While the cannabis industry strives to develop, cannabis companies are growing in leaps and bounds
As expected, Australia’s newly legalised medical cannabis industry is being built at a slower pace compared to places like Canada. Although these companies are already receiving tremendous growth forecasts, to date their growth has been stunted to some degree by Australia’s pharmaceutical cannabis model of distribution, as well as bottlenecks of entry into the industry imposed by stringent regulations.
However, the companies that have successfully established their claim to the medical marijuana industry are in for a windfall once the industry picks up. Australian medical cannabis manufacturers have long term ambitions. The number of patients in need of medical cannabis products amounts to over a quarter of a million, and demand in other parts of the world offers phenomenal sales potential.
The companies are focused mostly on meeting all the standard requirements in order to scale up production to meet demand, and not on how to outwit competitors, since the industry is still at an early stage of development. It seems this scenario will stay true for a while yet, as more people are expected to try out cannabis solutions for various ailments Regulations remain difficult and are a deterrent to new entrants, meaning those companies that focus on compliance now will be well placed to succeed once the industry flourishes.
This will all take time. However, even if the industry isn’t expected to strike a balance between demand and supply in the near future, at the current rate of development some of the top producers are expected to hit at least $1 billion in revenue annually soon. This doesn’t even take into account expected global sales figures, which potentially range in trillions of dollars. These early adopter companies are poised to monopolise the international markets. They’re looking to take advantage of the severe shortages due to underdeveloped growing facilities in countries that have only recently accepted marijuana.
“The Deathstar”, a Symbol of the New Era in the Cannabis Industry
Sprawling across an expansive landmass in Southport is THC Global’s massive refinement facility for extracting and refining medical cannabis. The top Australian cannabis brand is running the largest medical cannabis facility in the southern hemisphere, while also operating across Australia, New Zealand and Canada. The massive refinement facility is expect to up the ante for the company both locally and on the international stage.
In fact, the company changed its name from the Hydroponics Company — given when it was founded in 2016 as the parent company of medical cannabis startup Canndeo — to THC Global last year, after it initiated large operations on a global scale.
But despite having the largest medical cannabis refinery in the southern hemisphere, THC global is only one example out of the largest marijuana producers in Australia. Although the industry is still emerging, several mass-scale growers have sprung up across the country with huge production capacities.
Pot Stocks Stomping the ASX
THC Global is one of over 30 cannabis companies that have achieved listings on the Australian Stock Exchange (ASX). The company currently has a market capitalisation of $70 million and a share price of 54 cents. Like all the other cannabis stocks, THC Global stocks have been rising at a steady pace for the past 12 months.
It is unusual to see a rush for ASX listings by companies in a relatively new industry. However, medical cannabis companies are extremely capital intensive, given the level of sophistication of the infrastructures they need to have in place to meet the high production standards imposed by regulations. Compliance with regulatory standards for production is quite onerous, so much so that THC Global CEO Ken Charteris thinks compliance with the ASX listing requirements is a breeze compared to what it takes to get a cannabis company off the ground.
However, Charteris also sees the bottlenecks as an advantage that keeps the bar of entry high to give successful entrants a high degree of monopoly. Australian cannabis companies listed on the ASX have run through a gauntlet of drug control regulatory checks, including those that check the people in charge of the company, the major shareholders of the company, and the condition of production facilities. As such, these companies are smart, organised, and kept to the highest standards. When marijuana use becomes more accepted on a global scale, both for medical and recreational purposes, these companies who have staked an early claim are already poised to reap the benefits of legalisation.