Australia’s medical cannabis sales might surpass Canada’s in near future

(This story is part of an occasional series on the international medical cannabis industry. The previous installment, on Israel, is available here.)

Australia’s medical cannabis industry continues to experience brisk growth in patients and sales, and experts say the market could even surpass Canada’s medical sector this year.

Australian patients generally access medical cannabis via two government-regulated programs: the so-called Special Access Scheme Category B (SAS-B) system or from an Authorized Prescriber, typically a physician.

Australia legalized medical marijuana in 2016.

According to Therapeutic Goods Administration (TGA) data, the number of SAS-B patient approvals for medical cannabis increased sharply every year from January 2018 to January 2022.

Patient approvals rose from 25,160 in 2019 to 57,710 in 2020 and almost 122,000 in 2021.

However, that number dropped to 117,000 in 2022.

Industry sources say SAS-B approvals declined last year partly because of reforms implemented in late 2021, which effectively pushed some patients to pick an alternative pathway for securing medical cannabis - through an Authorized Prescriber (AP).

TGA data shows that medical cannabis approvals through an AP have increased dramatically since late 2019, when only 322 approvals were recorded.

That figure reached 172,185 approvals through the AP program in the second half of 2022.

“The TGA approval data shows that the Australian market is continuing to grow rapidly, with an increasing number of patients accessing medicinal cannabis via an Authorized Prescriber, rather than via the SAS-B pathway,” Rhys Cohen, global partnerships and engagement adviser at the Victoria, Australia-based Penington Institute, a drug policy organization, told MJBizDaily via email.

“This is probably due to a combination of the November 2021 reforms, which made it easier to become an AP, and ongoing growth in the number and size of medicinal cannabis clinics, which prefer to use the AP pathway.”

However, Cohen said the caveat is no one, including the TGA, knows exactly how many actual patients there are in Australia.

AP versus SAS-B

According to a freedom of information request filed by Cohen, a roughly equal volume of medical cannabis units was sold via the AP and SAS-B programs in 2022, between January and June.

Comparing the data for the two streams is also difficult. There could be overlap in the data.

On some occasions, patients could get cannabis prescriptions via the SAS-B pathway and some via AP - even facilitated by the same doctor.

On other occasions, a patient might receive SAS-B approval - which is usually valid for 24 months - but, in the meantime, could change to seeing an AP.

In that case, the same patient would be accounted for in both the SAS-B and AP data at the same time.

Nevertheless, industry experts say the data paints a picture of an industry that is growing quickly.

“The market has been at least doubling in size every year since its inception, and that growth is set to continue,” Cohen said.

Cohen estimates that patients spent roughly 250 million Australian dollars ($167 million) on prescription medical cannabis products in 2022.

“That could very well double in 2023,” he said, warning that “any forecasts should be treated with caution.”

That would put Australian spending ahead of Canada’s shrinking medical cannabis industry, which was worth 407 million Canadian dollars ($302 million) in 2022, which is roughly equal to AU$449.4 million.

Tommy Huppert, CEO of Melbourne-based cannabis producer Cannatrek, said Australia's industry continues to mature as the number of doctors prescribing cannabis rises.

“Actual patient approvals have continued to grow well due to more and more Approved Prescribers becoming active, who do not need to apply via the SAS-B application,” he said.

November 2021 reforms

Australia overhauled the rules governing the Authorized Prescriber and SAS-B systems in November 2021.

Before the reforms, medical practitioners needed government approval to prescribe a specific medical cannabis product via the SAS-B pathway or become an Authorized Prescriber..

Authorized Prescribers also required government approval for each cannabis product they prescribed.

However, according to a story by Cohen in the Australian publication Cannabiz, if a certain product a doctor had been authorized to prescribe was out of stock or the respective physician wanted to prescribe a different cannabis product, the SAS-B pathway was required.

The regulator, the Therapeutic Goods Administration, changed all this in the 2021 package of reforms.

Rather than requiring government approval for a specific product, the TGA created five categories of medical cannabis products.

The new categories are products containing:

• At least 98% CBD.
• Between 60%-98% CBD.
• Between 40%-60% CBD.
• Between 60%-98% THC
• More than 98% THC.

The reform eliminated the requirement for doctors to receive approval to prescribe each specific product.

Instead, doctors are now approved for product formats, such as flower or oil in the above measurements, for the five respective categories of products.

“The impact has been a significant improvement in patient access,” Cohen told MJBizDaily via email.

“The reforms have made it easier and quicker for prescribers to get approved, and reduced the time and cost involved for patients when their prescribed product is unavailable or discontinued.”

In another reform, Cohen said Australia made it quicker and cheaper to become an AP for certain treatments.

As a result, the number of Authorized Prescribers rose from fewer than 200 before the reforms to more than 1,900 today.

Big importer - for now

Australia is one of the biggest importers of unapproved medical cannabis products and cannabis for scientific purposes in the world, along with Israel and Germany.

Australia’s imports have grown substantially since 2018, when roughly 961 kilograms (2,119 pounds) were imported, per data shared with MJBizDaily by the Department of Health.

Sixty-five percent of those imports originated in the United Kingdom.

The following year, that number rose to 1,288 kilograms, but Canadian producers accounted for 77% of the imported quantity.

The figure jumped substantially in 2020 and 2021, when 4,567 kilograms and 7,587 kilograms were imported to Australia, respectively.

Canada accounted for a combined 73% of the imported quantity for those years, according to the Department of Health data.

The health agency said the quantities are a combination of raw cannabis, finished cannabis goods and extracts used for medical and scientific purposes.

Matthew Cantelo, CEO and founder of ANTG, a cannabis producer headquartered in Byron Bay, New South Wales, said the data shows that the Australian market has been dominated by imported products for the first five years.

“This was due to the fact that Australia needed to invest in and build out capabilities,” he said.

However, he noted that a handful of Australian companies have now built out those capabilities, so local production should be more competitive in the market.

“Also, Australia has a great opportunity to become a global exporter of quality cannabis medicine,” he said.

ANTG has been exporting cannabis products to Germany since 2021.

New import rules

Starting in July, all medical cannabis products released for sale in Australia will be required to comply with new requirements on manufacturing quality, child-resistant packaging and labels.

The new requirements were set out last September in the so-called TGO 93, which is a standard specifying the minimum quality requirements for medicinal cannabis products.

TGO 93 applies to any medicinal cannabis product imported into or supplied in Australia. It does not apply to cannabis products manufactured in Australia solely for export.

The new rules will also level the playing field between imported cannabis and cannabis produced locally.

Only products produced in Australia had been required to be manufactured in facilities certified Good Manufacturing Practice (GMP), meaning Australian-made cannabis products had to conform to stricter standards than imported ones.

The changes will require imported products to be manufactured in facilities meeting "equivalent" GMP codes.

“Capacity keeping up with demand is a challenge," ANTG's Cantelo said.

"With the regulatory changes to TGO 93 looming, we will see some overseas supply ceasing."

Cantelo said the TGA regulations are some of the strictest in the world, “so those Aussie companies that persisted, and are now in full production, are the future of the industry in Australia.”

Matt Lamers can be reached at matt.lamers@mjbizdaily.com.