Australia Cannabis Law Reform / Markets 2019 The Year Ahead.

Observations and Considerations & Getting Past The Noise –

LIVE BEING EDITED

Loren W
Melbourne Australia
Updated 12 January 2019


To address the year ahead we need to look where we are starting from, how we got here and one very important definition. 

What is Medical Cannabis in Australia and How Does That Differ from The United Nations / USA / Canada Definition

“To stop the use of “REAL Cannabis” for medical or recreational use in Australia, the Australian Government working with the embedded Pharmaceutical Industry, uses an “all inclusive definition of “Medical Cannabis” to include pharmaceuticals, GMO, “Anything that acts like cannabis” and even synthetics, as not from a plant at all.

Some have started using the words “Corporate Cannabis” as another word for pharmaceuticals called Cannabis devoid of REAL Cannabis (per definitions below)

Cannabis/Marijuana vs Medical Cannabis vs Hemp

Cannabis vs Hemp / CBD  

The Cannabaceae family of plants includes 170 species, from hops, to hackberries and Cannabis.   Though thought to be a mistake today, hemp/industrial hemp and Cannabis/Marijuana  share the botanical genus name of Cannabis Sativa L. Genetically they are different, and also medically work differently as well per the work of a Dr Paige in 2014 – http://bit.ly/Cannabis-Genome2 .   Cannabis contains over 400 compounds, and over 110 Cannabinoids with the psychoactive THC being dominant and CBD being an antagonist to the THC in much lower ratios. THC and CBD seems to work in balance overall, as part of the “Entourage Effect” that says REAL Cannabis (per below) works differently than isolated Cannabinoids alone.

Specifically, the United Nations defines “REAL” Cannabis as having THC potency of between over 1.1% (typically over 10%) and low CBD (typically below 5%) . Hemp is defined as having low THC below 1% and in many countries under .3% often defined as “zero THC”. Hemp can have high or low CBD www.bit.ly/UN-Cannabis-defined .

Medical Cannabis / Marijuana has typically been defined as Recreational Cannabis used for medical use, in flowers buds, oil, edibles etc. However, as many countries and USA states where Cannabis/Marijuana is illegal due to the perceived dangers of THC, then CBD is often a preferred alternative. Being high CBD is from hemp only, then this greatly differentiates the entire global Medical Cannabis market between Cannabis/Marijuana (with THC over 5%) or Hemp (with low or zero THC and low or high CBD).

The REAL vs Pharma Global Cannabis Market Power Players –  Aurora Hemp vs Canopy Growth

With Hemp/ CBD/ API in a market competing directly with Cannabis then this makes the industry also attractive to the other competitor to Medical Cannabis that being the pharmaceutical industry.

The dynamic impact of the CBD vs Cannabis market makes the stocks, investment opportunities, and risks also different adding further volatility. The 2 power houses now are Canopy Growth and Aurora Hemp. Aurora Hemp deals only in CBD and Canopy Growth supplies both Cannabis and CBD. Stock volatility and value in late 2018 for both were for greatly different reasons. For Aurora hemp not offering Cannabis has made the value of their actual products viewed of less value. However, their investments largely in Cannabis have offered great returns making their stock investments viewed as more valuable than their product.

For Canopy Growth with the legalisation of recreational Cannabis in Canada supply and distribution has been a large problem and in serving Canada where states are still writing laws on how distribution will work, all adds complications to a standard supply and delivery model for Canopy Growth.

How Hemp got grouped with Cannabis / Marijuana?

Was it right to ban hemp along with marijuana?

president nixon declares war on cannabis

In the 1970s, President Nixon declared a “War on Drugs” and signed into law the Controlled Substances Act of 1970. This law established a set of banned drugs and created the Drug Enforcement Administration (DEA). It also unintentionally outlawed one of the world’s oldest domesticated crop, hemp. This not only led to the demise of hemp, but also an increased misconception of the plant.

In the Controlled Substances Act, marijuana / Cannabis was grouped with hemp and was made illegal to grow in the US. This, unfortunately, classified hemp as a drug even though it doesn’t include any of the chemicals that make marijuana a drug.Learn more about the legality of hemp in the United States.

HOW DID WE GET HERE – Australia 1984 to 2019?

1984 – The Hon Rn Sackville lead on a Royal Commission into drug use in South Australia, he wrote, “Australia is misinterpreting the UN Single Use Act (UNSUA). It is NOT about medical or personal use only about trafficking and should be legalised, regulated, taxed and made available ASAP.” – The suggestions were ignored, and benchmarks of what trafficking is were lowered and penalties increased since. This resulted in that introduction of mandatory sentences for Cannabis trafficking in 2017 for relatively low amounts of Cannabis.

2014 – Mothers with sick children pressuring Australian politicians to legalise Cannabis gained momentum in 2014 across Australia leading on this was the Victorian government who hired the VLRC (Victoria Law Review Commission) to lay out what would be state victoria Cannabis policy (and much of Federal policy later) The end result was the government thought the take up of Cannabis for medical use would be 50% of 1% of 1% of the general population as the government wanted to focus laws on palliative care vs the USA model offering a far wider coverage. 

Globally at the same time the USA Cannabis industry began suing the USA hemp industry over their reporting that hemp oil was the same as Cannabis oil. The hemp industry was forced to concede in a letter that hemp & CBD was NOT medicine and the hemp industry (HIA) did not support CBD law reform offering CBD / Hemp as medicine.

2015 – A respected survey in Australia showed 94% of the general population supported the use of Cannabis for medical use, much, much higher than the government had expected. This combined with a flattening of sales in the Australia pharmaceutical industry (per the pharmacy guild) that is very embedded in Australia government industry, created a bit of a situation. How does the government legalise Cannabis for medical use, and not hurt the pharmaceutical industry? . – http://bit.ly/Cannabis-Survey

Globally, recent (2015) research also showed (per the pharmacy guild) that 90% of OTC (over the counter) drug sales, and 90% of scripts were for pain management. Not surprisingly countries like Germany, Israel, the USA legal states, and Canada that had legal Cannabis for medical use, all confirmed 90% of all Legal medical Cannabis use was also for pain. Combing this with 54% of the legal opium in world (used for pain) was also produced in Australia and the growing synthetic opiate market of Fentanyl/Subsys in the USA put even more pressure on the situation.

2016 – Starting in Victoria the government moved to legalise “Cannabis” for medical use. To do this the Federal government introduced a new sister organisation to the TGA (Therapeutic Good Administration) the ODC (Office of Drug Control) they would be responsible for all licencing of the new medical Cannabis, permits etc. Legal Demand – to determine what products would / could be grown allowed  initially (July 2016) the ODC said the products would be determined by growers, with manufacturers and doctors to determine what products had demand (e.g. CBD  vs Real Cannabis with THC over 10%) By September 2016 this changed to leave doctors out of the lawmaking, and by this time all states had changed the definition of what Cannabis is and what hemp is even contrary to the United Nations, USA

Cannabis Law Reform The Way Forward in Australia in 2019

Market Volatility is also further complicated where there is still great confusion as many countries / governments refer to CBD as Medical Cannabis or Medical Marijuana and impacting the true value of shares, and companies. Further impacted again where REAL Cannabis becomes legal.

In Australia there are 2 tabled bills and 1 bill pending. The Labor NSW Cannabis bill authored by Adam Searle MLC is the leader of the Labor opposition in the NSW upper house. His father passed away due to Cancer and he benefited greatly from the use of real Cannabis for medical use, so the bill is personal also. That bill will re-appear prior to the forthcoming NSW state election where Labor is hopeful to be in power. That bill legalises real Cannabis for medical use, removes the need for scripts, and bypasses the TGA, amongst other things. It is a framework bill at only 20 pages and looks to bypass a lot of baggage / debate in other larger bills. The bill failed in 2017, and 2018 due to the current Liberal government. Though the committee work for the bill was bipartisan and the Greens are supporting the bill but would currently it have failed in the upper house 22-18.

The ACT Labor Cannabis Bill 2018-2019 – looks to legalise Cannabis for recreational use. More an evolution than a revolution it looks to double the number of plants that can be grown from 2 to 4 but more importantly allow the material from those plants to be legal, which is not currently the case. It is due to be debated in February with the Liberal government already trying to block its passing.

The Australia Greens Party – has introduced a bill into parliament, but it is yet to be debated. It seeks to legalise Real Cannabis for adult recreational use. Being Federal even if passed Cannabis would still be illegal and would need state support. ACT Labor has agreed to support it with their bill and discussions are ongoing into that, expected to be resolved in the next 30 days.

AUSTRALIA PRODUCES OVER 50% OF THE WORLDS LEGAL OPIUM  

How Australia Uses Opium To Limit the Access to Real Cannabis &
How Opium Producers in Australia Use Pharmaceuticals to Protect Themselves From Cannabis – Market Impacts & Considerations 

Poppy crop up close
Opium Fields Tasmania Alkaloids

Some Current Market Opportunities and Risks
As of 2019, with no pro-Cannabis lobby in Australia and only a CBD/hemp/pharmaceutical lobby market with some occasional REAL Cannabis interests, all benefits from the deeply embedded pharmaceutical industry in Australia due partly to its history with poppies. This in Australia is far more so an issue than many other countries, it has introduced a unique market impacting dynamic.

Likewise the legal opium market has had to address how they address share value and how they address their competitor REAL Cannabis globally and in Australia. .

The Australia law changes in 2016, introduced an odd new monopoly in industry almost overnight almost covertly to the eyes of Australians. The government called it “Medical Cannabis” but there will be no licenses to grow REAL Cannabis for human access in Australia as mentioned because the government doesn’t want it and will justify it as there being there “no legal demand” in any state as it is illegal in all states.

The newly formed ODC (Office of Drug Control), said in October 2016, that they had also spent a lot of money and time with constitutional lawyers to manage the implications of pharmaceutical Cannabis importatiation, while at the same time preventing any exportation by the new industry (that came later) and importantly the strict enforcement that there would personal growing of Cannabis for personal medical use or importations all because Australia would be in breach of the United Nations acts.

I believe the CBD industry in Australia has not diversified enough and is living on borrowed time. This is complicated by the government restriction to not want anyone to have CBD or REAL Medical Cannabis increasing the risk of CBD / Hemp value and demand as real Cannabis.

Currently as there is “no legal demand” for REAL Cannabis in Australia because it is illegal in all states. So all licenses are currently only for export and research and development of Cannabis (THC over 1%) or for hemp to make CBD. Unfortunately, because of the costs involved 90% of all legal medical Cannabis in Australia is now CBD (but via an Cannabinoid isolated active pharmaceutical ingredient) or API which is a single cannabinoid from hemp.

If Canopy growth or another player, decided to work more with Australia Cannabis community for instance to help legalise REAL cannabis creating a lobby then the main distributor (similar to Canopy Growth in Canada) then the market would change overnight.

There only needs to be one state to change the status quo and the whole market changes in Australia.  At the moment this could be recreational Cannabis for ACT or real cannabis for medical use only in NSW both offering and protecting REAL Cannabis for the 1st time in Australia. A cannabis lobby that can lead on this would not just change Australia but also other countries in the same situation like New Zealand, Thailand, Malaysia, S Korea, and even Africa where medical Cannabis is being introduced that is not real Cannabis but only CBD API.

IMPACT OF RESISTANCE TO “REAL” CANNABIS LAW REFORM

For simplicity, lack of understanding, or agenda, as discussed government and the well embedded pharma industry prefer we all call GMO, pharma, synthetics, hemp, CBD, API (Cannabinoid active pharmaceutical ingredients) “anything that acts like Cannabis” (per definition) and even synthetics as not from a plant al all – “Cannabis, Marijuana or anything but what it actually is” 

Canopy Growth Outlines its CBD Advantage

https://www.prnewswire.com/news-releases/canopy-growth-outlines-its-cbd-advantage-300774602.html

Canopy Growth began adding strategic hemp assets to its portfolio in 2016 focused on consumer-packaged goods. The market potential for hemp and future CBD products was soon realized and the Company began investing in field-scale operations in late 2017 in order to vertically integrate its hemp business to mirror its existing cannabis business. 

“Canopy has been preparing for and investing in this opportunity for several years now, through strategic acquisitions, infrastructure expansion, and extensive internal research and development,” said Bruce Linton, Chairman & Co-CEO, Canopy Growth. “With the door now open, we are moving fast to bring our considerable resources to establish the same market leadership position internationally that we have earned in the Canadian cannabis market. Canopy has a strong supply of CBD, a significant channel presence, the IP to drive the CBD industry forward to the benefit of consumers, and the balance sheet needed to act now.”

Summaries –
The status quo will see “Corporate Cannabis/ pharma” push in some country markets to confuse the general population that is, or contains REAL Cannabis.

In Australia, new bills in 2019, are already looking at legalizing REAL Cannabis for recreational use but have an unusual challenge in that no other country / USA state has legalised REAL Cannabis for recreational use without legalising medical use first.

However, the 2017, 2018, 2019 NSW Cannabis bill still makes the most sense – it is small in 20 pages has less baggage (so less to be debated or forced to be amended) it will legalise REAL Cannabis for medical use, with no scripts (Doctors cannot or do not want script real cannabis) this is due to the AMA, state health departments and insurance concerns.

How long to legalise REAL Cannabis after Medical Use Was Legalised.

The likes of Canopy Growth are also seeing the benefit of CBD/API vs Real Cannabis for medical and recreational use also.

I expect the CBD/Hemp pharma market (like Aurora Hemp & partners) in Australia to see greater consolidations as even Pharma Cannabis has had greatly limited availability.



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