The Gold Rush: Understanding the Industry We Have Built

The medicinal cannabis industry occupies a curious place in Australian healthcare.

It is often spoken about as though it were simply another branch of pharmaceutical medicine. Yet anyone who has spent time working within it quickly discovers that it behaves unlike almost any other part of the health system. The relationships between doctors, pharmacies, manufacturers, wholesalers and patients often look very different from those found elsewhere in medicine. Commercial practices that would appear unusual in other therapeutic areas are commonplace. Patients have developed expectations that many doctors from outside the industry find surprising. Even the language used to discuss treatment often feels closer to consumer retail than conventional prescribing.

This raises an obvious question.

Why?

It’s a horrible cliché but……To understand where medicinal cannabis is today, we first have to understand how it came to exist.

An Industry Born Through Exception

Unlike most medicines, medicinal cannabis did not enter Australian healthcare through the gradual evolution of conventional pharmaceutical practice.

It emerged rapidly through exceptional regulatory pathways, enormous public demand and in many ways as a correction to past historic propaganda. Importantly, there wasn’t a widespread medical use case, or a desperate sense of clinical necessity, and the clinical utility that was there represents a very small proportion of today’s users and patients. That’s important. The manner in which cannabis access was permitted was pretty much appropriate to servicing the small, number of individuals that had a clinical need, but something changed. In a remarkably short period of time, an entire industry appeared around a product that had spent decades existing outside mainstream medicine. Using the examples of jurisdictions overseas a commercial model was applied by companies with virtually no understanding of Australian law or the medical system and A small legislative loophole suddenly became the through route of almost unprecedented demand, in a way that, it doesn’t have the capacity or control to manage. 

Rapid growth is exciting. It is also disruptive.

Industries normally evolve over decades. Professional cultures mature slowly. Standards become established through repetition, education, regulation and scrutiny. It is essentially a bypassing of the normal channels, Instead, commercial growth has raced ahead essentially bypassing the normal checks and balances of both pharmaceutical manufacture, prescribing and dispensing.

Different Origins, Different Assumptions

That matters because industries do not begin as blank slates. Consider for a moment, if we went back to the night before legalization - where would the individuals, in Australia, with the greatest expertise in cannabis growth and wholesale be employed? One of the defining features of medicinal cannabis is that it did not emerge solely from the established pharmaceutical sector, but…. as much as we all view pharmaceutical companies with suspicion, I think it’s a mistake to think they invented greed or hold a monopoly on commercial exploitation.

The industry’s participants arrived from many different backgrounds. Some came from pharmaceutical manufacturing, others from agriculture, Some from biotechnology investment maybe. But many others brought decades of practical cannabis knowledge acquired during prohibition, when cultivation, distribution and use existed entirely outside conventional pharmaceutical regulation. That diversity has been one of the industry’s strengths. There’s good that comes with that but it has undoubtably had a defining effect on the practices we see within the cannabis space. It’s also crucial to understand that for many the commercial opportunity represented by cannabis is the overriding motivation.

This diversity has also created some of the industries’ greatest and most overlooked challenges. Every profession develops assumptions about what constitutes normal practice. The whole supply chain from pharmaceutical manufacturing, to prescribing and dispensaries has evolved within one of the most heavily regulated environments in modern society. Documentation, traceability, validated manufacturing, quality systems, pharmacovigilance, supply chain integrity and legal accountability are not optional extras. They are part of the culture. Many of the people entering medicinal cannabis understandably arrived with different experiences and different assumptions and goals, and varying understandings of the role of the law. Those differences continue to shape the industry today.

When Adaptation Becomes Normal

Many of the behaviors that are seen as normal within the cannabis space are entirely based on commercial motivations, and are in fact, quite literally illegal. On the whole, many patients are ambivalent or more positively inclined towards these practices because they’re seen as providing choice and freedom in an area that’s historically been very hidebound and stuffy.

The best, most obvious example I can think of is dispensaries choosing to substitute products. The first thing I need to clarify is that substitution of Schedule 8 items is entirely illegal without the doctor’s permission. Outside of cannabis it is a potentially career ending action. There is a provision to allow substitution in times of national shortage, but that’s been adapted to allow pharmacies to substitute what the patient is prescribed for what they have in stock, that is an entirely commercial decision. A decision that commercially penalizes legitimate practice and undermines the principles and practical requirements needed for treatment.

This is the whole reason why that’s not allowed, the job of the doctor is to select and prescribe the medication based suited to the patients needs, what they believe to be the best thing for the patient. When that’s undone by a pharmacy trying to meet commercial, or inventory concerns to move expiring perishable product, the whole system rapidly begins to no longer function.

There are practical ramifications: once that chain of responsibility is interrupted are significant and will likely only become obvious to patients at the very worst time possible - when something goes wrong. Its hard to defend an individual’s prescription when they aren’t getting what was actually prescribed.

A Market Shaped by Incentives

None of this occurred because people set out to undermine good medical practice. But I don’t think the erosion is entirely innocent either. There has been a willful disregard of the ‘inconvenience ‘ of the law (not just the boring bits, but the good bit’s too like safety testing, and consumer protection, getting what you paid for, things we’ve learned to take for granted).

Businesses respond to demand, Patients value convenience. Pharmacies manage inventory. Manufacturers seek predictable sales. Each decision is individually understandable but collectively they produce an environment that is likely to see Cannabis become stigmatized, similar to tobacco shops: identified with the cultural elements that predominate in that environment, and marginalized.

The Gold Rush

Every gold rush follows a recognizable pattern, where extraordinary opportunity attracts extraordinary investment and where rules struggle to keep pace and for a time growth outstrips regulatory oversight. Experience is limited and Knowledge is uneven with early success encouraging further rapid expansion.

Medicinal cannabis has many of those characteristics.

Commercial success has understandably focused attention on the market that already exists. People familiar with cannabis. People actively seeking cannabis. People who already believe cannabis can help them, but this ignores the patient in favor of the ‘consumer’ which is a model that hurts those who most need care and responsible treatment disproportionately.

The Conversation We Are Not Having

There is an uncomfortable reality that the industry rarely discusses, most Australians are not looking for cannabis they are looking for solutions. The patient with osteoarthritis wants to walk a person with anxiety wants to regain confidence, The individual living with advanced cancer wants dignity and relief.

Cannabis matters only if it helps achieve those outcomes. 

A the industry perception is of a market built around people seeking cannabis is fundamentally different from the opportunity to provide healthcare and support that utilizes cannabis as a tool in treating illness.

The Missed Opportunity

Ironically, I believe the industry’s greatest opportunity lies beyond its current market.

Medicinal cannabis has the potential to become an important therapeutic option across a wide range of chronic illnesses because it may help carefully selected patients achieve meaningful improvements in function and quality of life.

That future, however, requires trust and a change in approach we need to be patient first not product first. Trust has always been the currency of medicine, because it speaks to the human needs at the center of the issue: without it, no pharmaceutical industry survives. 

Looking Beyond the Gold Rush

Successful businesses naturally invest in what is already working. That’s a common model for good business. However it ignores the obvious fragility of the current industry model and it’s reliance on a very unstable set of circumstances that cannot last, which is far from a bad thing.

Today’s medicinal cannabis market is only a fraction of tomorrow’s potential.

The industry’s future will not be determined solely by those who already want cannabis. It will be determined by millions of Australians who have never considered cannabis at all, but who simply want effective treatment for chronic illness. Reaching those patients will require something different from rapid commercial expansion.

Every gold rush eventually ends, some leave behind ghost towns Others become thriving cities. The difference is rarely the value of what was being mined but It is whether speculation eventually gives way to institutions and investment.

Medicinal cannabis now stands at that same crossroads. Its greatest opportunity is no longer to sell cannabis to an increasingly crowded marketplace of established users. Whether it succeeds will depend on whether the industry chooses to mature into more than a source of spectacle and supply invest in the enduring principles at the core of successful treatment that have guided good medicine for generations.