License Allows Australian Medical Cannabis Company to Vertically Integrate

Published on August 14, 2017 · Last updated July 28, 2020
Buds on Flowering Cannabis Indica Plant Growing Indoors. (Adobe Stock)

Australian medical cannabis company AusCann got one step closer to completing the sought after farm-to-pharma model this week when it was granted a manufacturing licence by the Australian Office of Drug Control (ODC).

Although 17 medical cannabis licences have been granted to Australian growers, according to the ODC, AusCann’s license is one of only four that also allow manufacturing. In combination with the company’s licenses to cultivate and produce in the states of Tasmania and Western Australia, the newly granted manufacturing license creates the potential for AusCann to build a highly independent, vertically integrated production chain.

The company already has a partnership with Johnson & Johnson-owned Tasmania Alkaloids, which reportedly produces 40% of global opioid supply. Elaine Darby, managing director of AusCann, told Leafly that the partnership will allow the companies to jointly produce medical cannabis products in Australia.

“We have entered into a strategic alliance with Tasmanian Alkaloids, one of the largest producers of opiates, for us to jointly produce Australian cannabinoid products in Tasmania. The next step in the process will be an amendment to Tasmanian Alkaloids TGA Manufacturing licence to enable the manufacture of cannabinoid pharmaceuticals.”

If all goes well, AusCann expects to have Australian-produced products available for prescription by mid-2018. If that isn’t soon enough, AusCann plans to stock Australian pharmacies with cannabis products sourced from their Canadian partner, Canopy Growth, later this year. “AusCann intends to have products in Australian pharmacies within the next couple of months,” Darby said.

The products imported from Canada will be the blueprint for AusCann’s first Australian-made products. “Our initial products will be based upon Canopy’s formulations,” Darby said. “The three products we are importing from Canopy initially are predominately for the treatment of chronic pain and palliative care symptoms.”

The manufacturing license announcement boosted AusCann’s share price 15% to $0.60 on Wednesday. That price is the highest it has been since May, but it’s still a steep drop from its high of $0.90 in late March. The Office of Drug Control announced on Tuesday that the response to its request for comment on the export of Australian cultivated and manufactured medicinal cannabis products had been one of overwhelming support.

Australia’s medical cannabis licensing scheme has been framed around ensuring domestic need is met by adequate supply, but the push to allow exports appears to be gaining traction with the ODC. If approved, this would open up huge new markets for Australian cannabis producers, although it remains to be seen whether the high cost of doing business in Australia’s regulatory framework will allow for competitive pricing at a global level.

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