand globally, Australian businesses face increasing competition from international players. Countries such as Canada, the United States, and several European countries have established mature cannabis markets and have developed advanced cultivation, manufacturing, and distribution capabilities.

Australian businesses need to compete with these international players not only in the domestic market but also in international markets where cannabis exports are permitted. This requires investing in research and development, innovation, and strategic partnerships to stay competitive and capture a share of the global cannabis market.

5.4 Research and Development

Research and development (R&D) are critical for the growth and advancement of the cannabis industry in Australia. R&D is necessary for developing new cannabis-based products, improving cultivation and manufacturing techniques, understanding the therapeutic properties of cannabis, and conducting clinical trials to gather evidence on the safety and efficacy of medicinal cannabis.

However, conducting R&D in the cannabis industry can be challenging due to regulatory restrictions, such as the need for permits and approvals for research involving cannabis, and limitations on the availability and types of cannabis strains for research purposes. There is a need for continued investment in R&D and supportive regulatory frameworks to foster innovation and advancement in the cannabis industry.

Despite these challenges, the cannabis industry in Australia also presents significant opportunities, including:

5.5 Economic Growth and Job Creation

The cannabis industry has the potential to contribute to economic growth and job creation in Australia. As the industry expands, it creates opportunities for employment in various sectors, including cultivation, manufacturing, distribution, retail, research, and ancillary services.

The development of a mature cannabis industry in Australia can also generate tax revenue for the government, which can be used to support healthcare, education, and other essential services. Additionally, the export potential of cannabis products can generate revenue from international markets, contributing to the country's economic growth.

5.6 Innovation and Product Development

The cannabis industry is a relatively new and rapidly evolving industry, with significant potential for innovation and product development. There are opportunities to develop new cannabis-based products, including pharmaceuticals, nutraceuticals, cosmetics, and other consumer goods. These products can target various segments of the market, such as medical patients, wellness seekers, and recreational consumers.

Innovation in cultivation techniques, extraction methods, and product formulations can also improve the quality and efficacy of cannabis products, creating opportunities for businesses to differentiate themselves in the market and gain a competitive advantage.

5.7 Medical Research and Clinical Trials

The legalization of medicinal cannabis in Australia has opened up opportunities for medical research and clinical trials to explore the therapeutic properties of cannabis and its potential applications in treating various medical conditions. Conducting rigorous research and clinical trials can generate evidence on the safety and efficacy of cannabis products, providing a solid foundation for the use of medicinal cannabis in mainstream medicine.

Investment in medical research and clinical trials can also attract funding and collaborations with international research institutions, positioning Australia as a leader in cannabis research and innovation. This can have positive impacts on the overall development of the cannabis industry in the country.

5.8 Social and Public Health Impacts

The cannabis industry also has the potential to have social and public health impacts in Australia. The legalization of medicinal cannabis has already provided relief to many patients suffering from chronic pain, epilepsy, multiple sclerosis, and other conditions. Access to medicinal cannabis can improve the quality of life for patients, reduce their reliance on opioids and other medications, and potentially lower healthcare costs.

However, the recreational use of cannabis also presents challenges related to public health and safety. Regulatory frameworks need to be in place to ensure responsible use, including restrictions on marketing and advertising, age limits, impaired driving regulations, and public education campaigns on the risks associated with cannabis use.

6. Conclusion

The cannabis industry in Australia has undergone significant changes in recent years, with the legalization of medicinal cannabis and the development of a regulatory framework to govern its production, distribution, and use. While the industry is still in its early stages and faces challenges, it presents significant opportunities for economic growth, job creation, innovation, and medical research.

The regulatory landscape for cannabis in Australia is complex and evolving, with federal, state, and territory regulations that businesses in the industry need to comply with. Access to medicinal cannabis for patients, regulatory compliance, international competition, and research and development are some of the key challenges that the industry faces.

However, with the right strategies, investments, and collaborations, the cannabis industry in Australia has the potential to grow and thrive. Continued efforts to streamline regulations, improve access to medicinal cannabis, foster innovation, and conduct robust research can contribute to the responsible and sustainable development of the cannabis industry in Australia.

In conclusion, the cannabis industry in Australia is a dynamic and rapidly evolving sector with significant potential for growth, economic contribution, and medical research. As the industry continues to develop, it will be important for businesses, regulators, healthcare practitioners, and other stakeholders to work collaboratively to ensure that the industry operates in a responsible, compliant, and sustainable manner, benefiting patients, consumers, and the broader community.