May 27, 2022+
Although cannabis has been legal in Australia for several years, the market does not receive much attention from the media or love from the capital markets.
Since 2020, the amount of cannabis that has been solid in Australia has significantly increased and we believe the market is unaware of this trend. Out of the medical cannabis prescriptions that have been granted in the last five years, approx. 85% have been issued since January 2020 and we are favorable on the growth of the market.
According to data from the Therapeutic Goods Administration (TGA), medical cannabis prescriptions have been issued to Australian patients for more than 140 different conditions. We are favorable on the structure of Australia’s cannabis market and the wide range of ailments that medical cannabis has been prescribed for.
We are surprised by the lack of attention the Australian cannabis market receives and believe the industry was negatively impacted by Canadian Licensed Producers (LPs) which exited the region after attempting to capitalize on it.
From the geographic location of Australia to the climate, we believe the market has attractive characteristics and continue to monitor the companies that are focused on it. As the number of medical cannabis prescriptions that have been granted steadily increased, several large scale Canadian LPs exited the market.
Canopy Growth Corporation (Nasdaq: CGC) (TSX: WEED) and Aurora Cannabis Inc. (Nasdaq: ACB) (TSX: ACB) were two early movers on the Australian cannabis market (as well as most international cannabis markets) and we expected the businesses to capture significant market share.
Both Canadian LPs were highly focused on burgeoning international cannabis market and both have failed tremendously to capitalize on them. We believe that many cannabis operators avoided the market after Canopy Growth and Aurora Cannabis exited them and consider the region to not be overly saturated.
Between Canopy Growth and Aurora Cannabis, the Canadian LPs invested billions in emerging cannabis markets in Europe, Latin America, and Australia. We are of the opinion that the companies were acquiring international cannabis assets when the sector was trading at an all-time high and believe the failure on the international side of the business played a role in the ousting of the original management teams at each respective company.
Based on the performance of Canopy Growth and Aurora Cannabis in Canada and abroad, we believe the companies moved to early on several attractive international markets. We are of the opinion that other operators are better positioned to capitalize on the markets that Canopy Growth and Aurora Cannabis exited and will monitor how the international cannabis market continues to evolve.
https://technical420.com/cannabis-article/the-cannabis-sector-is-is-on-fire-down-under/#
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