The Cannabis Paradox: How Australia's Medical Market Boom Became a Domestic Industry Crisis
The industry's 38 tonnes of unsold inventory isn't just an economic problem. It's karma.
Australia's cannabis import quota has been slashed from 101 to 88.8 tonnes for 2025, the first major reduction since medical cannabis was legalised nine years ago. It's a stunning reversal for an industry that, by every metric, should be thriving.
Patient demand is exploding. Prescriptions have skyrocketed. The market is forecast to reach US$402.1 million in 2025. Yet behind the growth headlines lies an uncomfortable truth: Australia's domestic cannabis industry is collapsing under the weight of its own success, or rather, under the weight of everyone else's surplus.
The Import Flood That Changed Everything
The numbers tell a brutal story. Cannabis imports into Australia surged from just 7,306 kilograms in 2021 to 77,406 kilograms in 2024, a 959% increase in just three years. To put that in perspective, Australia imported more medical cannabis in 2024 than Germany, Europe's largest cannabis market.
Meanwhile, domestic production jumped 55% from 26,593 kilograms in 2023 to 41,328 kilograms in 2024. But here's the catch: by the end of 2024, Australian producers were sitting on 38,206 kilograms of unsold domestically grown cannabis inventory, nearly double the inventory from the year before. They're growing more but selling less of their own product.
The problem isn't demand. Australians spent approximately $402 million on medicinal cannabis in the first six months of 2024 alone, compared to an estimated $235 million for all of 2022. The problem is that patients and prescribers are overwhelmingly choosing imported products, particularly from Canada.
The Canadian Dumping Debate
"I have no issue with imports coming here; the issue is that because they have surplus product, they're dumping it here, which makes things difficult for local cultivators,"
Nan-Maree Schoerie, managing director of ECS Botanics, told the Sydney Morning Herald in October 2024. Her company is one of dozens of Australian producers struggling to compete.
In 2024, Australia imported 62,111 kilograms of cannabis from Canada, representing 80% of the country's total cannabis imports. Canada's cannabis industry faces massive oversupply in its domestic market. With nowhere else to sell ageing inventory, Canadian producers have turned to export markets like Australia, where they can offload large quantities at prices Australian growers simply cannot match.
Schoerie noted that while Australian growers could get around AU$6 per gram wholesale in 2023, that dropped to around $4-4.50 in 2024, a direct consequence of imports primarily from Canada. The Canadian advantage isn't just about surplus, it's about scale, genetic diversity, and a decade-long head start in commercial cultivation techniques.
Australian producers face a cruel catch-22: the domestic industry needs imports to meet patient demand and provide product variety, but the flood of cheap imports prevents the domestic industry from gaining the foothold it needs to become competitive. Chris Nasr at Nectar Brands noted that top-tier Canadian cannabis can be landed in Australia for a dollar less per gram than comparable Australian quality, with far more choice available.
The Regulatory Burden Nobody Talks About
If import competition were the only problem, it would be manageable. But Australian cannabis producers face regulatory costs that make competing nearly impossible.
Establishing a compliant cannabis cultivation facility in Australia takes between two and four years, with annual costs of around $50,000 just to maintain a licence, and inspections alone ranging from $4,800 to $12,800. In contrast, there are no fees required to import medicinal cannabis into Australia.
Australian growers aren't just competing with cheaper Canadian product, they're competing while operating under some of the world's strictest and most expensive regulatory frameworks. Cade Turland from Hale Farm noted that Canada had a sort of incubation period in which it could develop without outside pressure from imports, while Australian producers haven't had time to develop.
The Guild's Warning
The newly formed Australian Cannabis Cultivators Guild, representing around 80% of the country's licensed cannabis producers, recently sent a letter to federal health minister Mark Butler warning that without government assistance, the industry faces dire times in the near future.
The Guild says growers can't compete with products coming into the legal market from South Africa, Thailand, Colombia, Uruguay, Portugal, and Canada, not just because those countries can produce at lower costs, but because the regulatory burden in Australia tips the scales beyond recovery.
The letter warned of "catastrophic failures across local cultivators" unless imports are restricted, calling for a domestic-first policy aligned with International Narcotics Control Board rules.
Why The Quota Cut Matters
The reduction in Australia's import quota from 101 to 88.8 tonnes signals a policy shift, but it's unclear whether it represents genuine support for domestic producers or simply administrative housekeeping. The Office of Drug Control confirmed that delays were linked to over-forecasting by companies and unused permits tying up capacity.
In other words, companies were requesting more import permits than they actually needed, creating artificial scarcity. The quota reduction may simply reflect more accurate demand forecasting rather than a deliberate effort to protect domestic growers.
For Australian producers hoping this represents protectionist support, the reality is likely disappointing. The fundamental economics haven't changed. Canadian producers can still deliver triple-A and quad-A quality flower at prices Australian growers struggle to match, even after paying for international shipping.
What Went Wrong?
Nine years after legalisation, Australia's medical cannabis sector is experiencing remarkable growth, but almost entirely on the backs of foreign producers. Several factors converged to create this crisis:
1. Late Market Entry: By the time Australian producers scaled up, international suppliers had already established dominant market positions with proven products and trusted brands.
2. Regulatory Asymmetry: Australian producers face rigorous and expensive licensing standards, while international suppliers enter the local market with far fewer hurdles.
3. Import Over-Reliance: In 2023, 61% of medicinal cannabis sold in Australia was imported. This early dependence created prescriber and patient preference patterns that now favour foreign products.
4. Lack of Genetic Diversity: Canada offers extensive genetic variability and cultivars grown at scale, making high-quality triple-A and quad-A product extremely affordable to import. Australian producers are still developing competitive genetics.
5. Global Oversupply: Canadian producers facing domestic oversupply are using the export market to offload lower-quality products from stockpiling, distorting competition.
6. Lack of Reciprocity: Countries like Canada can export medicinal cannabis to Australia but do not allow Australian imports in return.
7. Industry Opposition to Patient Home Grow: By failing to support patient cultivation rights, the industry alienated potential political allies and reinforced the perception that commercial growers prioritise profits over access. This destroyed the goodwill needed when asking for government intervention against imports.
The Self-Inflicted Wound: What The Industry Didn't Say
Perhaps the most damaging factor in the industry's collapse has been its own political strategy, or more precisely, what it chose not to advocate for. The silence is damning when you examine what the industry actually submitted to government inquiries.
When Medicinal Cannabis Industry Australia (MCIA), the peak industry body representing licensed producers, made its submission to the 2020 House of Representatives inquiry into drug approval processes, it advocated passionately for its own interests: fast-tracked approvals for products already registered overseas, reduced regulatory burdens for research, easier access to novel delivery methods like vaporisers and transdermal patches, and government funding for industry R&D.
What MCIA didn't mention even once in its entire submission: patient home cultivation. Not a single word about the affordability crisis driving patients to the black market. Not one sentence supporting patient rights to grow their own medicine.
This wasn't an oversight.
It was a strategic choice that would prove catastrophic.
The 2020 Senate inquiry into barriers to medicinal cannabis access heard testimony about patients paying up to $100,000 per year for treatment, costs that witnesses described as "well beyond the reach of almost all patients." The inquiry received evidence that over 90% of medical cannabis users were obtaining their product from recreational dealers, illicit suppliers, friends, family, or self-cultivation precisely because legal commercial products were prohibitively expensive.
The Senate inquiry's final report recommended amnesty for possession and cultivation of cannabis for genuine self-medication purposes. The Australian Government explicitly rejected this recommendation, stating:
"The Government does not support the provisions of amnesties for possession and/or cultivation of cannabis through illegal sources, as there are straightforward legal means by which to obtain medicinal cannabis products on the prescription of medical doctor."
The industry's response?
Silence. No coordinated push for home grow rights. No public campaigns supporting patient cultivation. No submissions arguing that home grow would complement, not compete with, commercial products for those who could afford them.
You don't need to find evidence of the industry actively lobbying against home cultivation, the absence speaks louder than any position paper ever could. When patient advocates and research organisations were calling for home grow rights, when the Senate was recommending amnesty, the industry said nothing. Their silence was their position.
This strategic failure poisoned the well with the very politicians and patient advocates the industry now desperately needs. When the Australian Cannabis Cultivators Guild writes to the health minister warning of industry collapse and begging for import restrictions, what credibility do they have? They're asking taxpayers to protect businesses that never supported patient access when it mattered.
Compare this to Canada, where constitutional challenges established patient home cultivation rights years before commercial legalisation. Canadian patients can grow unlimited plants based on their prescription. When Canada's commercial industry developed, it had public support because patients had options.
The industry built goodwill by existing alongside, not against, patient rights.
In Australia, the industry's calculation was transparent: keep patients captive, maximise margins, let government handle the political heat. Now that calculation has backfired spectacularly. Politicians look at an industry begging for protection and see businesses that prioritised profits over patient access. Patient advocates see an industry that was silent when home grow amnesty could have helped millions of Australians afford their medicine.
The message is inescapable: This isn't an industry worth protecting. These are companies that want monopoly pricing power without market competition, not from imports, not from patients growing their own. Why should government intervene to save businesses that never fought for the patients they claim to serve?
The industry's 38 tonnes of unsold inventory isn't just an economic problem. It's karma.
The Path Forward
Australia now faces a choice: accept that its medical cannabis market will be permanently import-dependent, or implement policies that give domestic producers a fighting chance.
Some industry voices are calling for import taxes similar to those proposed in Israel, where the government threatened tariffs up to 165% on Canadian cannabis. Schoerie has stated that most growers don't want tariffs, but believes some form of tariff for low-cost producing countries may be the only way to level the playing field.
Others argue for a domestic-first policy where local growers supply as much of the government-approved cannabis quota as possible, with importers only filling remaining shortfalls.
The irony is bitter. Australia positioned itself as a potential global supplier of premium medicinal cannabis, with climate advantages, strong agricultural expertise, and quality control reputations. Instead, it's become a dumping ground for surplus product from more established markets.
The 12.2-tonne reduction in import quota may be symbolic, but symbols matter little to producers sitting on 38 tonnes of unsold inventory while prescribers continue ordering from overseas. Without structural changes to level the playing field, Australia's domestic cannabis industry risks becoming a cautionary tale: what happens when you legalise a market but fail to protect the local industry you hoped to build.
The sector hasn't just stalled, it's discovered that explosive market growth and domestic industry collapse can happen simultaneously. That's the paradox nobody predicted when medical cannabis became legal nine years ago.
References
- Australian Government Office of Drug Control - Medicinal cannabis data and statistics
- Cannabis import and production statistics (2021-2024)
- https://www.odc.gov.au/medicinal-cannabis-statistics
- Sydney Morning Herald - "Australian cannabis growers call for tariffs on international imports" (October 2024)
- Nan-Maree Schoerie (ECS Botanics) quotes on dumping and pricing
- Interview with Chris Nasr (Nectar Brands) and Cade Turland (Hale Farm)
- https://www.smh.com.au/politics/federal/australian-cannabis-growers-call-for-tariffs-on-international-imports-20241017-p5kirj.html
- Statista - Australia Medical Cannabis Market Report 2025
- Market value projections (US$402.10m in 2025)
- Growth forecasts and market analysis
- https://www.statista.com/outlook/hmo/pharmaceuticals/cannabis/medical-cannabis/australia
- FreshLeaf Analytics - Australian Medicinal Cannabis Market Reports
- Q2 2024 spending data ($402 million in first six months)
- 2022 annual spending comparisons
- Patient and prescription statistics
- https://freshleafanalytics.com.au/
- Senate Community Affairs References Committee - "Current barriers to patient access to medicinal cannabis in Australia" (March 2020)
- Recommendation 12: Amnesty for possession/cultivation for self-medication
- Testimony on patient costs and access barriers
- Evidence of 90%+ patients using illicit sources
- https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Medicinalcannabis/Report
- Australian Government Response - Response to Senate Inquiry on Medicinal Cannabis (October 2020)
- Rejection of amnesty recommendation
- Government position on legal access pathways
- https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Medicinalcannabis/Government_Response
- Medicinal Cannabis Industry Australia (MCIA) - Submission to House of Representatives Inquiry into Approval Processes (October 2020)
- Industry priorities and advocacy positions
- Notable absence of patient home cultivation support
- https://www.aph.gov.au/DocumentStore.ashx?id=b80f99c0-4df7-4b74-b2f7-a078ac94fa66&subId=693432
- Cannabis Health News - "Australian cannabis industry faces 'dire times' without government help" (October 2024)
- Australian Cannabis Cultivators Guild letter to Health Minister
- Industry warnings about catastrophic failures
- Regulatory cost comparisons ($50,000 annual licensing, $4,800-$12,800 inspections)
- https://cannabishealthnews.co.uk/2024/10/22/australian-cannabis-cultivators-in-dire-straits-without-government-help/
- The Guardian Australia - Coverage of Israel's proposed cannabis import tariffs
- 165% tariff proposals on Canadian cannabis
- International market dynamics and protectionist measures
- https://www.theguardian.com/
- Australian Institute of Health and Welfare (AIHW) - National Drug Strategy Household Survey 2019
- Cannabis use patterns and self-medication data
- Patient access and acquisition methods
- Therapeutic Goods Administration (TGA) - Special Access Scheme and Authorised Prescriber data
- Approved conditions for medicinal cannabis (130+ conditions as of December 2019)
- Regulatory pathways and requirements
Article drafted October 28, 2025, based on publicly available data, government submissions, industry statements, and market research reports.
