In just 16 months medical cannabis outfit Little Green Pharma managed to jump every regulatory hurdle and beat out a wave of bigger companies wanting a slice of the burgeoning medicinal cannabis industry.
The WA-based company started on a park bench in early 2017, when managing director Fleta Solomon met with a retiring scientist to discuss how a technology he created, to improve the delivery of active ingredients to the body, could be used in the emerging medical cannabis sector.
“We shared a vision to not only help thousands of people across the globe with WA-grown cannabinoid medicines, but in the way cannabinoid therapies could be delivered,” Ms Solomon said.
After that conversation, Ms Solomon hit the pavement looking for cash; first securing backing from some friends, then eventually banks.
The company has since secured more than 20 different licenses and permits from state and federal authorities to become the first in Australia to successfully cultivate and manufacture its own medicinal cannabis.
What a legal grow room looks like
Last week, in a first for the company, it invited this masthead to tour their top-secret grow facility in WA’s south west.
What became immediately apparent is how serious the company took security of the facility and anonymity its staff.
Not wanting to jeopardise any of its hard-fought licenses, there were military-style precautions to be adhered to.
We met Ms Solomon at a pre-arranged location, signed non-disclosure agreements, handed blindfolds and told to turn our phones off.
We were then driven blindly on a winding route before arriving at the facility, which was unremarkable apart from an imposing fence and fake business name on the front.
Even through the first few doors we couldn’t spot anything unusual. It wasn’t until after we donned our hair nets, lab coats and shoe covers that the uniqueness of the facility became apparent.
It took a few seconds for our eyes to adjust, but when they did we found ourselves surrounded by a sea of bright green cannabis plants sprouting from huge pots, soaking up the light beaming from rows of halogen globes above.
I was expecting to be overwhelmed by the musky smell that often washes over music festivals – instead, it resembled the grassy, fertiliser-mixed scent of a nursery.
The walls were covered in foil insulation and the space was small but every inch of it was being used.
The path between the plants was tight but big enough that the growers, dressed in green hospital-style outfits, were able to manoeuvre between them to inspect and cut leaves to improve airflow.
The next room was awash with yellow light and even more cramped, with the plants further along their growing journey.
The rooms are clinical and every aspect from temperature to air flow is meticulously controlled in order to stop crop destruction.
Pipes run up and down the rows feeding the plants a precise fertiliser mixture and we were told they had regimented sleep times where the lights are switched off.
On our visit the plants, which the company lovingly refers to as its ‘babies’, were only a few weeks from harvest.
Once the plants reach maturity they will be transported to the company’s manufacturing facility, another top secret location in Perth, where different types of cannabinoids will be extracted; turned into varying strengths and mixes of medical-grade oil; packaged; and eventually sold to approved patients.
Ms Solomon is confident in the potential of the industry, which Little Green Pharma has experienced. In just a year of manufacturing those ‘babies’ have made their way into medicine for more than 700 patients.
According to patient figures from the Therapeutic Goods Administration, from January 2017 to June 2019 more than 9200 medical cannabis access approvals had been issued. More than 6500 of those were issued this year alone.
A recent prediction from industry lobbyists Prohibition Partners was the Asian market could be worth $8.5 billion in just five years, buoyed by enthusiastic patients and businesses keen to meet demand.
The ASX has about 30 listed companies, collectively worth about $1.6 billion.
According to research firm Mordor Intelligence the global cannabis market, which includes medical and recreational, will jump from $21.6 billion in 2018 to $133 billion by 2024.
Even traditionally conservative organisations such as the Australian Medical Association have backed further investigation into its medical properties.
AMA president Tony Bartone said the association wanted to see greater investment in education and training for doctors on medical cannabis and supported moves to make access processes quicker.
“Therapeutic cannabinoids that are deemed safe and effective should be made available to patients for whom existing medications are not as effective,” he said.
Unlike lots of other cashed-up competitors, Little Green Pharma, which has remained a private company, went small first and partnered well. Ms Solomon claimed this was one of the reasons they were able to begin operating so quickly.
“We were able to gain first mover advantage not only due to our ‘proof of concept’ business model, but because we partnered with an existing good manufacturing practice (GMP) manufacturer with an existing narcotic licence,” she said.
“It was about proving we had all the relevant licences and processes from seed to sale.
“This has been the hardest thing to navigate. It was literally an unpaved road that we had to that we had to create ourselves.
“It was exciting, challenging, time consuming and quite costly. But now that we’ve done it, we have a fully operational integrated supply chain from importing seed genetics, to cultivating, manufacturing, packaging and distribution.
“We have proven our entire supply chain and have revenue now from patient sales so we have significantly de-risked the business.”
Little farmer, big dreams
This revenue has given the company confidence to expand its operations to meet Australian demand but also venture into Europe, whose industry is also in its infancy and has equally strict cultivation and manufacturing standards.
It also wants to ramp up R&D of different delivery methods and products but to do that it will need money and a public float of the company is being explored.
“Being a private company has its advantages – we’ve been able to act swiftly and remain nimble,” Ms Solomon said.
“We are actively exploring the European markets to distribute our medicines. Germany is a huge market as they’ve had 180,000 prescriptions for cannabinoid medicines, which have been reimbursed.
“However, as we move to fund clinical research and expansion projects, we need to explore all avenues for raising capital, including a public listing.”
Whatever path the company chooses Ms Solomon is confident they won’t have trouble raising cash.
“It’s not something that you really have to sell, everybody just gets it,” she said.
“The social impact this business can have is incredible. The patient stories are very real.”
Last week Federal Health Minister Greg Hunt announced changes to the sector that would simplify administration, remove red tape, simplify patient access and prioritise ‘major’ cannabis projects.
The government has also agreed in principle to adopt all 26 recommendations of a recent review of the Narcotic Drugs Act 1967, which will have ramifications for the medical cannabis sector.
The news was welcomed by the industry worried that Australia would miss its chance to supply the rest of the world with cannabis.
“The priority given to industry participants who are investing more heavily will encourage legitimate players to continue that investment, which will ultimately benefit patients,” Medical Cannabis Industry Association chair Peter Crock said.
Canadian and American giants such as Canopy Growth Corporation have had more than a decade to grow their businesses and have the jump on exports.
Another WA company AusCann recently celebrated the first ever delivery of cannabis resin from a Canadian supplier MediPharm Labs.
Ms Solomon said there was only a small window of opportunity for Australia to carve out its spot and regulators needed to remove barriers quickly.
“Australia has an opportunity to supply international markets with premium-grade medicinal cannabis products,” she said.
“We are relying on the government and regulators to support local expansion for the export market, because other jurisdictions will quickly catch up.
“We are thankful to the government for the high quality products we produce but we do wish the long administrative waiting times could be improved so Australia as an industry could flourish.”
Breaking the mould
A Department of Health spokesman confirmed the Office of Drug Control had received 250 applications for licences to cultivate, produce and manufacture medicinal cannabis received to date.
But only 70 licences had been granted and 30 permits had been issued allowing work to begin.
With hundreds of licences set to be granted over the next few years Ms Solomon predicted cannabis would eventually become a commodity.
The company is looking to differentiate itself in other ways and the conversation Ms Solomon had with the retiring scientist in 2017 is driving that innovation quest.
“In five years from now there is a good possibility that cannabis will just be a commodity, and the need to differentiate yourself becomes very real,” she said.
“The Canadians are focusing largely on the recreational side since cannabis was legalised and their focus on the edible market is consuming them.
“Our vision however, and how we’re different is we are pharmaceutical driven and will focus on optimising how cannabinoid medicines are delivered into the human body.
“In the next few years our expertise will focus on the manufacturing and pharmaceutical side.
“We’re going to be exploring optimal delivery systems from patches through to suppositories and sprays to help solve real patient issues.
“One day, we may even be able to explore at a DNA level, and look at personalised medicine for cannabinoid therapies.”
Hamish Hastie is WAtoday’s business reporter.