Australian Govt paves the way for medicinal cannabis exports – which ASX listed stocks stand to benefit?

Medicinal cannabis exports Australia government ASX listed stocks

The Australian Federal Government announced this morning it would permit exports of Australian manufactured medicinal cannabis products, following its decision to open Australian borders to imports, with first legal medicinal cannabis imports hitting Australian shores in 2017.

Minister for Health Greg Hunt said the decision to allow exports followed “extensive consultation” undertaken during 2017. He said the primary reason for the green light was to ensure Australia’s domestic medicinal cannabis market remained competitive – with the sector facing mounting competition from international importers.

With the go-ahead Australia’s domestic medicinal cannabis producers can now expand internationally to booming markets in Canada, Europe and the US.

However, the green light maintains a codicil ensuring medicinal cannabis products must be available to Australian patients first.

The current protocol for patients desiring access to medicinal cannabis products is via an authorised prescriber under the Therapeutic Goods Administration’s special access scheme.

The Therapeutic Goods Administration has published guidelines for prescribing medicinal cannabis products for treating chemotherapy-induced nausea and vomiting, epilepsy, multiple sclerosis, chronic non-cancer pain and palliative care.

Additionally, numerous more products are undergoing clinical trials and permitting processes for assisting with a host of other conditions including migraines, autism, psoriasis, anxiety, as well as cannabis and hemp-based cosmetics and general health products.

According to Mr Hunt, exports were not approved initially because the government wanted to focus on gaining the international community’s confidence on Australia’s industry controls and cultivation systems, which it did when the International Narcotics Control Board gave it a favourable mention in its 2016 annual report.

Global medicinal cannabis market

The global medicinal cannabis market is thriving, with world cannabis consumption tipped to reach A$500 billion by 2029.

Driving this massive growth is an easing in medicinal cannabis restrictions in many countries around the world and the increasing legalisation of recreational marijuana use in the US and Canada, with the US state of California one of the latest to join the ranks – its citizens now having the ability to purchase the green elixir for personal use from the start of this month.

Recreational use reforms are also set to become official in Canada by mid-2018 with many cannabis growers preparing in anticipation for the new market opening up.

In the US, cannabis sales grew 30% in 2016 to US$6.7 billion, with revenue in the US, alone, predicted to reach US$20.2 billion by 2021 and US$50 billion by 2026.

Small cap cannabis stocks on the ASX

Multiple ASX-listed small cap pot stocks are set to benefit from the Australian government’s medicinal cannabis export reform, with many stocks also exposed to growing legalisation of recreational use in US states and Canada – so let’s take a closer look at them:

MGC Pharmaceuticals (ASX: MXC)

MGC Pharmaceuticals just launched its cannabidiol-based herbal cream which sufferers throughout Australasia, the European Union and US can purchase via MGC’s 51%-owned subsidiary MGC Derma’s website.

In clinical testing, the CBD-based cream eased itchiness, flaking and severe dryness. Two other products are due for imminent launch.

The company also has the advantage of being very fast to market with a medicinal cannabis treatment set to be available to drug resistant Australian epilepsy patients early this year with specialist drug distributor HL Pharma.

MGC’s pharmaceutical, cosmetic and medical cannabis cultivation is centred on a 1,100-square metre glasshouse facility in the Czech Republic and an open field farm in Slovenia.

Creso Pharma (ASX: CPH)

Through various agreements, Creso Pharma has strong exposure to medicinal cannabis markets in Australia, Latin America, Canada and China.

Creso also plans to access Canada’s edible and recreational cannabis demand, with its growing facility in the country due for completion mid-year.

According to the company, the 20,000 square feet facility will product up to 4,000kg of cannabis a year. Creso also plans to acquire adjoining land and expand the facility up to 200,000sq ft in the future, which it believes could produce up to 40,000kg a year.

MMJ Phytotech (ASX: MMJ)

Perth-based MMJ Phytotech also aims to take advantage of Canada’s lucrative medicinal and recreational cannabis sectors, which is enhanced by its recent C$2 million debenture investment in Toronto-based Weed Me in December 2017.

MMJ has an 59% interest in Harvest One Canada (TSXV: HVST), which owns a 59% stake in Satipharm AG.

Via Harvest One and Satipharm, MMJ has exposure to the entire medicinal cannabis value-chain and markets in western Europe, United Kingdom, Ireland, Canada and Australia.

Cann Group (ASX: CAN)

One of just two Australian companies with a growing and research licence, Cann Group is in a strong position to become a leading agribusiness producer of cannabis for Australian consumption.

The company has openly welcomed the government’s decision today to allow medicinal cannabis exports to overseas markets.

It is currently scaling up production capacity, is well capitalised and has a highly experienced agribusiness board.

AusCann (ASX: AC8)

Based in Perth, AusCann is also fully licenced for growing and research and has a strong relationship with Canada’s largest player, Canopy Growth, which holds AusCann shares.

That relationship will allow AusCann to import medications from Canada and supply them to Australian patients even before its first crops are grown and formulated.

Medlab Clinical (ASX: MDC)

Medlab Clinical is literally a world leader in its field because it is importing cannabis products from Canadian partner Aphria Ltd to use in a trial at Royal North Shore Hospital in Sydney for cancer patients in intractable pain.

Medlab uses a special atomising spray delivery system, Nanocelle, and will be testing the two main active ingredients in cannabis, THC and CBD.

Medlab has a variety of other products on the boil, including drugs to treat depression and obesity and the use of Nanocelle as a more efficient delivery system for a variety of off-patent medications including statins.

Algae.Tec (ASX: AEB)

More diversified than some of the other players here, Algae.Tec is aiming to use waste carbon dioxide to produce plant products commercially, including medicinal grade cannabis, algae-based nutraceuticals, biofuels and animal feed and aquaculture.

It has plans to produce a wide range of algae and cannabis products.

Queensland Bauxite (ASX: QBL)

Queensland Bauxite has a 55% stake in Australian unlisted company Medical Cannabis Limited (MCL) in addition to its existing businesses of mining the aluminium precursor bauxite.

The ultimate aim is to float MCL on the share market as a separate entity, which plans to become a leading cannabis manufacturing company in Australia.

Stemcell United (ASX: SCU)

Another fairly left field entrant in this list is Stemcell United, which is aiming to buy a stake in Israeli cannabis company iCAN Israel.

Zelda Therapeutics (ASX: ZLD)

Zelda Therapeutics is developing a range of cannabinoid-based formulations to treat medical conditions with perhaps the most exciting an observation autism trial in Chile.

The Hydroponics Company (ASX: THC)

With the highly appropriate ticker THC (the main psychoactive ingredient in cannabis), The Hydroponics Company’s subsidiary Canndeo has been granted a medicinal cannabis licence by the Office of Drug Control to cultivate and grow cannabis plant in Australia.

Canndeo operates under a pharmaceutical model with a focus on the end-to-end supply of medicinal cannabis products.

EVE Investments (ASX: EVE)

EVE Investments backs entrepreneurs and has a 50% interest in Meluka Health, which has produced its first organic hemp seed honey, which is expected to be available to Australian and US consumers early this year.

Chapmans Limited (ASX: CHP)

Another investment vehicle Chapmans Limited has entered into an agreement to make a strategic purchase of US$500,000 in medical cannabis holding company MJ Life Sciences Pty Ltd (MJLS).

The investment gives it a half share in MJLS which is an Australian special-purpose company established with the aim of becoming a leading global medicinal cannabis holding and investment company.

Bod Australia (ASX: BDA)

Bod Australia is working with the Swiss herbal extract company Linnea to extract a full spectrum of compounds from cannabis plants, which it thinks will be more effective and reliable in treating patients than current extraction methods.

Botanix Pharmaceuticals (ASX: BOT)

Skin care company Botanix is conducting trials on a synthetic version of the cannabis compound BTX 1503 which is thought to be excellent at treating acne in teenagers.

So far there have been few side effects from the treatment and a phase two trial is planned to ensure the claimed benefits of controlling oil production in the sebaceous gland tissue and acting as an anti-inflammatory are statistically valid.

eSense-Lab (ASX: ESE)

Israel-based eSense-Lab has entered into a deal with US cannabis concentrate producer, Wild Rogue Extracts to supply cannabis concentrates and essential oils.

The companies are collaborating on the development and marketing of a new line of CBD-based products including vapours and vape pens (oils and concentrates), tinctures, salves and other topical applications and concentrates.

Lifespot Health (ASX: LSH)

Lifespot Health has a joint venture with Seng Vital Germany to integrate that company’s Cannamed vaporizer into Lifespot’s BodyTel platform.

Bodytel would enable advanced medical diagnostic and dosage monitoring and fingerprint scanning, which is seen as an important part of developing the medicinal cannabis industry.

Roto-Gro International (ASX: RGI)

Canada-based Roto-Gro International is a cannabis-tech company with an automated rotary hydroponic system that can grow up to 420 cannabis plants without soil.

CannPal Animal Therapeutics (ASX: CP1)

CannPal Animal Therapeutics is an interesting addition to this list with plans to develop cannabis based therapies for veterinary use.

The aim is to produce a drug to ease cancer related pain in animals.

Atlas Pearls and Perfumes (ASX: ATP)

Atlas Pearls and Perfumes subsidiary Essential Oils of Tasmania has teamed up with LeafCann and the duo is seeking a medicinal cannabis licence to grow cannabis in Tasmania.

The idea is that each partner will bring skills to the deal, with Atlas proficient at growing perfumes and oils in Tasmania.

Capital Mining (ASX: CMY)

After a brief foray into cannabis stocks, Capital Mining shares were suspended from the ASX from August 14 after the ASX scrutinised its decision to change from an exploration company to cannabis play.

In mid-November Capital reported its would discontinue its medical cannabis investment opportunities and is finalising an exit.

In-depth guide to ASX listed cannabis stocks

For a more detailed guide into each of the above mentioned companies, you can view our report on cannabis stocks on the ASX.

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