Green Gold: amazing investment opportunities in the medicinal cannabis industry in New Zealand
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In this article, we look at investment opportunities in New Zealand’s fledgling medicinal cannabis industry; and how our legislation, agri-business know-how, environment and other factors combine to position New Zealand as a future market leader.
Changing attitudes to medicinal cannabis
The world is changing, and not just with the coronavirus pandemic. In the last decade, many countries (including New Zealand) have legalised the production and use of non-recreational cannabis – in other words, for medical, medicinal and wellbeing purposes. The governments of many more are in the process of reviewing and enacting similar legislation. After almost a century of prohibition, all of a sudden it seems the world is waking up to the real health benefits of cannabis.
As access to legal cannabis grows, more research into its medicinal uses is carried out ; and as more information becomes available attitudes change, thus increasing the market for cannabis-based health products. This in turn drives the market for raw materials. The medicinal cannabis sector is now expanding at a phenomenal rate worldwide, opening up significant investment opportunities.
The New Zealand position on cannabis
It has been legal to prescribe cannabis since 2016 in New Zealand. Even so, strict controls, high costs and sparse information limited uptake by practitioners. Changes were afoot within government however, and in 2020 it enacted legislation to enable the medicinal cannabis industry here.
The Medicinal Cannabis Scheme, implemented in April 2020, treats medicinal cannabis like any other pharmaceutical product, ensuring adherence to strict quality standards.
The government carried out rigorous planning before enacting the legislation; for instance a local cultivation and supply network was created serving both the domestic and export market; additionally, New Zealand was able to export from day one. Our regulatory processes are less likely to cause backlogs and delays – something other countries have fallen foul of after legalisation.
The government’s forward-thinking approach was partly due to the upcoming referendum on legalisation and control of cannabis for recreational use. Held in October 2020, this narrowly resulted in a “no” vote for recreational cannabis. However, the resultant establishment of a sound structure to scaffold the medicinal cannabis industry here has put New Zealand ahead of many other countries around the world.
What is medicinal cannabis and how do we use it?
“Medicinal cannabis” is an umbrella term used to indicate all cannabinoid-based therapeutic products (medical and pharmaceutical).
The cannabis plant produces cannabinoids (for example CBD and THC) within its cells. We can use these natural chemicals to treat a variety of medical conditions and their symptoms. In fact, one of the most common uses of medicinal cannabis is chronic pain relief for nerve pain and pain associated with cancer.
Research into the medicinal effects of cannabinoids is ongoing and gathering pace. So far, a handful of cannabis-based medicines have been approved for treatment of certain types of epilepsy, multiple sclerosis, emesis and anorexia. Cannabis also shows promise in the treatment of Alzheimer’s disease, Crohn’s disease and Tourette’s syndrome, among others.
How does New Zealand compete in the medicinal cannabis market?
This is a new and growing industry, with many opportunities for New Zealand to become a world leader. As shown above, our legislation means we can move fast to take advantage of the growing market. Here are some other factors giving us a competitive edge:
Agri-business and horticultural expertise
Agricultural innovation is part of New Zealand’s history, because settlers needed to develop technology to work the land. Farmers and growers here have often been early adopters of innovation. As a result, we now have almost every type of agricultural and horticultural system there is. Moreover, this is all contained within a relatively small geographical area. Consequently, as we continue to innovate, we can test and put new processes into action quickly, scaling up as needed.
Our environment and the New Zealand “brand”
New Zealand’s climate and fertile land is ideal for growing many different crops outdoors including several varieties of cannabis. Meanwhile, in cooler regions we already make good use of indoor growing facilities.
In addition, people perceive New Zealand’s environment as clean and green; and our “100% Pure New Zealand” brand is well known and respected overseas. This is one of the reasons we already earn top export dollar for our grown produce and manufactured goods.
Highly-regarded researchers and state-of-the-art facilities
New Zealand already boasts a thriving, world-class biotechnology sector, capable of researching and developing high quality medicinal products. BioTechNZ executive director Dr Zahra Chapman believes New Zealand could become a medicinal cannabis “research centre of excellence”. This will drive innovation in manufactured products.
Growth of the medicinal cannabis market
Growth forecasts for the global medicinal cannabis market over the next few years are very encouraging for investors. Globally, CAGR is predicted to be between 15% and 21% up to 2027.
Some regions are ahead of others; for example in North America, Fortune Business Insights predicts a CAGR of 20.4% for the period 2018 (US$6 billion) to 2026 (US$25 billion). Growth in Asia is more difficult to forecast as conservative views hold back legalisation in many countries. However, Asia is the world’s most populous region so the market potential is huge even if only a handful of countries legalise medicinal cannabis.
Western Europe is on track to become the world’s largest legal medicinal cannabis market in the next decade. Bryan, Garnier & Co, a European independent investment bank, projects it to be worth EUR15 billion in 2029. This growth has already fuelled investor interest in commercial cannabis companies there; all three segments of the European medicinal cannabis market (medical cannabis, the CBD wellness industry and pharmaceutical cannabis) have captured investor attention, both in fundraising and M&A transactions.
Opportunities for investment in New Zealand’s medicinal cannabis industry
New Zealand’s export-led economy puts us in a fantastic position to become the market leader in high quality medicinal cannabis products. The outlook is so good that CareSaver has already invested in a private commercial cannabis company here. (CareSaver is a licensed savings scheme similar to a pension fund.) In June 2020, CareSaver chief executive John Berry stated that medicinal cannabis “offers a significant export opportunity” for New Zealand.
Global trends in medicinal cannabis are important to New Zealand’s fledgling industry. The legalisation of cannabis production and products fuels rising demand for medicinal cannabis globally. As the number of clinical research trials grows, so cannabis treatments for an increasing number of medical conditions are identified; surely this will continue to feed future growth of the medicinal cannabis market and opportunities for investment.
There are ample opportunities to invest in growers, packers, logistics, transport, research and manufacturing in New Zealand. We already have the capabilities to position ourselves at the top of the medicinal cannabis market with high quality, high value grown produce (raw materials) and manufactured products. Without doubt, this avenue for growth will serve us better than the large scale, low value production carried out elsewhere.
In conclusion, by earning top export dollar for our premium medicinal cannabis products, New Zealand can carve a niche for itself at the very top of the market; whilst at the same time enabling improved quality of life for people with chronic medical issues. Now that’s got to be a recipe for success.
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