Australia is a legal cannabis market that rarely receives the attention it deserves and is a market that we are bullish on in 2021.
In 2019, we noticed a slowdown in interest in the Australian cannabis market as companies started to focus on the opportunity in Latin America. Since then, the Latin American cannabis market has not grown as much as expected while the Australian market has shown signs of strength.
2020 was a challenging year for Australia. From massive fires to the COVID pandemic, the country’s economy has been under pressure and this is a trend that is expected to reverse now that a COVID vaccine is being distributed in countries all over the world.
Although Australia’s economy has been negatively impacted by the pandemic, the cannabis sector has strengthened and this is a trend that caught our attention. During the last year, we have seen a decrease in the number of cannabis companies that are focused on the opportunity in Australia or Latin America. Many of these companies are in preservation mode and have slowed down the pace of acquisitions or have shut down operations altogether.
During the last few years, we have highlighted the importance of being selective with international cannabis markets. Cannabis markets outside of North America tend to have less capital invested in them and this makes the growth process take longer. We prefer markets that have existing infrastructure (distribution and retail) that can be modified for the cannabis industry and are favorable on the long-term outlook that is associated with the Australian market as a result of this.
When it comes to the cannabis flower side of the industry, Aleafia Health Inc. (AH.TO) (ALEAF) has been capitalizing on the export opportunity to Australia and is an operator that we expect to record strong growth in 2021.
When it comes to the cannabis oil side of the industry, MediPharm Labs Corporation (LABS.TO) (MEDIF) has been executing on a multi-national expansion and has been capitalizing on the opportunity in Australia.
After companies like Canopy Growth Corporation (CGC) (WEED.TO) and Aurora Cannabis Inc. (ACB) (ACB.TO) exited the Australian market, the opportunity for companies like Aleafia Health and MediPharm has become more significant and is a trend that we expect to benefit both businesses in 2021.
If you are interested in learning more about the companies that are executing on the Australian cannabis market, please send an email to [email protected] with the subject “Australian Cannabis Companies” to be added to our distribution list.