In a landmark achievement for Aotearoa New Zealand, Cannasouth has obtained product verification for its EU GMP quality dried medicinal cannabis flower product. The New Zealand Medicinal Cannabis Agency (the Agency) verification marks a significant milestone for the country’s medicinal cannabis industry and unlocks new local and export opportunities for Cannasouth, as the GMP-compliant flower is now eligible for New Zealand and international markets. EU GMP is the world’s most stringent standard that a medicines manufacturer must meet in their production processes.
This verification provides the market with the first New Zealand dried cannabis flower products that are 100% grown, processed, and packaged locally, for use by local patients. It sets the benchmark in a market known for its rigorous regulatory landscape and its current reliance on imported products (including products which are exported for processing and reimported).
This follows last weeks’ announcement that Cannasouth’s two CBD Oral Solutions products were verified by the Agency. CBD oral solutions and dried cannabis flower constitute large segments in the New Zealand and Australian markets. These Agency verifications position Cannasouth to capture a notable market share in both segments.
Market Opportunity and Industry Dynamics
New Zealand’s cannabis industry, encompassing both legal and illegal markets, is estimated to be worth in excess of $1.65 billion annually. Notably, around 40% of cannabis users report using it for therapeutic reasons, translating to a potential market value of over $600 million annually. However, only a small fraction of this market, about 5%, is currently being accessed through legal channels. This excludes patients new to medical cannabis, who constitute a large number of new prescriptions and further enlarge the market potential.
Current market insights reveal more than 100kg of dried flower is being dispensed each month in New Zealand -some suppliers report monthly growth rates exceeding 20%. The market is on track to double in size in the next 12 months, indicating a flourishing sector with a long trajectory before reaching a plateau. Cannasouth CEO Mark Lucas says “While the kilogram quantity doesn’t seem large, it’s important to remember this is pharmaceutical quality flower and the current price to patients for dried flower often exceeds $15,000 per kg, underscoring the substantial opportunity at hand. The month-on-month sales growth being reported is significant.”
Cannasouth successfully merged with Eqalis Group on June 1, 2023, bolstering Cannasouth’s operational capacity, creating the largest NZX listed medicinal cannabis company, and delivering end-to-end GMP manufacturing capabilities.
Lucas says “In countries like New Zealand, where medical cannabis is now legal, the price difference between the current legal market and the potential market size is enormous. Our goal is to bridge this gap by offering high-quality, competitively priced products, thereby shifting the paradigm from illegal to legal consumption. This is a win-win situation, providing better patient access to safe medicinal cannabis while creating a robust, legitimate market that drives economic value and shareholder returns.”
Pipeline of Products and Technologies
Looking ahead, Cannasouth is leveraging its strengthened position, especially as it rolls out its pipeline of new products to expand market opportunities in Australasia, drive down costs for patients, and deliver value to its shareholders and the community at large. The company’s global ambitions are underpinned by disruptive processing and drug delivery technologies, which will provide the next wave of revenue, building on near-term sales.