Up in Smoke: Why New Zealand’s medical cannabis industry is struggling to make ends meet

Dr Waseem Alzaher (inset) has had success but some others in the medicinal cannabis industry have struggled. Photos / Supplied

It’s been five years since medicinal cannabis was legalised in New Zealand but Kiwi companies are struggling to get off the ground as GPs remain reluctant to prescribe the drug. John Weekes investigates what it will take to get the budding industry to take off.

Ten years ago, nurse Jacinta Newport was battling for her daughter to get a Sativex prescription.

The family had tried numerous treatments and her daughter, diagnosed with juvenile arthritis 11 years earlier, often suffered side effects from opioid medicines.

It was a strange time, with reports of New Zealanders moving to Colorado to get medicines banned here – and others so worried about getting burgled they would only talk about their medicinal products anonymously.

And it was a desperate time for some, with tragic cases highlighting what some people did for their suffering loved ones.

Teenager Alex Renton had an acute prolonged seizure and his family campaigned for him to be given medical cannabis.

Days before getting approval, his mother Rose Renton secretly gave him doses of cannabis oil medication – but he died in July 2015.

To Newport, around the same time, the cannabinoid spray had potential but only 27 New Zealanders were approved to use it and it wasn’t funded. From what Newport heard, those who did get Sativex could barely afford it.

The Medicinal Cannabis Agency, which now administers the Medicinal Cannabis Scheme, wasn’t yet in existence, but some campaigners and the odd politician were pushing for a new approach.

Years later, a new industry is up and running but it’s claimed many corporate scalps.

Cannasouth, founded in 2017, was the first medicinal cannabis company to list on the NZX in June 2019.

In mid-2023, it merged with fellow medicinal cannabis company Eqalis. The two companies at the time said affordability was the most significant barrier to widespread uptake of medicinal cannabis for patients.

Cannasouth was placed into voluntary administration in March 2024 and in December delisted from the NZX.

Aether Pacific Pharmaceuticals, formerly known as Medical Kiwi, entered liquidation in February. Liquidators shredded dried marijuana stock, then mixed it with cat litter and coloured dye to render it unusable.

In late February, NZX-listed Greenfern was put into receivership, a day after chief executive Elizabeth Plant and director Kirsten Taylor resigned from the business.

But Rua Bioscience in December secured $1.2 million through a capital raise to help it keep operating.

Cannasouth founders (from left) Nic Foreman and Mark Lucas, and chairman Tony Ho.

Liquidator Garry Whimp says the administration of Cannasouth is complete but when working with the company, he heard of many problems afflicting the nascent industry.

“When we were putting it to interested parties, I had discussions with a lot of the people in the sector and they were sharing stories of how difficult an environment it is in New Zealand.”

He says regulatory hurdles were among the challenges – and so was the black market.

Whimp says patients facing “47 questions” from the GP might instead decide “I know somebody who knows somebody” and just buy illegal bud instead.

“It’s so expensive to develop products, and then [there is] the delay of getting it to market.”

Any medicinal cannabis company needed enough cashflow to support costly admin and operational needs, he says.

“It’s just so difficult. Anything in the cannabis industry proper is highly regulated.”

The Cannabis Clinic supplies medical cannabis products to patients across the country.

On Auckland’s North Shore, Dr Waseem Alzaher set up the Cannabis Clinic, starting in 2018, soon after restrictions were lifted for cannabidiol and drug laws were changed to improve access to medicinal cannabis for terminally ill people.

Alzaher considers April 2020 his launch date. Five years on, some people still view his clinic on Auckland’s North Shore as a curiosity. A sign on the footpath says “Cannabis Clinic” and some people stop to take photos.

There are giggles and frivolous discussions in society about cannabis sometimes and a few people might recall days when they’d use cannabis leaves as a motif in teenage graffiti.

But for Alzaher, there is also still sometimes a more harmful stigma, extending to doctors who just don’t like cannabis or don’t see it as valuable.

“The stigma will take a long time to change. There is a subset of doctors, usually the younger ones ... generally speaking they’re more open to it.”

Six months after Alzaher’s launch, 51.17% of voters rejected the Cannabis Legalisation and Control Bill, which would have controlled cannabis cultivation, manufacture, use and sale.

“The referendum did several things. One, it brought the conversation to a public level, which was very helpful, especially because there are very restrictive advertising regulations currently,” Alzaher says.

But the referendum result meant a model with physical stores selling recreational cannabis was out of the question.

“The industry will be smaller because you can’t have dispensaries. The economic benefit in the industry would have been much larger overall.”

Alzaher says the current regulatory environment is at least in a better position to serve manufacturers and suppliers.

“That comes four years after a scheme was put in place, in retrospect, that ... was too stringent in regard to quality requirements.

“In Australia, you’ve got 133 medicinal cannabis products which are prescribable.”

Dr Waseem Alzaher says some suppliers are thriving but manufacturers and growers often face significant hurdles. Photo / Supplied

The minimum quality standard is used to verify medicinal cannabis products and any doctor can prescribe the 56 medicinal cannabis products currently meeting that standard. The products include oral liquids, sprays, products inhaled by vaporiser and others used as teas.

Alzaher is aware of the trouble some medicinal cannabis companies have encountered.

“Unfortunately I don’t think we’re out of the woods yet,” he says of the industry. “There’s definitely a set-up cost if you’re intending to be a grower and manufacturer.”

But he says for a clinic and distributor and pharmacy, the barriers to entry are not so profound and some suppliers are thriving.

Alzaher says there are probably cannabis users in New Zealand who still don’t know legal medicinal options are available.

Some people argue patients have to provide too much information to the likes of the Cannabis Clinic.

“We ask you to fill out a pre-appointment questionnaire. It does mean we might ask you to provide a healthcare summary,” Alzaher says.

“Once you’ve set up the process and you’re being prescribed and you’re a regular patient or client with us, it’s very straightforward.”

For his patients, anxiety and sleeping difficulties such as insomnia are the main conditions people present. The biggest patient age group is people aged 35 to 45.

“We also attract some weird and wonderful, quite rare medical conditions. Also a whole lot of people who use cannabis already and source it illegally,” the doctor says.

“You don’t need to have severe symptoms or be dying. We’re here for the everyday Kiwi.”

The New Zealand Drug Trends Survey in January found the proportion of medicinal cannabis users who had a prescription for cannabis increased from just 9% in 2022/2023 to 37% last year.

The survey found one-quarter of medicinal cannabis users said cannabis clinics and pharmacies were the “main source” of cannabis, rather than the illegal market.

Alzaher says navigating regulatory restrictions, having products registered, having a range of products, having access to prescribers and showing leadership are the key challenges for business in the sector.

“It’s all well and good to set up a business to have 10 or 20 products but unless they’ve got prescribers who are open and willing to prescribe the product, it doesn’t get into the hands of people. You’ve got a medical board that have been very vocal against cannabis ... That puts the whole industry in a very difficult position.”

Alzaher says the sector needs the Government and regulators to work with sector leaders to identify the bottlenecks that might be contributing to company failures.

And he says the system needs clarity on how medicinal cannabis education can proceed, so people can have discussions without risk of prosecution.

He also says clearer standards are needed around prescribing to stop clinicians from “operating in fear”.

Alzaher says the health system in New Zealand is broken and the way medical training is funded is broken too. Those failures, he says, are why there is slow uptake of a new medical option.

“We are seeing resistance, pulling back. That’s not going to change any time soon.”

Just last week, public hospital doctors took the highly unusual step of going on strike, citing surgery waiting lists, underfunding and dilapidated facilities.

Alzaher says change relies on leaders standing up and saying: “This is not acceptable, this is not good enough, we’re going to be the role model and show good and responsible healthcare can be delivered.”

Professor Michelle Glass from the University of Otago.

Professor Michelle Glass says there are good reasons some doctors are sceptical about medicinal cannabis and wary of prescribing it.

“It wouldn’t surprise me because we still haven’t got good clinical data in many cases that actually establishes that the cannabis-based medicines are effective, so there is going to be a reluctance to treat.

“There’s been a preponderance of new products approved and I have to admit that’s actually something that worries me,” says Glass, from the University of Otago’s Department of Pharmacology and Toxicology.

“I was quite shocked at how many new products have been approved in the past year.”

The wide number of available products confuses patients too, she says, and comparing New Zealand to Australia is not sensible, because she says Australia has far too many approved products.

“What we want is a few, good-quality, validated, properly-tested products, not hundreds of slightly different products.

“It just makes it more confusing for people to predict which product is going to be right for them.

“The other thing that worries me more is, ideally, the prescription of these would sit within the general practitioners and not with practitioners who are specially set up to prescribe cannabis, because it should be part of a holistic treatment plan.”

Glass did not agree with practitioners having associations with manufacturers.

“It raises major concerns about conflict about conflicts of interest.”

She says it’s reasonable, if you’re asking doctors to prescribe something, for that product to meet quality standards.

Glass says the rejected 2020 referendum model was quite a commercial model, where the onus would have been on manufacturers to increase the number of users to make more profits.

“Even some states in America have gone for a less commercially-driven model. For me, that was where the reluctance came from ... Some people that didn’t really want to go for the cannabis store model.

“We have to keep in mind that medicinal cannabis covers everything from pure CBD [cannabidiol] to high-THC preparations. It’s a really diverse range of active ingredients.

“I find the whole field really frustrating now. Because most countries have moved to a medicinal cannabis legalisation model ... It actually seems like we’re getting less good-quality clinical data.”

She says the scheme requires products to meet quality standards but not establish that the compounds actually work.

“You want the doctor to be making a decision on the basis of their clinical judgment, rather than being pressured by the patient on the basis of advertising.”

A customer stands by the counter inside a cannabis store in Bangkok, Thailand, which in 2022 became the first Asian country to legalise recreational cannabis. Photo / Valeria Mongelli, Hans Lucas via AFP

A decade ago, former MP Peter Dunne was one of the voices in Wellington willing to advocate for people who wanted to try medicinal cannabis.

“When I left office, we were trying to put together a scheme for making medicinal cannabis more available to patients who needed it. My impression is the regulatory regime that they established has been too cumbersome and too burdensome for a lot of companies,” he says.

“We were talking then about the best possible manufacturing standards.”

Dunne says when he was in Parliament, lawmakers felt there were a few available cannabis-derived products that were too expensive, so the Minister of Health at the time looked at medicines on a case-by-case basis.

“There was a feeling ... that somehow cannabis-based medicines would be the solution to a lot of medical problems.”

Dunne says there were perhaps not so many discussions about the cost of medication for patients and there was an assumption New Zealand had the right climatic and other conditions for becoming an effective cannabis-growing country. But domestic production turned out to be expensive.

“Partly it’s the fact that there are large-scale growing operations in other countries.”

And he says stigmas persisted, not just in the clinical sphere but among some investors.

Dunne was once on the board of Taupō-based medicinal cannabis company Setek Therapeutics, incorporated in 2018.

“To put it in general terms, it was difficult getting access to capital.”

He says momentum built a few years ago for making cannabis-based products more available, but as it became a more realistic opportunity, old prejudices resurfaced.

People had to be realistic about economic prospects in a business less glamorous than maybe anticipated, and understand that success in the sector involved hard work.

“It’s not just a case of saying we’ve got a crop, we’ve taken out some extracts, we’ve got a product.”

Start-ups needed to achieve the required approvals, get to market and then contend with competitors.

“Then you’ve got patients who want something not in three months or six months, but now.”

Alex Renton and his family helped foster a national debate about medicinal cannabis.

Dunne says three things are required to improve the sector’s prospects.

First, he says better education for prescribers would break down some prejudices, then steps should address the difficulty of getting products registered and to market. If a product was deemed safe and approved for an overseas market, why not approve it in New Zealand?

And third, cost pressures had to be addressed, especially around access to capital and tackling the prejudice of people not wanting to be regarded as funding cannabis.

In terms of Pharmac, Dunne wouldn’t favour the Government making special exemptions for medicinal cannabis.

As for Jacinta Newport, she says a key issue 10 years on involves educating GPs about medicinal cannabis.

“The GPs are also under the pump and they might not have the time to talk to patients. A lot of people are just doing telehealth and going through to the Cannabis Clinic.”

Newport says in hindsight, Sativex wasn’t a panacea but she didn’t regret fighting to get it for her daughter, after so many other medications failed to work.

“It may have alleviated some of her pain but it’s not exactly what she needed. We are finding out a little bit more about her health. And science evolves. We have genetic testing now.”

Newport says the process would be easier today than it was a decade ago.

“It’s across all ages and even the elderly are using cannabis for Parkinson’s and any sort of spasticity or pain-related symptoms.”

She says some doctors still needed more information and evidence of a medicine’s effectiveness before prescribing it but adds: “It’s another tool in the toolbox and it doesn’t have the side effects of some of the prescription medicines used.”

Newport says Sativex is now less expensive, as are many other medicinal cannabis products.

“It’s more accessible and it’s more acceptable for people to use medicinal cannabis.”

John Weekes is a senior business reporter. He was previously the online business editor and has covered some of New Zealand and Queensland’s most high-profile court cases and trials, as well as politics, breaking news and consumer affairs.