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Green Rush

The Challenge

There are millions being made in the Australian marijuana business but these entrepreneurs and investors aren't risking jail to make their fortunes. They're betting big on the home grown medicinal marijuana industry and riding the "pot stock" boom.

Entrepreneurs are talking up the potential of a whole range of possible products, from insomnia cures to chronic pain treatments, and the share market is loving it.

But with patients struggling to access cannabis products, Four Corners investigates who is making money out of the marijuana boom.

Tonight, Four Corners charted the rise of this industry which has grown from nowhere in just a few years.

The program gained exclusive access to the harvesting of cannabis in the first legal commercial growing facility in Australia, under heavy security, at a secret location.

Some in the industry are confidently predicting that the "green rush" has a long way to go yet and are positioning themselves for any further changes to the law.

Asked if he had a view about legalising recreational cannabis use, federal Health Minister Greg Hunt told Four Corners: "It's not something that the Commonwealth is proposing, but it is a matter for individual states, under the constitution."

However, last week Mr Hunt denounced a policy to legalise recreational marijuana announced by federal Greens leader Richard Di Natale

Senator Di Natale has proposed regulating the sale and use of marijuana by adults in Australia, which he said would raise hundreds of millions of tax dollars.

Mr Hunt slammed the policy as "open slather for a highly addictive and dangerous drug".

Last month a parliamentary committee recommended that the Victorian Government establish an advisory council to consider a range of drug policy issues.

It said the council should "investigate international developments in the regulated supply of cannabis for adult use, and advise the Victorian Government on policy outcomes in areas such as prevalence rates, public safety, and reducing the scale and scope of the illicit drug market".

The 2016 National Drug Strategy Household Survey found cannabis was the most commonly used illegal drug, used by 10.4 per cent of people in the previous 12 months.

It found that 35 per cent of Australians support the legalisation of cannabis, up from 26 per cent in 2013.

"Community tolerance has increased for cannabis use, with higher proportions of people supporting legalisation and a lower proportion supporting penalties for sale and supply," the report by the Australian Institute of Health and Welfare said.

One view is that once a country allows medicinal cannabis, it is inevitable that legalisation of recreational use will follow. Do you agree?

  • Are you optimistic about the legalisation of recreational cannabis in Australia or do you consider it a step toward open slather for a highly addictive and dangerous drug?
  • How can policy be designed for the challenge and opportunity?


Each Monday MindHive Number One ranked consulting problem-solver, statistician Peter Grimbeek, leads a challenge on Australia's Four Corners’s investigation. We take seriously the often quoted “if you’d like to continue the conversation head to our Twitter or Facebook site”. What’s missing with that invite is the ability to collectively co-create various potential solutions and ideas to the challenges the production exposes. We’re missing the power of our collective intelligence on the issue at hand. The outcome of the challenge will be faciloitated by Peter, creating a 600-800 idea published on Mindhive, submitted to ABC and other mainstream media. Mindhive also allows for impact recognition by ORCID, uniquely identifying scientific and other academic authors and contributors ensuring you get credit for your work.


Challenge Opened: 12:06 PM, Monday 23 April 2018
Challenge Closes: 10:00 AM, Friday 29 June 2018
Time to go: Closed


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The context

Tonight we take you inside Australia’s booming medicinal cannabis industry, where fortunes are being made, amid promises of revolutionary new products to treat ailments ranging from cancer to insomnia.


The hype around medicinal cannabis is being compared to the dot com boom and bust of the 90s; and – as investors pour hundreds of millions of dollars  into so-called ‘pot stocks’ - there are warnings that this time around, there are similar risks.


Despite the naysayers, the new cannabis industry has a vocal backer in the federal government, which in January announced its support for Australia to become “the world’s biggest exporter of medicinal cannabis”.


The rapidly growing  industry has also fuelled a new push to have cannabis legalised in Australia for recreational use, a proposal floated by the Greens just last week.


As tonight’s investigation reveals, local and international players are already positioning themselves for this possibility – and the promise of even bigger profits that could follow.


Sean Nicholls reports.


ROSS SMITH, VENTURE CAPITALIST: I got thrown out of  – I hope you’re recording this – no less than five investment banking offices. They thought I was insane – get out, get out!


SEAN NICHOLLS: Ross Smith is not your average investor.


ROSS SMITH: A guy like me, I’m like the first wave. The commandos - like we did in Australia – we kick the door down.


SEAN NICHOLLS: It’s a Tuesday morning and Smith’s on his way to the home he calls his mountain lair, high in the hills of New Zealand’s north island.


ROSS SMITH:  Am I making money? Yes of course! Who works for nothing?


SEAN NICHOLLS: A venture capitalist for two decades, Smith has taken a wild ride through the early days of Australia’s legal marijuana business.


ROSS SMITH: I was heavily involved in the dot com boom. I never thought I’d see another boom like it but this green rush or gold rush or whatever you want to call it is simply remarkable. It’s going to be absolutely huge.


SEAN NICHOLLS: Smith’s home is one of ten New Zealand properties he says he’s bought with the millions he’s made from marijuana investments. With his beloved $300,000 Bentley in the garage, he’s living the dream - but it wasn’t always this way.


ROSS SMITH: Here's the funny part back in 1989, uh, I was, uh, uh, arrested and charged for cultivating cannabis with the intent to sale and supply, along with possession of cannabis with intent to sale and supply. At the time, 11 kilos in my house was a little bit, uh, shall we say, above personal use but, uh, I think I'm the only guy in world history that, uh, was fined.  So having a cannabis conviction as a cannabis mogul, it’s simply an occupational hazard. It’s nothing to worry about.


SEAN NICHOLLS: Smith floated the first cannabis company on the Australian stock exchange in 2015. But he quit its board just two weeks later after being accused of making a death threat on Facebook to a critic of the deal. Smith insists he was hacked.


ROSS SMITH: All- all very colourful, uh, you know? That sort of thing is three years ago. Those sorts of guys, um, they're inherently jealous, and, uh, it's about as worrisome as a cloudy day, mate, seriously.


Sean Nicholls: No truth to it?


Ross: No, none whatsoever.


SEAN NICHOLLS: Today, Smith’s hatching his latest medicinal cannabis deal. He wants to export the plant from Queensland into New Zealand after the Kiwis legalise medicinal cannabis later this year.


SEAN NICHOLLS: Smith is a medicinal cannabis evangelist, spruiking it as a new wonder drug. Since Smith’s first venture, the value of listed Australian cannabis companies has soared to one and a half billion dollars.


ROSS SMITH: Mate eventually all pharmacies will stock it.


SEAN NICHOLLS:  Smith is not the only one attracted to the scent of big money.


ROSS SMITH: There's dodgy companies everywhere. Yeah. I mean I often say, uh, in the speck end of the market, I mean, there are wolves in the forest. If you can't handle the fact that there's wolves in the forest, don't go to the forest. It's real simple. Stick to, uh, stick to BHP, Rio Tinto, ANZ, National Australia Bank.


SEAN NICHOLLS:  Are you one of those wolves?


ROSS SMITH: I am called The Wolf but, uh, I am in the market for all the right reasons.


SEAN NICHOLLS:  Back in Australia, the medicinal cannabis industry is starting from scratch – working hard to build a clean corporate image. In an outer Melbourne suburb, we’re visiting Australia’s first licensed medicinal cannabis growing rooms. It’s a high security environment, with no external signs to indicate what’s going on inside. We can’t identify these workers in case they’re targeted by criminals. The federal government’s Office of Drug Control bans anyone with connections to illegal marijuana from working here.


PETER CROCK, CANN GROUP CEO: Our cultivators and our cultivation team can’t have had any experience with cannabis before that’s part of the screening process on the way through.


SEAN NICHOLLS:  So you haven’t been able to go out and say, “if you’ve been growing cannabis illegally and you have a level of expertise, please come and work with us?”


PETER CROCK, CANN GROUP CEO: I’ve been approached by plenty who’ve said ‘I’m really good at growing this, how do I get involved in the legal side of the industry?’ Step one is don’t apply. It won’t cut it with the Office of Drug Control.


SEAN NICHOLLS: The number of plants growing here, and their varieties, are secrets closely guarded by the listed company that owns them, Cann Group.


PETER CROCK: So Sean come and have a look through here. So this is the start of our process we’ve got the mother plants –our grower is working on propagation Stage so we’re taking cuttings from mother plants and going into propagation tubes.


SEAN NICHOLLS: Cann Group’s CEO Peter Crock spent over 20 years in agribusiness developing farm products: now he’s growing high-grade marijuana. This is one of three growing sites owned by Cann Group. It’s hoping to harvest up to six crops a year.


PETER CROCK, CANN GROUP: In terms of agriculture scale is everything. It doesn’t matter if it’s growing wheat or what it is. We know that and we need to be able to set up at scale and play in that space.


SEAN NICHOLLS: Cann Group is growing cannabis for a surprising customer -  the Victorian government. The plants being harvested here will become medicine in a government trial for children with severe epilepsy. Last year Cann Group secured the first Australian cannabis licences, boosting its market value to $400 million.


PETER CROCK: I’ve been approached by plenty who’ve said ‘I’m really good at growing this, how do I get involved in the legal side of the industry?’ Step one is don’t apply. It won’t cut it with the Office of Drug Control.’


SEAN NICHOLLS:  The number of plants growing here, and their varieties, are secrets closely guarded by the listed company that owns them, Cann Group.


PETER CROCK: So Sean come and have a look through here. So this is the start of our process we’ve got the mother plants. Our grower is working on propagation Stage so we’re taking cuttings from mother plants and going into propagation tubes.


SEAN NICHOLLS: Cann Group’s CEO Peter Crock spent over 20 years in agribusiness developing farm products; now he’s growing high-grade marijuana.


SEAN NICHOLLS: This is one of three growing sites owned by Cann Group. It’s hoping to harvest up to six crops a year. So Sean come and have a look through here. So this is the start of our process we’ve got the mother plants – our grower is working on propagation stage so we’re taking cuttings from mother plants and going into propagation tubes.


SEAN NICHOLLS: Cann Group’s CEO Peter Crock spent over 20 years in agribusiness developing farm products: now he’s growing high-grade marijuana.


MATTHIJS SMITH, CANACCORD GENUITY ANALYST: If you look at a company such as The Cann Group, which listed in May last year at 30 cents a share. It's now trading at $3. So, from a capital gains perspective, people who bought those shares at 30 cents have done very, very well, assuming they've sold it.


SEAN NICHOLLS: Unlike most so called ‘pot stocks’, Cann Group has attracted interest from the big end of town. Its’ backers include Ellerston Capital, part owned by billionaire James Packer, with a shareholding worth $6 million. There’s also global investment bank Canacord Genuity, which helped float Cann Group and holds a $6 million stake.


MATTHIJS SMITH, CANACCORD GENUITY ANALYST: What's getting investors excited is this the ability to be on the cusp of a clearly emerging industry where there will be a whole bunch of new economic activity and obviously great investment opportunities as a result of that.


SEAN NICHOLLS: But it’s still some way from making a profit.


SEAN NICHOLLS: Could you hazard a guess at when you expect to turn a profit?


Peter Crock: No I won’t hazard a guess at that. I would say we’re just focused on making sure we can get our crops through this small facility.


MATTHIJS SMITH, CANACCORD GENUITY ANALYST: if you do have a company that is consuming cash that it's not absolutely clear what the demand, when the demand will be and what the revenue, when that revenue will kick in, that is a speculative investment and people are happy to put that in with the understanding that it is risky, but if the risk plays out they could make a lot of money.


SEAN NICHOLLS: On Australia’s west coast, researchers are about to explore one of the myriad possible medical uses for cannabis unlocked by the end of prohibition. Funding the research is Harry Karelis, who’s got a science degree and 25 years experience in the finance industry.


HARRY KARELIS, ZELDA THERAPEUTICS: I could see it through the lense of not only a medical perspective but also from a capital and investment markets perspective so when the two meet, when you see a brand new industry opening up globally and you see that it’s inevitable it’s coming to Australia and there’s no reason it shouldn’t come to Australia, then that presents an investment opportunity.


SEAN NICHOLLS: Karelis has spent 18 months convincing state and federal health authorities to give the green light to a pioneering clinical trial. In a world first, researchers at the University of Western Australia are about to test whether a cannabis medicine can treat insomnia.


HARRY KARELIS, ZELDA: We see insomnia as a market or a condition that we have a high degree of confidence that will respond to cannabis therapy. It's a big market in its own right. I think 1 in 6 people suffer from some kind of sleep disorder, and insomnia is one part of that- that fraction. The anecdotal evidence is certainly out there, that people feel as though they relax and can go to sleep using cannabis.


DR JENNIFER WALSH: So this one measures air flow through your nose and mouth.


SEAN NICHOLLS: Twenty four volunteers will be given cannabis for two weeks and a placebo for another fortnight.


SEAN NICHOLLS: Their sleep will be measured both in the lab and at home. When advertising for participants, researchers didn’t mention they would be taking cannabis … only revealing it after they volunteered.


DR JENNIFER WALSH: None of them have said, "Oh, no, I don't want to be involved." They might've been a bit surprised, um, but they're not against using medicinal cannabis to treat their insomnia.


SEAN NICHOLLS: Was that all surprising to you?


DR JENNIFER WALSH: Yeah, I thought that there might be a few people that would say, "Oh, no. Oh, no. I can't- I can't use that. I'm not interested.” But we haven't experienced that.


DR WALSH: Debbie, I’m going to get you to lie there with your eyes closed.


SEAN NICHOLLS: One problem with cannabis being illegal for so long is the lack of hard data about its medicinal effects. As more countries legalise its use, clinical trials like this are starting to become more common. Zelda is also running a trial in Chile for autism and in Spain it’s researching treatment for breast cancer.


HARRY KARELIS, ZELDA: It's going to be a multi-billion dollar market in total, but it's going to be built up of lots of players selling an insomnia product in Germany and an autism product in Canada, and you add that up, it's a multi-billion dollar market for sure.


SEAN NICHOLLS: Karelis is a founder of another West Australian cannabis company. AusCann rivals Cann Group as Australia’s biggest cannabis company, also with a market value of about $400 million. It was founded by a politician - former federal Liberal MP and avocado grower Mal Washer.  Washer had a job convincing his family to join him - including his microbiologist daughter Elaine Darby.


DR MAL WASHER, AUSCANN CHAIRMAN: So I got them involved and said, "How about this?", right. Now, they thought I was fruit loop, right. I mean, you know. I went into federal politics. I won't say what they said about that. It was not favourable and can't be repeated on camera. They said the same reaction, "What, has he hit his head or something", you know. Ring up mum said, you know-


ELAINE DARBY, AUSCANN MANAGING DIRECTOR: Well, we were all a little sceptical. I don't know.


DR MAL WASHER: What the hell is happening now? He's not taking this stuff or anything strange?, you know.


ELAINE DARBY: Most Australians haven't really...if they haven't had anything to do with cannabis at all, that if you're suddenly broached to say, "Hey, the family is going into the, uh, cannabis business.”, you know's a little surprising, to- to be quite honest.


SEAN NICHOLLS: AusCann plans to grow cannabis and produce a medicine targeting chronic pain. But when it started out there was a problem: none of their team had any experience growing marijuana.


ELAINE DARBY, AusCann managing director: You've got in an industry where, you know, you have the, the doctors and the scientists and our pharmaceutical team. We’re here, we know how to make pharmaceuticals, we still need cannabis genetics. And the problem is the only place you find cannabis genetics to kick off, unfortunately, is some real colourful characters. So it's one of those really bizarre, uh, industries where you're getting this interface with these individuals.


SEAN NICHOLLS: The company hired a cult figure in the global marijuana underground ... a man once dubbed the “King of Cannabis” … Australian Nevil Schoenmakers.


HARRY KARELIS, AUSCANN, CO- FOUNDER: Nevil is a fascinating person. Yes, King of Cannabis is his kind of name in- in the industry. He had expertise. He had access to genetics.


ELAINE DARBY: There is, um, particular, uh, kind of strains that are named after him still today. You know, there's Nevil's Haze, and ... all these various weird and wonderfuls.


SEAN NICHOLLS: Schoenmakers gained global notoriety in the Netherlands as a cannabis breeder and seed merchant. But in 1990 his global enterprise was targeted by US authorities, who charged him with 44 drug offences.


ABC ARCHIVE Presenter Liam Bartlett: So when Mr Schoenmakers came to Perth to visit his family he was arrested at Perth airport on an extradition treaty between Australia and America. He has committed no crime in Holland and no crime in Australia.


SEAN NICHOLLS: Schoenmakers was only released on bail after almost a year in a Perth jail.


ABC ARCHIVE: Nevil Schoenmakers: I just want to live with Trish and Daniel and be happy.


SEAN NICHOLLS: While on bail, Schoenmakers vanished.


ABC ARCHIVE: NEVIL’S PARTNER: The last time I saw him was 5.30pm on Tuesday afternoon and I haven’t heard from him since.


ABC ARCHIVE: Schoenmakers fled the country …and in 2003 the US dropped the charges. Years later, he returned to Australia and in 2014 became a founding shareholder in AusCann.


SEAN NICHOLLS: How concerned were you initially about bringing somebody with that reputation into a company that you're trying to establish?


ELAINE DARBY: Look, that, that's certainly something to consider. I mean, certainly, he hadn't broken any Australian rules by any stretch of the imagination. Um, however, yeah, he did have the issue with the Americans. Um, for us it wasn't a problem. Um, initially, in terms of what we're looking at doing there.


SEAN NICHOLLS: The company was looking to access Schoenmakers’ famous seed collection – held in the Netherlands.


ELAINE DARBY, AusCann Managing Director: I mean his collection that he had in his day overseas was an enormous range of various varieties and strains of cannabis. And when you’re looking to wanting to produce a therapeutic product that’s absolutely fantastic that you had that whole range of potential strains that could produce all these different kinds of compounds”.


SEAN NICHOLLS: In return for the promise of his expertise, the company gave Schoenmakers 14 million shares.


SEAN NICHOLLS: And what did you get for that?


ELAINE DARBY: Well, we got a lot of entertaining lunches and dinners with Nevil.


SEAN NICHOLLS: But his seeds were never delivered.


ELAINE DARBY: Unfortunately we were unable to access those at the end of the day. Un, that was due to um the rules and legislation in those particular countries where they were sitting. They couldn’t be accessed. So we had to move on from that.


SEAN NICHOLLS: Schoenmakers remains a large shareholder in AusCann.


HARRY KARELIS, AusCann co-founder: I think Nevil is the number two or number three shareholder and I think on today’s prices, it must be worth thirty million dollars plus worth of value.


SEAN NICHOLLS: AusCann is not the only company that has tried to capitalise on the King of Cannabis. Singapore-based Philip Gu is chief executive of Stemcell United – a traditional Chinese medicine company with big plans to break into the cannabis market.


PHILIP GU: Sean, this is about Joseph Banks … and the hemp.


SEAN NICHOLLS: Right. I didn’t know he was interested in hemp.


PHILIP GU: In fact, much more interested than you think and what everybody knows.


SEAN NICHOLLS: When Stemcell first listed on the Stock Exchange, it promised to make face masks infused with extracts from a rare orchid. Then in March last year, it hired Schoenmakers as a medicinal cannabis consultant, handing him 10 million shares and a $5,000 monthly retainer.


PHILIP GU: Stemcell CEO: His involvement as advisor, and actually they give us confidence and knowledge and boost for our company's confidence and knowledge as well because his status, everybody knows him, King of Cannabis.


SEAN NICHOLLS: The announcement sent the share price rocketing, boosting the company’s market value from $4 million to $130 million in A day. Six months later, Schoenmakers resigned as a consultant.


ELAINE DARBY, AUSCANN: I think we've seen, unfortunately in this space, quite a few companies that have suddenly appeared, uh, out of nowhere. They'll make an announcement, share price spikes up, everyone, "Yay, we sold." Then, it's quick bucks to be made. So, unfortunately there has been a bit of that going on.


SEAN NICHOLLS: Is your company in this for the long term, is it genuine about wanting to produce medical cannabis products, or is just in it for a bit of a quick buck?


PHILIP GU: We have no intention of doing those so-called "quick bucks." And we, we long term not only because my personal, but also my profession. And we want long term. And long long term. We want to be in, in the long term development.


SEAN NICHOLLS: Meanwhile Nevil Schoenmakers is as elusive as ever. We tracked him to the tiny northern NSW town of Bonalbo to try to get his side of the story. But the King of Cannabis was nowhere to be found.


SEAN NICHOLLS: Mr Gu, where is Nevil Schoenmakers now?


PHILIP GU: I’m not sure where he is now.


ELAINE DARBY, AUSCANN: I don’t know where Nevil is. Unfortunately I haven’t spoken to him for years.


SEAN NICHOLLS: Despite the money pouring into the cannabis industry, patients are still struggling to access the drug. Since legalisation in Australia in 2016, medicinal cannabis has only been prescribed to about 600 patients. Experts mostly blame complex state and federal rules.


DR BASTIAN SEIDEL, ROYAL AUSTRALIAN COLLEGE OF GPS: The regulatory system is a complete basket case here in Australia. Each and every state has a differently regulatory framework in place. There's the federal, you know, TGA that also has a say. So, even if the GP feels that medicinal cannabis is the appropriate treatment for a patient, it's in-, very very difficult to access it. So there are huge barriers that need to be overcome before patients actually have access to medicinal cannabis here in Australia.


SEAN NICHOLLS: Those barriers are forcing people like Jen - and thousands like her - to seek their own supplies outside the law.  Every month, Jen drives from her Gold Coast home across the NSW border to buy medicinal cannabis on the black market


JEN:  I feel actually very nervous making the journey not so much on the way there but particularly on the way back when I’ve got my products in hand.


SEAN NICHOLLS: Jen is dying from mesothelioma –  a cancer caused by asbestos exposure. She spends $700 a month on medicine she says helps relieve pain and nausea. Jen’s oncologist can only prescribe her medicinal cannabis after securing permission from both federal and Queensland health authorities. That takes time she doesn’t have.


JEN: I understand it's a process, uh, that takes between 7- 10 months, which actually if you're a standard mesothelioma patient on a normal, late diagnosis, you're gone. You don't live normally that long, unfortunately, and that's the sad truth.


SEAN NICHOLLS: How would you describe the current system?


MATTHIJS SMITH: Inefficient, Byzantine and to be honest quite obstructive. If you look at what's been happening over the last 18 months, where people have got quite frustrated, there has been a lot of political currency put out there in terms of "We are going to provide access and bring materials in", but that's not translated into the reality.


SEAN NICHOLLS: Federal health minister Greg Hunt has been a strong advocate of medicinal cannabis. Ten days ago, he convinced the states to work towards a single, national approval scheme.


GREG HUNT, FEDERAL HEATLH MINISTER: Basically we've got a one-stop shop process with New South Wales, that proves that it can be done in under 48 hours, and there should be no excuse for any state, for not joining, uh, the one-stop shop process.


SEAN NICHOLLS: So it's actually the states need to get out of the way?


GREG HUNT: Look, my message is, I respect, uh, deeply their approach, but this is about patient access. This is about ensuring that those people, where the doctors make the decision that it’s in the interests of the patient, have the access to that material.


HARRY KARELIS, ZELDA THERAPEUTICS CHAIRMAN: We’ve still got a long way to go to match the patient access schemes that are in place in some other parts of the world.


SEAN NICHOLLS: And how much of a risk does that present to your company and other companies in this industry?


HARRY KARELIS, ZELDA : If guess if you’re Australian domestic focused only, that’s a big risk, if you’re putting all your eggs in one basket.


SEAN NICHOLLS: The prospect of the local industry stalling prompted a surprise announcement from Greg Hunt - that Australian companies would be allowed to export medicinal cannabis.


GREG HUNT: Our goal is very clear. To give Australian farmers and manufacturers the best shot at being the world’s number one exporter of medicinal cannabis.


SEAN NICHOLLS: What were your concerns about the viability of the domestic medicinal cannabis market, that led you to bring forward the decision to allow companies to export?


GREG HUNT, HEALTH MINISTER: Many companies have said that they would have a stronger position for cultivation, and research, and manufacturing in Australia, if they had both a domestic, and an international market. Um, I agreed with that. I thought that would strengthen the Australian market, but on an absolute condition that any company that's to be granted an export license, would sign a guarantee that Australian patients would have first access.


SEAN NICHOLLS: What were your concerns about the viability of the domestic medicinal cannabis market, that led you to bring forward the decision to allow companies to export?


GREG HUNT, HEALTH MINISTER: Many companies have said that they would have a stronger position for cultivation, and research, and manufacturing in Australia, if they had both a domestic, and an international market. Um, I agreed with that. I thought that would strengthen the Australian market, but on an absolute condition that any company that's to be granted an export license, would sign a guarantee that Australian patients would have first access.


SEAN NICHOLLS: The announcement fired up cannabis stocks. Within a week, Cann Group’s share price shot up by a third while Auscann’s more than doubled.


ELAINE DARBY, AUSCANN: Look, the potential for that is enormous. I mean, it opens us up to the whole world, because what we're finding is that countries all over are legislating to allow medical use of cannabis. So it's sort like, all these countries are opening up all the time.


CONFERENCE MC: Please give a round of applause – from Canopy Growth – the largest arguably cannabis business on the planet – Bruce Linton.


SEAN NICHOLLS: One international company investing in Australia is the five and half billion dollar Canadian firm Canopy Growth Corporation. Its founder and CEO is Bruce Linton who is also a director of West Australian company AUSCANN.


BRUCE LINTON: We tend to say we’re the largest industry in the world that grows cannabis that publishes their address.


SEAN NICHOLLS: Canada already has medicinal cannabis and later this year it will legalise marijuana for recreational use. Linton was in Sydney recently to drum up investor interest. 


BRUCE LINTON, CANOPY GROWTH CORPORATION: Reefer madness is over. Um, this crazy, this Mad Hatter place called Canada is doing it, and I think it couldn't be a better place to launch it, because you know, we are relatively well-mannered pretty boring. We like structure, our governments are going to be selling it. So whenyou come to Canada next summer, maybe about September, you're gonna line up at a store run by the state or provincial government. All the employees and most of them will work for the government, and they'll be selling products that have been described and defined by the federal government, and all you're need to have is the money and ID to say that you're over 19. Um, that sanctions and validates a whole bunch of things that I think is gonna catch the globe and say, "Wow."


SEAN NICHOLLS: In Canada, Canopy Growth has partnered with rapper Snoop Dogg to promote its medicinal cannabis products. Its main brand Tweed even has a clothing line. Canopy has registered the Tweed trademark in Australia…for both medicinal and recreational cannabis.


SEAN NICHOLLS: So, is this, very clearly a positioning uh, for the potential advent of recreational use in Australia?


BRUCE LINTON: Uh, yeah, we do it. So every country that's federally legal, we think someday will start with medical. And don't know when, there's a path that they go to managing the whole topic. And the reason is it isn't being introduced as a new thing. Bad news, it exists everywhere in a large volume, and so we think it's just a natural progression. So Australia, Germany, everywhere, if we've, and, and I gotta keep track of my lawyers, I don't keep track of how much they spend doing this everywhere, but it is kind of the mandate. Prepare for the future, have things ready.


SEAN NICHOLLS: Linton’s company has also hired top-tier lobbyist Crosby Textor to help it in discussions with Australian governments.


SEAN NICHOLLS: You have a, uh, engaged a, um, a, an Australian lobbyist. Yeah.


BRUCE LINTON: I think that's true.


SEAN: Yeah, I'm, I'm just wondering what, what you are using them for?


BRUCE LINTON: Um, I'm gonna be totally truthful, I can't, I don't know exactly what we use them for in most countries, as what we try to do is frame the Canadian experience and use indications of what worked.


SEAN NICHOLLS: A company called Canopy Growth Corporation, which is a major shareholder in an Australian company called AusCann is listed on the register of lobbyists for the Australian parliament, using the, the firm Crosby Textor. I’m just wondering why that would be and if you’ve had any meetings with either Crosby Textor or Canopy Growth?


GREG HUNT: I have met with, uh, international firms, and I've met with Australian firms. And…

SEAN: And what did they want to talk about?


GREG HUNT: People are all talking about, uh, access to the Australian market, and understanding the regime.


SEAN NICHOLLS: In the northern NSW counter-culture capital of Nimbin, people have been lobbying for the legalisation of marijuana for decades. The town’s preparing for its annual Mardi Grass festival.


Michael Balderstone: Take a few - that’s how we get people to come. I’ve got no TV ad.


SEAN NICHOLLS: Nimbin’s home to the Hemp Embassy – a tourist attraction doubling as headquarters of the Australian Hemp Party.




MICHAEL BALDERSTONE: Andrew! How are you? long time no see.


SEAN NICHOLLS: Its Secretary is Andrew Kavasilas, who has founded his own medicinal cannabis company. He’s also betting on marijuana being legalised for recreational use.


ANDREW KAVASILAS:  Yeah, it's certainly on our mind. Um. We'd be, you know, a, a pretty dishonest company to not be thinking in that way. Um. And I think, how in the natural course of the progression that we see, I think you're going to have to really be able to prove yourself as a, as a good producer of medical grade cannabis before you can look to, you know, get in to the recreational side. We are certainly, certainly, eyeing off recreational as another form of revenue in the future yeah. 


SEAN NICHOLLS: And how big do you think that market could be?


ANDREW KAVASILAS: Maybe ten times the medical side. Yep.


SEAN NICHOLLS: Kavasilas is a pioneer of the cannabis industry.


ANDREW KAVASILAS: That’s the male and they’re coming on really well – you can see a nice flower there - they’ll produce a lot of pollen for these immature female here we’re looking at here.


SEAN NICHOLLS: Kavasilas is licensed to grow these plants for his hemp food company: they’re low in THC, marijuana’s psychoactive ingredient.


ANDREW KAVASILAS: There’s a female over here. This one here.  What we’re looking at is the first of the seeds. The plant’s been pollinated.


SEAN NICHOLLS: The medicinal cannabis boom has catapulted the veteran campaigner headlong into the world of big business.


ANDREW KAVASILAS, MEDICAL CANNABIS LTD founder: This has interrupted my normal job, my normal vocation. Um. So, yeah, th, those benefits are, are, are greater, but I've never been busier in all my life either. I do a lot of travelling now. I'm hardly ever home. Um. I'm always in meetings and talking to people on conference calls.


SEAN NICHOLLS: Last year mining company Queensland Bauxite Limited bought 55 per cent of Kavasilas’s medicinal cannabis start up to break into the market.


ANDREW KAVASILAS: I see the potential of that deal, um, for me personally, will be quite beneficial if, if what we're saying comes to fruition.


SEAN NICHOLLS: Has it made you a wealthy man?


ANDREW KAVASILAS: Uh. Wealthier than I've probably ever been, yeah.


SEAN NICHOLLS: At his home outside Nimbin, Kavasilas shows us one prize the mining company paid to access. It’s the Holy Grail of medicinal cannabis: a rare seed bank, collected from around the world.


ANDREW KAVASILAS: It’s quite extensive. Some of the oldest ones that we have – these kind of samples - are from various regions in China - Yellow River, Jiangxi, a particular one called Lulu. Some are very old, what was referred to as Indian hemp, or Yellow River number 3, and some European varieties that are very important.


SEAN NICHOLLS: Kavasilas reckons his seeds could deliver an even bigger pay day.


ANDREW KAVASILAS, MEDICAL CANNABIS LTD founder: Any statistic you look at, Australians enjoy using cannabis more than any other illicit drug, and they decide to do it quite reasonably and responsibly, and so, on that fact alone, um, it is inevitable that Australia will legalise, tax, and regulate recreational use of cannabis.


SEAN NICHOLLS: But other Australian companies aren’t so sure.


SEAN NICHOLLS: Given the potentially enormous size of the legal recreational market globally, how likely do you think it is that Australia will eventually move down that track as Canada has?


PETER CROCK: Eventually, maybe. But I see that on a 5 to 10 year time frame, not … and I don’t think it will happen in the immediate future. And our focus is definitely not in that area at all.


SEAN NICHOLLS: How much has AusCann thought about it?


ELAINE DARBY, AUSCANN: As a recreational product? Not at all. It's a completely, uh, different mindset to where we are as a company.


SEAN NICHOLLS: You’d be well placed to take advantage of it.


ELAINE DARBY: Yeah. Look, I think those that are in the pharmaceutical sector with cannabis would probably be the best place to do it, um, because we already would be producing a very high quality raw material that could then be changed into a different kind of product, um, to make something for the recreational market.


MATTHIJS SMITH, ANALYST: Look, it's been interesting that a number of jurisdictions, such as Canada, Uruguay, and states in the US, once they have made cannabis available for medical purposes, and they've seen that that hasn't resulted in a whole deterioration of society, have become a lot more liberal and contemplated or indeed enacted the recreational use, the use for non-medical purposes.


SEAN NICHOLLS: Last month, a state parliamentary inquiry told the Victorian Government recreational use of marijuana for adult use is a ‘drug law reform worthy of exploration.


SEAN NICHOLLS: Do you have a personal view on whether, it would be acceptable for recreational cannabis to be allowed in Australia within five or ten years?


GREG HUNT: It’s not something that the Commonwealth is proposing, but it is a matter for individual states under the Constitution.


SEAN NICHOLLS: In New Zealand, they’re also preparing to debate the legalisation of recreational cannabis. The country’s Prime Minister has pledged to hold a referendum before the next election in 2021.


ROSS SMITH, VENTURE CAPITALIST: What I believe is happening is, there's no question in my mind that medical cannabis is the Trojan Horse for recreational cannabis, and I don't believe it's a bad thing.


SEAN NICHOLLS: Meanwhile, from his north island retreat, venture capitalist Ross Smith is about to land his next big deal. He’s finalising plans to import cannabis from Queensland.


ROSS SMITH, VENTURE CAPITALIST: An investment banking colleague asked me the other day on the phone, he said, "Ross, you know, you're making all this money," uh, you know, "Where to next? What are you gonna invest in next?" I said, "Mate, I'm investing in cannabis for the next 10 years." As long as this, uh- the party's only just beginning. I mean people got no idea how big this is gonna be. This is going to be huge.


SEAN NICHOLLS: There’s lots of talk about the potential riches to be made. But for those wading in, there are also plenty of risks.


MATTHIJS SMITH: There's no doubt, as with any new industry, there's a flurry of people jumping on board, jumping on the bandwagon, and there will be a shake down as a result of that.


HARRY KARELIS: There is always the early movers. There is, um, growth, then you have the late arrivals, and then not everyone can win.


This is one of three growing sites owned by Cann Group – it’s hoping to harvest up to six crops a year. 


Smith is not the only one attracted to the  scent of big money.


Green Rush, reported by Sean Nicholls and presented by Sarah Ferguson, goes to air on Monday 23rd April at 8.30pm. It is replayed on Tuesday 24th April at 1.00pm and Wednesday 25th at 11.20pm. It can also be seen on ABC NEWS channel on Saturday at 8.10pm AEST, ABC iview and at


Challenge Opened: 12:06 PM, Monday 23 April 2018
Challenge Closes: 10:00 AM, Friday 29 June 2018
Time to go: Closed

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