Cannabis

Tight Regulations Could Inhibit Investment in Australia's Medical Marijuana Market

The government Down Under has made cannabis legal for the ill but regulatory hurdles seem likely to make genuine access difficult.
Tight Regulations Could Inhibit Investment in Australia's Medical Marijuana Market
Image credit: JJ Harrison | Wikipedia

As legalized marijuana continues to gain support across the United States, investors have become increasingly interested in backing start-ups in the growing industry.

Some in the U.S. have expanded their research into foreign markets. One country that seems ripe for investment is Australia, where the government approved the production and sale of medical marijuana this year.

However, Australia plans to take a tightly regulated approach to legalized marijuana, as some jurisdictions have done in the U.S. They also are expected to move slowly, with potentially complicated licensing procedures and high-cost regulatory fees.

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That approach could make it difficult for start-ups and likely will create a playing field for well-funded, larger companies. “There won’t be much of an opportunity for small-scale, or family farm-style farmers to cultivate medical cannabis,” Blaise Bratter, of Australian consultancy BuddingTech, told Marijuana Business Daily.

Australia’s new marijuana laws.

The Australian parliament legalized marijuana in February 2016 with an amendment to the country’s Narcotic Drugs Act. The amendment allows, for the first time, the growing of marijuana in Australia for medicinal purposes and scientific research.

Part of the support for the law change came from a group called United in Compassion. Lucy Haslam started the organization after her son, Daniel, used marijuana to help ease the pain of his terminal bowel cancer. After his death, she began to lobby the government to make medical marijuana legal.

Minister for Health Sussan Ley, at the time of the vote, called the change “an historic day for Australia” and said the change provides "the missing piece in a patient's treatment journey and will now see seamless access to locally-produced medicinal cannabis products from farm to pharmacy,” according to CNN.

However, potential businesses in Australia will face a stronger regulatory landscape than in most of the areas of the U.S. where medical marijuana has become legal.

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How Australia may regulate marijuana.

Since passage of legalized medical cannabis in February, Australian officials have worked to craft regulations governing how they will oversee marijuana production and sale.

Under rules released at the end of October, the Australian government plans not to allow dispensaries, but instead have medical marijuana dispensed through pharmacies.

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Also, growers will need to attain licenses and may have to spend hundreds of thousands of dollars on a months-long approval process, according to Marijuana Business Daily.

As with investments in the U.S. – where marijuana rules on possession, growing and distribution can vary widely – those looking to put money into the Australian cannabis industry will need to carefully research the new laws. However, it is yet another market open for possible investment as the legalization of marijuana movement continues to have success around the globe.