Analysis and Commentary

Local cannabis market booming, but R&D being stifled: industry

Analysis and Commentary

The cannabis industry is growing rapidly and plays to Australia’s strengths in medical research, but the local industry says regulations make its work difficult. Brent Balinski spoke to Peter Crock of Cann Group and Peter Duggan of CSIRO’s Botanical Extracts Lab about the potential. 

Since growing cannabis for research purposes became legal in 2016 — followed by other gradual relaxations in federal and state laws — there has been excitement about the potential attached to an Australian cannabis industry.

In general, and due to long-time prohibition around the world, there’s essentially a new class of compounds that the medical field is just beginning to properly explore, says Peter Crock, CEO of Cann Group.

“There’s a whole spectrum of conditions and uses that are pretty much unmapped or haven’t got the clinical work to support them, [and] that’s exactly where Australia has a role to play,” he tells @AuManufacturing.

Following a nearly three-decade background at Nufarm, Crock joined Cann — the first local company to earn licences for cultivation and research — in 2016.

“It’s completely flawed in terms of the risk and controls that have been put around it,” says Crock of public research on cannabis.
(Picture: Herald Sun)

In five years, the local cannabis industry, including medicinal, industrial hemp, recreational and CBD (cannabidiol, a component with a long list of claimed health benefits and recently made available over-the-counter) has grown to a market in the tens of millions of dollars. Prohibition Partners estimates it will top $US 1 billion in value by 2023.

According to Crock, who is also chair of industry group Medicinal Cannabis Industry Australia, the potential to develop new treatments locally is being stifled by incredibly strict rules on public R&D.

“We’ve got institutions like Melbourne University, La Trobe University playing a pivotal role in this, and CSIRO. These same institutions can work with radioactive materials and genetically modified crops and all sorts of things — but they have been limited to holding no more than 200 grams of cannabis at any one time for risk of diversion,” he says. 

“It’s completely flawed in terms of the risk and controls that have been put around it, which has really stifled research in Australia and will continue to until we get that change.”

And while medicinal cannabis is used by an estimated 600,000 Australians (only about 4 per cent of whom have a prescription for it) Crock adds that the plant was a schedule nine substance until recently.

(He does not argue for recreational use, which “confuses the message” of its potential medical value.)

Only one licenced public researcher

Last week CSIRO announced it became the country’s first and only public research institute licenced by the Office of Drug Control to develop and manufacture new cannabis medicines.

Adjunct Professor Peter Duggan, who oversees CSIRO’s Botanical Extract Lab in Melbourne, says this allows for manufacture — “not a very clean term” in this case — such as including analysis, extraction, formulation, and developing new processes for industrial partners.

“Once you start extracting, once you do any sort of chemical separation, refinement, that sort of thing, then you need a manufacturing licence from the [ODC]” he tells @AuManufacturing.

Although BEL has been working with Cann since nearly the company’s beginning, it needed the new licence to work “with the manufacturing side, the developing new medicines side,” he adds. (Duggan states that his lab work is not impeded by restrictions on volumes, which he says is thanks to the regulatory regime in Victoria.)

CSIRO has been involved in plant extract research since the 1940s, and in recent years with companies such as Tasmanian pyrethroid specialist Botanical Resources Australia. Nowadays BEL’s work takes in small projects with native plants, but is mainly in cannabis “and overwhelmingly with the Cann Group.”

Wide open possibilities

The two main chemicals mentioned when medical marijuana comes up are THC and CBD, though there are dozens of cannabinoid compounds alone. 

There are over 20 medical cannabis companies listed on the ASX, by Crock’s count. 

Picture: CSIRO

His company is aiming to commission a factory at Mildura this year, with capacity for 12,500 kilogram of dry flower processed a year. It is attempting to establish itself as a biotech company rather than a commodity producer, with genomics, cultivation and R&D expertise, and a stated focus on precision medicine.  

“With our cultivation, production and manufacturing expertise and capability here and taking that into the medical research field, which then Australia absolutely is a world player in… that’s what we’re looking to leverage and take forward,” he adds.

For Australian researchers wanting to make an impact in a burgeoning area of medicine, it’s a highly interesting time, believes Duggan. Besides an under-explored set of compounds, drug delivery methods are another area that will be important to develop.

“There’s a whole lot of different formats that are being developed, and those formulas will probably be designed for the particular indication,” he offers. 

“Scientists are trying to develop different ways of presenting drugs for those particular indications. So that means you need particular manufacturing processes to develop those. And we have known delivery methods, but we can’t predict what others will come in the future. So it’s really wide open and that’s what’s exciting about it.”

Main picture: AFP/Getty Images

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