It’s been a shade over three years since medicinal cannabis was legalised by the Government, which has sometimes hyped the young industry.
“We’re proud to support the medicinal cannabis industry as it sets out to follow in the footsteps of our wine industry which, from first planting on a commercial scale in the 1970s, has now reached over $2 billion in export value,” said Agriculture Minister Damien O’Connor in April last year, as he stood on Puro’s organic farm near Blenheim, against a background of some 51,000 cannabis plants.
“Now is the perfect time to grow this high-value industry, as international demand for medicinal cannabis takes off,” O’Connor said.
“This project will bring significant scale to this new industry, providing domestically-sourced medicinal cannabis for Kiwi patients in pain and exciting export opportunities in a global growth market, providing further diversification of land use and export opportunities.”
But how is one of New Zealand’s youngest industries really getting on?
The Herald’s power list of the most influential players - the dope dozen, if you will - reveals those starting to realise its potential, but also some handbrakes.
The industry stands at a pivotal point. A set of proposed changes to the Medicinal Cannabis Scheme that governs how product is grown, processed and sold has - after being in the works since 2020 - finally gone to Cabinet for consideration, on an open timetable.
Many of the changes are technical, around the likes of labelling and containers. Then there is what one CEO calls “the biggie, and it’s time-critical” - New Zealand firms currently have to meet tough local standards before they can export, even if the target market has more liberal rules.
With many cannabis start-ups only just bringing their first product to market, insiders say the outcome could literally be make-or-break for some in the sector.
Health Minister Ayesha Verrall will be the key player as the proposed changes get an airing around the Cabinet table. Can she convince risk-averse Prime Minister Chris Hipkins that the changes are worth making before the election and that they can be sold as helping to boost a high-value new industry, rather than yet another issue to kick down the road until after the election, lest it scare the horses?
Verrall’s success, or failure, will have a bigger impact on the industry in the years ahead than any other factor.
Just as only Richard Nixon could go to China, only Guy Haddleton can walk into a posh North Shore tennis club and convince card-carrying conservatives to embrace medicinal cannabis.
Haddleton is a big player in the industry day-to-day. The entrepreneur - who made an estimated $800 million selling two finance software start-ups, and through becoming an early investor in Xero - in 2018 founded Helius Therapeutics, one of a handful of companies that features multiple times on the Ministry of Health’s short list of medicinal cannabis products that meet its minimum standard.
Haddleton, who owns 84 per cent of Helius, told the Herald the firm would likely require $100m in capital. He uses every opportunity to push for making medicinal cannabis more accessible, with a passion born in part from personal experience of his late wife and late stepson’s use of medicinal cannabis during their respective battles with cancer (see below).
He’s often speaking to an audience that more traditional advocates will never reach - and that could tip the scales, helping to push through reforms, even if there’s a change of Government.
Chris James heads two Ministry of Health agencies: Medsafe and the Medicinal Cannabis Agency, which administers the Medicinal Cannabis Scheme.
That means deciding which products are safe to prescribe - and medicinal cannabis can only be sold by prescription - checking that growers, processors, and producers are playing by the industry’s many rules, which include the requirement to meet strict standards for Good Manufacturing Practice (GMP) certification before they can export dried flower or cannabis oil to any market.
James is also the gatekeeper. He told the Herald that a number of cultivation applications had been refused. He wouldn’t say how many.
“Applications have been declined because the application has not provided sufficient information that the necessary facilities, such as security, and systems, such as procedures, are in place to prevent diversion or misuse of cannabis material,” he said.
One medicinal cannabis company CEO told the Herald that although the regulations he enforces are seen as too tight, James is well-regarded, and seen as a fair sheriff. “But he’s hopelessly short-staffed.”
Then Health Minister David Clark credited Chlöe Swarbrick as one of the prime movers behind the Misuse of Drugs (Medicinal Cannabis) Amendment Bill when it passed in 2019 - establishing the foundation for the Medicinal Cannabis Scheme that came into effect in April the following year.
The Green Party drug law reform spokeswoman has been pushing ever since for tweaks to the law to make it more workable. Through various means, including campaigning through the media and a barrage of Parliamentary questions, the Green MP has played a key role in getting various incremental tweaks in front of Cabinet, even if their fate still hangs in the balance.
Swarbrick told the Herald: “Cost remains the biggest issue with regard to access, but we also know there’s a general GP hesitancy to engage with a substance that’s cast in such a long shadow of stigma from the war on drugs. Education can go a long way here, but while Pharmac continues to refuse to acknowledge medicinal cannabis as on par with opiates and their cocktail of side effects for things like pain management, we are tinkering with a system that hasn’t got the fundamentals right.”
In the meantime, Swarbrick has been able to push through incremental changes, such as a tweak to the Medicinal Cannabis Scheme that allowed licensed growers to access seeds from the unlicenced market.
The Ministry of Health can’t provide any data on the number of people who get cannabis on prescription (see below) but Helius’ Haddleton puts it at around 25,000 - or a single-digit percentage of those who use the drug for pain relief.
Industry players see a mix of factors in the apparently low number of scripts being issued by doctors.
Medicinal cannabis was simply not on the radar when most GPs did their training; the prohibition on almost any promotion whatsoever means many patients are simply unaware of most medicinal cannabis products, so don’t request them. It doesn’t help that the recreational cannabis referendum was narrowly lost (Prime Minister at the time Jacinda Ardern refused to endorse either option), undermining GPs’ social licence to prescribe.
And doctors are aware that no medical cannabis treatments are subsidised by Pharmac - which leaves the patient with a tab somewhere between $110 and $350 per month - unlike various alternatives for conditions like chronic pain.
Former Porirua GP Dr Bryan Betty was recently made chairman of General Practice NZ, putting him in a key position to influence our primary healthcare providers and politicians.
Don’t expect any big, sudden shifts in his members’ thinking. We already know from Betty’s previous role, as medical director of the Royal New Zealand College of General Practitioners, that he leans far more towards wary than a medicinal cannabis cheerleader.
Last year, as Auckland grandmother Pearl Schomburg became the first New Zealander to use dried cannabis flower on prescription after a 10-year struggle with chronic pain and autoimmune diseases, Betty told the Herald: “A lot of GPs take the position that if the patient feels medicinal cannabis could benefit them then they would support that but it’s with the provision that there isn’t huge evidence for a lot of these conditions that medicinal cannabis has claimed to help.”
He said his mind was not closed. He would monitor international trials. But it would take some time before robust evidence was gathered.
Pharmac does not currently subsidise any medicinal cannabis products. The agency can pay for an individual person’s prescription under “exceptional clinical circumstances”. As of May 29 this year, “we have funded medicinal cannabis products for nine people,” a spokeswoman said.
An explainer on Pharmac’s site says: “These approvals were for individual patients whose clinical circumstances were life-threatening and/or extremely severe and other treatment options exhausted.” It gives examples of conditions that have been declined for medical cannabis funding, including chronic pain, post-operative pain and rheumatoid arthritis.
The Herald was pointed to a summary of a March 2021 meeting of Pharmac’s Pharmacology and Therapeutics Advisory Committee, “as part of an overarching horizon scan sought by Pharmac”. The committee ”found that clinical evidence about the use of medicinal cannabis spanned a wide range of conditions.
However, the evidence was generally of poor quality, did not capture long-term risks, and did not demonstrate a meaningful benefit when treating most symptoms or conditions”, the summary of the meeting said. A medicinal cannabis company CEO told the Herald he did not have any ill-will towards Pharmac.
They said it was always going to take time for the agency to capture enough clinical data (a realistic mindset, given an application for Pharmac funding for Sativex, a cannabidiol nasal spray made by Britain’s GW Pharmaceuticals, has been sitting with the agency since 2015). The CEO’s immediate focus was on the Ministry of Health’s restrictive export regulations under the current Medical Cannabis Scheme.
If these were liberalised, exports would grow, generating economies of scale and allowing products to be sold more cheaply here. Their immediate aim was to be able to sell medicinal cannabis more cheaply than it could be acquired on the black market. Currently, the black market is around three times cheaper.
When Damien O’Connor had his photo-op in front of those 51,000 plants, it was at Puro’s Kēkerengū organic site in Marlborough. The firm also operates an indoor and R&D centre at another Marlborough site, in the Waihopai Valley. Puro - co-founded by Tim Aldridge (MD), Sank MacFarlane (CEO) and Tom Forrest (director of cultivation) - is the largest cannabis grower in Australasia (or, at least, the largest street-legal grower).
Again, their stories run counter to weed stereotypes. Puro’s main plantation sits on land that’s been in MacFarlane’s family for 130 years, for sheep and beef farming (which continues to be the farm’s main activity). He attended Christ’s College and, before moving into cannabis, he was head of corporate and institutional foreign exchange for Westpac. Forrest was awarded a Winston Churchill Trust fellowship for his efforts to raise the standard of medical cultivaton standards in Australian licensed facilities. Aldridge established HireKing in the South Island.
Puro has what has been described as a “multimillion-dollar” partnership to supply Helius Therapeutics. MacFarlane declined to put a figure on the partnership. The CEO said this year’s harvest will again involve around 51,000 plants. But he said Puro could “comfortably grow five times that” if regulations change in the right direction.
Mark Lucas is chief executive of Cannasouth which, with its $87m market capitalisation, is easily the largest of three medical cannabis firms listed on the NZX (the others are Rua Bioscience, which has a $24m valuation, and the $6m Greenfern).
Last year was essentially another pre-commercial year for the “biopharmaceutical” firm, founded in 2018, as it reported a net loss of $8.2m on just $141,000 in revenue. But now things are starting to happen.
Last July, Cannasouth signed a three-year deal to supply Germany’s Weeco Pharma with dried cannabis flower, which it says could be worth up to $15m over years two and three. Earlier this month, it dispatched its first order to Australia. And in May, Cannasouth wrapped up a 50-50 merger with privately-held Eqalis.
Lucas told the Herald that the merger with Eqalis - a grower and GMP-grade manufacturer of ingredients and oral solutions - made Cannasouth a fully-integrated, full-service medical cannabis company.
While Cannasouth shares have staged a modest recovery on recent developments, they were recently trading at 28c - well off their all-time high of $1.04, hit in September 2020 in the run-up to the (narrowly lost) cannabis referendum. In overseas markets, firms founded in medical cannabis have been able to expand their markets after the passing of measures allowing recreational use.