Australian Cannabis Growers Lay out Plans for the Future

Published on April 14, 2017 · Last updated July 28, 2020

As the Australia’s stance on medical cannabis has shifted in recent years, shares of some cannabis companies have already seen huge gains. Earlier this week we highlighted several questions investors should ask as they consider investing in the new industry.

Leafly put those questions to a handful of Australian companies, such as AusCann, Cann Group, and The Hydroponics Company. In their responses, each outlined how they plan to build and grow their businesses in light of recent regulatory reforms.

Cann Group

Cann Group CEO Peter Crock is optimistic about growing cannabis in Australia—and rightfully so. Cann Group last month became the first commercial entity to receive cultivation and research licenses from the Australian government. The company plans to cultivate for both commercial and research purposes, with its first harvest planned for July or August.

One issue for Cann Group—and all Aussie growers—is the government’s requirement that c cultivators either have a license to manufacture medicine from the plant or can demonstrate a contract with a licensed manufacturer. Crock said Cann Group has plans to apply for a manufacturing license itself later this year. “In the interim,” he said, “we have a technical services agreement with a manufacturing licence holder.”

AusCann (ASX:AC8)

This small-cap, Australian Securities Exchange-listed stock has quadrupled in price since it was first listed at 20 cents a share back in February. Melinda Thompson, AusCann’s quality assurance manager, said she, too, is optimistic about a quick start. She described cultivation and processing as “the fastest part of this equation” as the country begins to embrace the medical potential of cannabis.

The company said it isn’t daunted by Australia’s rather onerous infrastructure and security requirements. Once operations are up and running, the company plans to extract cannabis oils and package them directly.

AusCann pointed out that Australian agriculture competes on a number of fronts in the international marketplace, which the company hopes will translate to its own growth plans.

The company has no intention of patenting plants, it said, and will instead source strains through collaborations with groups like Spanish company Phytoplant.

And it’s not too worried about competition from global pharmaceutical manufacturers, noting that most have focused synthesizing cannabinoids in isolation—rather than extracting whole-plant medicine. Despite this, Thompson said the company likely won’t hold off on synthesis forever. “As the science around cannabis improves, it is likely that therapeutics will focus in on single compounds, or small groups of compounds that have an understood mechanism of action,” she told Leafly. “Once the chemistry is solved, scale is usually not an issue.’

AusCann thinks the little-understood interactions among the many different compounds within cannabis may hold the key to profitability for growers. “Ultimately it comes down to cannabis having over a hundred compounds which have known biological effect, which can and do interact, and whose complete mechanisms of action are slowly becoming clear but are not yet completely known,” the company said. “At the moment, synthetic single cannabinoids are a company taking a punt—that they’ve picked the right one, that it doesn’t need anything else to assist it to work, that it will have the effect they want and that effect is the best possible effect it could have. The science isn’t yet detailed enough to make those anything but assumptions.”

The entourage effect: How cannabis compounds may be working together

The Hydroponic Company (THC)

The Hydroponic Company plans to be listed on the ASX on 4/20 this this year under the ticker THC, according to a spokesperson who noted that the company’s IPO was three times oversubscribed. The company currently manufactures hydroponic equipment and sells its products in North America, where legal cannabis has become a multibillion-dollar industry in recent years. Sales in that region supports the company’s division focused on research and intellectual property development.

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But now THC is also looking to get into medical cannabis in Australia. In February it applied for a cultivation license. “The hydroponics division is the cash cow at the moment, but yes we have plans to grow medical cannabis in Australia,” the company told Leafly.

“THC has been looking at a couple of key sites, and it could happen very quickly,” a spokesman said.

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