Last month, Australia's Ministry of Health and the Therapeutic Goods Administration (TGA) agreed to reschedule CBD from Schedule 4 to Schedule 3.
This allows for CBD to be sold without a prescription. The decision and down scheduling is set to take effect on June 1, 2021.
The TGA also approved the CBD medicine Epidyolex from GW Pharmaceuticals PLCs (NASDAQ: GWPH). The treatment is used for patients living with seizures associated with Lennox-Gastaut syndrome, or Dravet syndrome.
Dr. Issac Balbin, founder of Melbourne-based blockchain cannabis tracking brand Parsl, welcomed the developments and expressed excitement over the market's direction.
"As CBD starts to become available, people in Australia are going to become more and more conditioned to the effectiveness of cannabis as a medicine with very limited side effects," Balbin said, citing a potential boost in pharmacy revenues. "At the same time, there will be a drop in the use of pharmaceutical opiate-based pain medication because people are looking for this type of answer. They just haven't had it available to them before."
Valens Company Inc. (OTCQX:VLNCF) executive vice president Everett Knight was also optimistic.
"OTC CBD, as well as the legalization of recreational cannabis, have the potential to stimulate Australia's economy," Knight told Benzinga. "These are two areas that can significantly enhance tax revenue in addition to create jobs."
According to Knight, the entire first addressable year of OTC market size will be valued at roughly CA$500 million, dependent on regulations. There will also be an influx of additional low-CBD product demand to develop, he said, with CBD isolates dominating the market.
Next Steps For Australia's Cannabis Laws
Public comments are now being accepted through Oct. 13, with a final decision on rules slated for a Nov. 25 release.
Balbin says scores of illicit market sales will occur while waiting on implementation. However, once implemented, he expects the rules to push cannabis forward in Australia.
"I think it's going to grow by leaps and bounds, and it's going to put additional pressure on the Australian government to look at allowing access to THC," said Balbin.
Balbin also noted the country's displeasure with the government over COVID-19 rules and market setbacks. He believes that cannabis is the key to helping nations cope with economic setbacks.
"The government knows this," he said. "So we expect to see some changes coming."
Knight also recognized the market potential, and expects Australia to eventually be in a similar position as the U.S. and Canada.
"The Australian government will also likely rethink recreational legalization as a continued effort to combat the illicit market, as legal product pricing moves in line with that of the illicit market, and Australians increase their dosing due to increased affordability," Knight said.
Challenges And Concerns
Australia market's limitations include a cap on recommended daily doses at 60 milligrams or less of CBD, with additional various percentage caps on CBD and other cannabinoid content.
Another area of concern centers on OTC sales being limited to only products listed on the Australian Register of Therapeutic Goods (ARTG). The process to become ARTG listed is considered time- and cost-consuming to some in the market.
Typical costs to join the ARTG can run a business several hundred to thousands of dollars, depending on the product and required approvals.