A major player in the global cannabis market says Australia is not likely to become a big producer of cannabis.
The Federal Government recently approved the export of medicinal cannabis products such as oils, sprays, tablets and patches.
But Brendan Kennedy, president of Canadian cannabis producer, Tilray, said the potential for Australia to export the raw material was limited.
“Countries such as Columbia and the Congo, any country around the equator has geographic advantages [and] while the price per kilogram of this product today is very high at the moment, at some point it will start to look like other agricultural products,” he said.
The venture capitalist set up Privateer Holding in 2010, which bought Canadian firm Tilray, to get a foothold in the medicinal cannabis market.
Tilray now exports to eight countries and has a $30 million cultivation plant in Portugal.
Mr Kennedy said the global market for recreational cannabis was already $200 billion and the medicinal cannabis market was likely to grow quickly.
“I think it will be around a $100 billion opportunity over the next five to 10 years,” he said.
The Federal Government’s announcement means finished medicinal cannabis products, such as cannabis oil and cannabis flowers or ‘bud’, will be permitted for export but bulk raw material for processing elsewhere in the world will not.
Narcotics are not a ‘commodity good’ under the United Nation’s Single Convention of Narcotic Drugs and the production and trade is limited to ensure there is an adequate supply of medicines but not enough for a stockpile to build up or get diverted for non-medicinal uses.
A spokesperson for the Department of Health said “the decision addresses an imbalance for the local industry following the bulk import of cannabis products to meet existing demand”.
“Exports will allow the local industry to develop scales of production that will, ultimately, deliver benefits to Australian patients in the same way it has built large industries on grains and mineral exports.”
Tilray is involved in four different trials of medicinal cannabis products in Australia, involving cancer and epilepsy patients and the impact of cannabinoids on oral health, users’ ability to drive, and their emotional response to the drug.
But when it comes to cultivation, the company has backed away from Australia saying the demand here is not enough to warrant it.
“We’re seeing positive signs [but] it’s just not as large as we anticipated,” Mr Kennedy said.
“It’s one of the reasons we didn’t invest in a cultivation facility in Australia.”
Mr Kennedy thought Australia could succeed in the global pharmaceutical market because of the strict standards here and the government focus on research, and that was probably where Australian companies would need to focus.
“The Australian industry as a whole will have to be focused on medical uses of cannabis in order to be successful,” he said.
Tilray also has a commercial agreement with Bob Marley’s family.
The reggae singer made marijuana use famous in the 1970s, and Tilray has an agreement to produce Marley products for the recreational market when it becomes legal in Canada later this year.