• In its state budget, the Victorian government pledged $5.2 million towards a drug-driving trial to study the impact cannabis has on driving ability. The trial and evaluation was to take six-to-eight weeks followed by data-analysis with research and findings expected by end of CY2024.
  
  
• However, in late May, it was reported that the closed-track trial would be abandoned until the middle of 2026. The delay raises concerns there will be no resolution in the current parliament given state elections will be held in 2026.
  
  
• Meanwhile, the Legalise Cannabis Party is seeking an interim legal defence allowing Victorian courts to consider the level of impairment of medical cannabis patients who test positive for THC while driving, with the Labour party promising to review and table a report in the Legislative Council by 18 October 2024 https://www.cannabiz.com.au/hope-for-patients-as-legal-defence-edges-closer-for-unimpaired-drivers-who-test-positive-for-thc/
  
  
• Further information on the trial can be found here:
  https://www.cannabiz.com.au/cannabis-patients-abandoned-as-driving-trial-delayed-until-2026/

• While highly supportive of this world-leading trial, LGP is concerned the delay will impact reform not only in Victoria but potentially in other states who are watching this trial with interest. Fortunately, if passed, the proposed legal defence in Victoria will give much greater confidence to unimpaired medicinal cannabis patients who test positive for THC in the interim.
  

Potential down-scheduling of cannabis to Schedule III

• The U.S. Department of Justice (DOJ) has proposed reclassifying cannabis from a Schedule I to a Schedule III controlled substance under the Controlled Substances Act.
  
  
• This proposal, submitted to the Federal Register on 16 May, 2024, marks a significant shift in federal drug policy by acknowledging the accepted medical use of cannabis within the United States. A public comment period, which closed on 22 July 2024, received nearly 43,000 comments mostly in support of rescheduling, and will now be followed by an administrative hearing.
  
  
• The proposed reclassification would place cannabis in the same category as substances like acetaminophen with codeine and ketamine, potentially easing federal restrictions and facilitating more research, medical use, and economic opportunities within the industry
  
  
• Schedule III drugs are still controlled substances, however 38 states and Washington, DC, have legalised medical cannabis, and the White House has flagged its intention to review the appropriateness of cannabis federal classification

• Following the initial DEA proposal in late 2023 to down-schedule cannabis, US cannabis valuations rose ~20% confirming a pattern observed following other rescheduling headlines. For example, US companies rose +34% on 6 October 2022 when President Biden directed federal agencies to reconsider scheduling cannabis; and those same stocks also rose +21% on 29 August 2023 when the Department of Health & Human Services recommended the DEA move cannabis to Schedule III.
  
  
• Generally, the Australian cannabis stock index has followed the US cannabis stock index for the last five years, with companies such as LGP well positioned to capture these tailwinds

• On 18 January 2024, the Israeli Ministry of Economy and Industry initiated an anti-dumping investigation into the importation of cannabis flower from Canada. The investigation found that Canadian exporters were selling cannabis at prices significantly lower than their production costs, causing substantial harm to the Israeli domestic cannabis industry.
  
  
• The inquiry revealed high dumping margins for several Canadian companies, including Decibel (63%), Organigram Holdings (112%), and Pure Sunfarms, a subsidiary of Village Farms International (74%). Additionally, other Canadian producers were found to have even higher dumping margins of up to 369%​ (See Cannabis Law Report)​​.
  
  
• These findings indicated that the low prices of imported cannabis flooded the Israeli market, driving down local prices and causing financial distress to Israeli producers.
  
  
• To counter this, the Ministry proposed anti-dumping measures, pending further review and stakeholder comments. The proposed measures aim to protect the local industry by ensuring fair competition and stabilising the market.

• As one of the fastest-growing cannabis markets globally, Australia attracts significant attention from Canadian suppliers, evidenced by the rapid increase in new product offerings each month and significant rise in pricing competition. Current industry modelling suggests that over 80% of medicinal cannabis supplied in Australia and 91% of raw materials are imported, predominantly from Canada.
  
  
• Unlike Canada, which has market protections, Australia lacks economic barriers to safeguard its local cannabis industry. The Therapeutic Goods Administration's (TGA) decision in July 2023 to reinterpret GMP manufacturing standards for cannabis flower products has further exacerbated the situation by allowing non-GMP cannabis products from countries without mutual GMP recognition standards, including Canada, to enter the Australian market. The Israeli government's recent imposition of anti-dumping tariffs on Canadian imports is also likely to spur the redirection of Canadian products to Australia.
  
  
• These factors, together with the market-distorting excise duty on domestic Canadian production and significant dumping margins found in Israel, strongly suggest similar dumping practices may also occurring in Australia.

• The German Federal Joint Committee (G-BA) announced that certain qualified doctors will no longer need prior approval from statutory health insurance providers to prescribe medical cannabis for serious illnesses.
  
  
• This change affects doctors in 16 specialties, such as general medicine, anaesthesiology, geriatrics, tumour therapy, palliative medicine, sleep medicine, and pain therapy.
  
  
• This decision aims to streamline the reimbursement process and will take effect after approval by the Federal Ministry of Health and publication in the Federal Gazette.
  

• The decision to exempt certain specialist doctors from requiring prior approval reflects the trend towards the progressive relaxation of barriers to access as highlighted in our recent investor presentation.