As of now, it has become a major business, even though the plant was legalized just 4 years ago.
The marijuana industry down-under is just as lucrative as those in the UK, Canada, and Germany.
Several companies that sell cannabis have achieved success on the ASX. Many of them have also become major names internationally. One of the reasons for this is the fact that marijuana is used for various purposes, including pain relief, anxiety, and insomnia.
Before we run through some facts about marijuana shares, let’s take a look at what Cannabis really is. This will help you understand why investing in Australian stocks like medifarm shares ASX is a good move.
What is Cannabis?
It is the official name of a drug that many Aussies are fond of – weed. It is also called ‘pot’ and contains two main properties. They are tetrahydrocannabinol (THC) and Cannabidiol (CBD). These activate your endocannabinoid system, releasing neurotransmitters that affect how you perceive stress, pain, and relaxation – including many other functions.
Marijuana comes in 2 main types: they are Sativa and Indica. Cannabis from the Sativa plant is high in THC, while its counterpart has an ample amount of CBD. They look and grow differently too.
THC is the psychoactive component in strains. Since it’s potent, strains that contain this element have the best kick. THC is generally used recreationally, but it provides superb medical relief – and treats pain very well. It can also help with low appetite and insomnia.
CBD is not psychoactive. This is one of the reasons people prefer Indica over Sativa. It doesn’t bring about euphoria like THC does, but it calms you down. CBD is so medicative that it’s used as an ingredient in topical creams.
When most people think about the compounds in the plant, Terpenes is probably not as well-known. They are the oils that give strains their distinct aroma. Cannabis can host up to 100 different types of this substance. The compounds also influence taste.
One of the most common terpenes is Limonene. As its name suggests, it provides a lemon-like scent. It is perfect for helping the user relax.
Another common terpene is pinene. This makes cannabis taste and smell like pine needles. What’s noteworthy about it is the fact that it helps treat conditions like inflammation.
What Is Hemp?
If you’re thinking of investing in cannabis stocks on the ASX, you’ll also see Hemp companies on the Australian Securities Exchange. Many people confuse the two, since they are two closely related plants. Hemp is high in CBD – and is a major source of CBD oil. It is also sought after for its fibre. It can be used to make various types of paper and textiles.
Not only is it high in fibre, but it’s packed with protein. Minerals like iron, zinc, and magnesium are found in the plant, so it can be eaten as well.
Hemp can be used as a building material as well. Its fibres are high-tensile, so they’re combined with lime to create hempcrete. This makes it “breathable”, so it’s widely used for insulation.
To top things off, it has a high tear-resistance. It’s so effective that it is used in filter paper and banknotes in certain countries.
Uses of Marijuana
More and more studies show that marijuana can treat a range of conditions. It has been discovered that it even provides relief to chemo patients. Marijuana helps enhance their appetite and helps combat nausea caused by radiation. Another major illness that cannabis can treat is HIV/AIDs – however, more research is being done on this.
If you suffer from muscle spasms, the sedative effect of Indica strains will help with the convulsions. This is why medical marijuana is commonly used by patients with multiple sclerosis and Parkinson’s disease.
CBD, along with hemp, is widely used in the cosmetic industry. They provide ample antioxidants that keep wrinkles at bay. They also help with inflammation and can keep the skin looking smooth and healthy.
The medical uses of marijuana are extremely beneficial, but one of the most popular uses of the drug is recreational. People all over the world purchase the plant solely for the experience it offers.
Listings in the ASX
In 2016, every state in Australia legalized cannabis for medical use. Today, 50 countries in the world have done so as well. Recreational use is unfortunately not legal, except in WA.
With the legalization of cannabis for medical use, multiple cannabis-related companies have listed themselves on the ASX in 2017. However, the first cannabis stocks ASX was the MMJ Group. They are currently a venture investor in the marijuana industry. The MMJ invested $2.65 mil in Embark Health inc.
Cann Group (ASX: CAN) is a name you should be aware of. They were the biggest IPO and raised $60 million in 2017. CAN made investors very hopeful about the industry, as it showed that it was a profitable venture.
2018 and 2019 weren’t the most exciting for medicinal cannabis stocks. Meanwhile, Emerald Clinics was listed on the ASX in 2020. CannVaLate finally appeared as well – they were going to list the year before, but they deferred as they wanted to try out property development and other projects.
Licensing in Australia
For a company to start growing strains, they first need to be licensed. This is not just the case in Australia but abroad as well. The license allows you to run a manufacturing site required for large-scale work. A company would need a permit too. The paper stipulates a few aspects which includes strains and the weight of plants that you can handle.
Several licenses are needed for research, commercial use, and the manufacturing of cannabis-related products. They will be issued from the Office of Drug Control (ODC).
If you’re thinking of investing in Cannabis stocks, know that in October 2018, the ODC had to hire more staff as they were flooded with licensing applications. Once an application has been submitted, it takes around a year and a half to 2 years for approval. As of now, there are 31 license holders in Australia – and the number is probably increasing.
Market size potential
The Global-View Research released a report that estimated that the legal marijuana market in the world would reach $146.5 billion USB by 2025. It also highlighted the fact that the United States and Canada would be leading the cannabis game.
New Frontier Data released an analysis estimating that the cannabis market in Australia as of 2019 was AUD 6.3 Billion – this included the illegal market.
Prohibition Partners are a European market research firm. They estimated that the marijuana industry in Australasia, Micronesia, Polynesia, and Melanesia would be worth around AUD 12 billion by 2028. They also predicted that if recreational marijuana were to be legalized, the market would grow by AUD 8.8 billion a year.
One thing Australia has going for it is that greenhouse growth is not needed, unlike offshore markets that rely on it.
Cannabis is a plant that has a great number of uses, both medicinal and recreational. Cannabinoids can help treat a range of conditions and companies have taken full advantage of this. As a result, the Australian government has also legalized marijuana for medical use. During this time, pot stocks Australia grew in popularity. The cannabis market potential in the nation is formidable, as well, with many companies getting on board. Investing in its stocks is a good move as it’s an industry that’s clearly on the rise both globally and at home.
As you know, to invest in marijuana shares ASX, a company needs to obtain a license. You’ll only find medical cannabis stocks ASX as recreational use of the plant is illegal.