Precis

“The party's only just beginning. People have got no idea how big this is going to be. This is going to be huge.” Cannabis investor

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.

“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.” Cannabis investor

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.

“It's going to be a multi-billion dollar market in total.”  Cannabis company co-founder

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

“I am called The Wolf but I am in the market for all the right reasons.”  Cannabis investor

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

“There’s no doubt, as with any new industry, there's a flurry of people jumping onboard, jumping on the bandwagon, and there will be a shake down as a result of that.”  Market analyst

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.  

“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.” Cannabis company CEO

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.

“There's no question in my mind that medical cannabis is the Trojan horse for recreational cannabis.”  Cannabis investor

4 Corners animated logo

00:00

Drone shot of Bentley driving down Coastal road

Music

00:13

Smith driving

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!

00:29

Music

00:38

SEAN NICHOLLS: Ross Smith is not your average investor.

00:41

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

00:47

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.

00:57

Music

01:05

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

01:09

Music

01:12

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

01:15

Music

01:24

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

01:29

Music

01:45

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.

011:49

Smith drives into garage at home

With his beloved $300,000 Bentley in the garage, he’s living the dream - but it wasn’t always this way.

02:00

Smith 100%. Super:
ROSS SMITH
Venture capitalist

ROSS SMITH: Here's the funny part. Back in 1989, I was 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, shall we say, above personal use, but I think I'm the only guy in world history that was fined.  So having a cannabis conviction as a cannabis mogul, it’s simply an occupational hazard. It’s nothing to worry about.

02:10

Smith on phone on deck at home

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 very colourful, you know?

02:42

Smith 100%

That sort of thing is three years ago. Those sorts of guys, they're inherently jealous, and it's about as worrisome as a cloudy day, mate, seriously.

SEAN NICOLLS: No truth to it?

ROSS SMITH: No, none whatsoever.

03:05

Smith on phone

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.

03:26

SEAN NICHOLLS: Smith is a medicinal cannabis evangelist, spruiking it as a new wonder drug.

03:45

Smith on phone:  "Seizures taken care of. Rheumatoid arthritis. I mean even pets. I saw a video this morning – I don't know whether you saw it – that boxer dog was having seizures. And the guy gave it a little eye drop of CBD oil, and bang, brought the dog straight out of seizures – he had a normal dog again."

03:51

SEAN NICHOLLS: Since Smith’s first venture, the value of listed Australian cannabis companies has soared to one and a half billion dollars.

04:10

Smith on phone: "Mate, eventually all pharmacies will stock it. "

04:18

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

04:21

Smith 100%

ROSS SMITH: There's dodgy companies everywhere. Yeah. I mean I often say, in the spec 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 BHP, Rio Tinto, ANZ, National Australia Bank.

SEAN NICHOLLS:  Are you one of those wolves?

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

04:26

Melbourne skyline

SEAN NICHOLLS:  Back in Australia, the medicinal cannabis industry is starting from scratch –

04:52

Nicholls enters building and greets Peter Crock

working hard to build a clean corporate image.

05:00

Crock and Nicholls enter growing rooms

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.

05:10

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.

05:37

Crock 100%. Super:
PETER CROCK
Cann Group CEO

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.

05:51

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.

06:02

CCTV footage of growing rooms

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

06:23

Crock and Nicholls into growing room

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 what we’re doing is taking cuttings from the mother plants and going into propagation tubes.

SEAN NICHOLLS: Cann Group’s CEO Peter Crock spent over 20 years in agribusiness developing farm products;

06:33

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.

06:55

Crock 100%

It doesn’t matter if it’s growing wheat or what it is. We know that, and that's what we're looking at; we need to be able to set up at scale and play in that space.

07:14

Plants in growing room

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.

MATTHIJS SMITH, CANACCORD GENUITY ANALYST: If you look at a company such as The Cann Group,

07:24

Smith 100%. Super:
MATTHIJS SMITH
Canaccord Genuity analyst

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.

08:00

Plants in growing room

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 Canaccord Genuity, which helped float Cann Group and holds a $6 million stake.

08:16

Smith 100%. Super:
MATTHIJS SMITH
Canaccord Genuity analyst

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.

08:42

Growing room

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

"Could you hazard a guess at when you expect to turn a profit?"

08:55

Crock 100%. Super:
PETER CROCK
Cann Group CEO

PETER CROCK: No I won’t hazard a guess at that at the moment. We’re just focused on making sure we can get our crops through this small facility.

09:04

Smith 100%

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.

09:14

Perth skyline

Music

09:37

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.

09:43

Karelis getting onto ferry

Funding the research is Harry Karelis, who’s got a science degree and 25 years' experience in the finance industry.

09:55

Music

10:04

Karelis 100%

HARRY KARELIS, ZELDA THERAPEUTICS: I could see it through the lens of not only from 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.

10:13

Music

10:31

SEAN NICHOLLS: Karelis has spent 18 months convincing state and federal health authorities to give the green light to a pioneering clinical trial.

10:34

Karelis at UWA

In a world first, researchers at the University of Western Australia are about to test whether a cannabis medicine can treat insomnia.

10:43

Karelis 100%. Super:
HARRY KARELIS
Zelda Therapeutics chairman

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 one in six people suffer from some kind of sleep disorder, and insomnia is one part of that fraction. The anecdotal evidence is certainly out there, that people feel as though they relax and can go to sleep using cannabis.

10:56

Trial participant being wired up

Music

11:17

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

11:27

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

11:31

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.

11:48

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

12:03

Walsh 100%. Super:
DR JENNIFER WALSH
University of Western Australia

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.

12:15

Walsh to trial participant

Jennifer Walsh: "Debbie, I’m going to get you to lie there with your eyes closed."

12:26

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. Karelis's company is also running a trial in Chile for autism and in Spain it’s researching treatment for breast cancer.

12:32

Karelis 100%

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.

13:00

Drone shot. Avocado orchard

Music

13:13

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.

13:18

Washer and Darby drive through orchard

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.

13:35

Interview with Washer and Darby in orchard

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. This had 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.

14:05

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 cannabis business.”, you know -- is a little surprising, to be quite honest.

14:25

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 the team had any experience growing marijuana.

14:40

Darby 100%. Super:
ELAINE DARBY
AusCann managing director

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. But we’re here, and 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 industries where you're getting this interface with these individuals.

14:53

GFX Photo. Nevil Schoenmakers

Music

15:24

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

15:28

Karelis 100%. Super:
HARRY KARELIS
AusCann co-founder

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

15:40

Darby 100%

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

15:49

Night Pics of Amsterdam in the 1980s

Music

15:59

GFX. Schoenmakers article/charge sheet

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.

16:08

Archive. ABC News report

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.

16:25

Super: May 1991

He has committed no crime in Holland and no crime in Australia.

16:33

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

16:37

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

16:43

SEAN NICHOLLS: While on bail, Schoenmakers vanished.

16:47

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

16:50

GFX.  Photo. Schoenmakers

Music

16:55

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.

16:57

Darby 100%

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

17:13

Super:
ELAINE DARBY
AusCann managing director

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. However, yeah, he did have the issue with the Americans. For us it wasn't a problem, initially, in terms of what we're looking at doing there.

17:22

Washer and Darby driving in orchard

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

17:38

Darby 100%

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 there that could produce all these different kinds of compounds at the end of the day”.

17:48

Washer and Darby driving in orchard

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?

18:16

Darby 100%

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

18:26

Washer and Darby driving in orchard

Music

18:32

SEAN NICHOLLS: But his seeds were never delivered.

18:35

Darby 100%

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

18:40

GFX. Photo. Schoenmakers

18:55

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

18:57

Karelis 100%. Super:
HARRY KARELIS
AusCann co-founder

I think on today’s prices, it must be worth thirty million dollars plus worth of value.

19:05

Nicholls in cab and into hotel

Music

19:10

SEAN NICHOLLS: AusCann is not the only company that has tried to capitalise on the King of Cannabis.

19:23

Nicholls greets Gu

19:31

Singapore-based Philip Gu is chief executive of Stemcell United – a traditional Chinese medicine company with big plans to break into the cannabis market.

19:36

Gu shows book about Joseph Banks

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 what 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.

19:47

Then in March last year, it hired Schoenmakers as a medicinal cannabis consultant, handing him 10 million shares and a $5,000 monthly retainer.

20:07

Gu 100%. Super:
PHILIP GU
Stemcell United CEO

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.

20:19

Gu and Nicholls in hotel

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.

20:33

Darby 100%

ELAINE DARBY, AUSCANN: I think we've seen, unfortunately in this space, quite a few companies that have suddenly appeared 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.

20:48

Gu 100%

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?

21:04

Super:
PHILIP GU
Stemcell United CEO

PHILIP GU: We have no intention of doing those so-called "quick bucks." And we're 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 the long term development.

21:16

GFX. Photo. Schoenmakers

SEAN NICHOLLS: Meanwhile Nevil Schoenmakers is as elusive as ever.

21:33

Driving to Bonalbo

We tracked him to the tiny northern New South Wales town of Bonalbo to try to get his side of the story. But the King of Cannabis was nowhere to be found.

21:41

Gu 100%

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

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

22:01

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

22:08

Aerial over cannabis field

Music

22:12

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.

22:18

Seidel 100%. Super:
DR BASTIAN SEIDEL
Royal Australian College of GPs

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 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.

22:45

Cars on highway

Music

23:10

Jen driving

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.

23:17

Jen interview in car

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.

23:36

SEAN NICHOLLS: Jen is dying from mesothelioma –  a cancer caused by asbestos exposure…

23:45

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.

24:03

Jen 100%

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

24:26

Smith 100%

SEAN NICHOLLS: How would you describe the current system?

24:43

Super:
MATTHIJS SMITH
Canaccord Genuity analyst

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.

24:47

[Archival] Greg Hunt

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.

25:09

Hunt 100%. Super:
GREG HUNT
Federal Health Minister

GREG HUNT, FEDERAL HEALTH 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 the one-stop shop process.

SEAN NICHOLLS: So essentially the states need to get out of the way?

25:23

GREG HUNT: Look, my message is, I respect 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.

25:40

Karelis 100%. Super:
HARRY KARELIS
Zelda Therapeutics chairman

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?

25:56

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 that one basket.

26:09

[Archival] Greg Hunt on beach

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.

26:15

Super:
January 2018

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.

26:26

Hunt 100%

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?

26:37

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. 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 licence, would sign a guarantee that Australian patients would have first access.

26:47

Cutting up of cannabis at Cann Group

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.

27:17

Darby 100%. Super:
ELAINE DARBY
AusCann managing director

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 now legislating to allow medical use of cannabis. So it's sort like, all these countries are opening up all the time.

27:27

Bruce Linton speaks at conference

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

27:44

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.

27:58

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

28:13

SEAN NICHOLLS: Canada already has medicinal cannabis, and later this year it will legalise marijuana for recreational use.

28:20

Nicholls greets Linton

Linton was in Sydney recently to drum up investor interest. 

28:29

Linton 100%. Super:
BRUCE LINTON
Canopy Growth CEO

BRUCE LINTON, CANOPY GROWTH CORPORATION: Reefer madness is over. This crazy country, 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 when you come to Canada next summer, maybe about September, you're going to 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. That sanctions and validates a whole bunch of things that I think is going to catch the globe and say, "Wow."

28:35

Canopy Growth video. Super:
Promotional video

Music

29:16

SEAN NICHOLLS: In Canada, Canopy Growth has partnered with rapper Snoop Dogg to promote its medicinal cannabis products.

29:31

Its main brand Tweed even has a clothing line. Canopy has registered the Tweed trademark in Australia, for both medicinal and recreational cannabis.

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Linton 100%

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

30:12

Super:
BRUCE LINTON
Canopy Growth CEO

BRUCE LINTON: 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 got to 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.

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

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Linton 100%

SEAN NICHOLLS: You have engaged an Australian lobbyist, Crosby Textor.

BRUCE LINTON: I think that's true.

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

31:01

BRUCE LINTON: I'm going to 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.

31:10

Hunt 100%

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 if you know why that would be and whether you’ve had any meetings with either Crosby Textor or Canopy Growth?

31:23

Super:
GREG HUNT
Federal Health Minister

GREG HUNT: I have met with 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 access to the Australian market, and understanding the regime.

31:43

Nimbin GVs

Music

31:55

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.

32:04

Balderstone in Hemp Embassy

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

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

32:28

Kavasilas greets Balderstone

ANDREW KAVASILAS:  G’day Michael.

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.

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Kavasilas 100%. Super:
ANDREW KAVASILAS
Medical Cannabis Ltd founder

ANDREW KAVASILAS:  Yeah, it's certainly on our mind. We'd be, you know, a, a pretty dishonest company to not be thinking in that way. 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.

32:54

Aerial. Cannabis crop

Music

33:31

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

33:38

Kavasilas shows plants

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 females that 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.

33:48

ANDREW KAVASILAS: There’s a female over here. This one here.  What we’re looking at here 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.

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Kavasilas 100%

ANDREW KAVASILAS, MEDICAL CANNABIS LTD founder: This has interrupted my normal job, my normal vocation. So, yeah, those benefits 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. I'm always in meetings and talking to people on conference calls.

34:34

Aerial. Marijuana crop

Music

34:52

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, for me personally, will be

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Kavasilas 100%

quite beneficial if what we're saying comes to fruition.

SEAN NICHOLLS: Has it made you a wealthy man?

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

35:17

Aerial. Kavasilas's Nimbin home

SEAN NICHOLLS: At his home outside Nimbin, Kavasilas shows us one prize the mining company paid to access.

35:27

Kavasilas opens seed bank fridge

It’s the Holy Grail of medicinal cannabis: a rare seed bank, collected from around the world.

35:37

Kavasilas shows seeds

ANDREW KAVASILAS: It’s quite extensive. Some of the oldest ones that we have – these kind of samples - are from various regions in China even -- 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.

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

36:16

Kavasilas 100%. Super:
ANDREW KAVASILAS
Medical Cannabis Ltd founder

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, it is inevitable that Australia will legalise, tax, and regulate recreational use of cannabis.

36:22

Crock opens door to growing room

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

36:40

Crock 100%

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

36:47

Super:
PETER CROCK
Cann Group CEO

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.

37:01

Darby 100%

SEAN NICHOLLS: How much has AusCann thought about it?

37:13

Super:
ELAINE DARBY
Australia Cann managing director

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

37:17

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

37:25

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

37:28

Smith 100%. Super:
MATTHIJS SMITH
Canaccord Genuity analyst

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.

37:49

Aerial. Cannabis crop

38:16

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

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Hunt 100%

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?

38:32

Super:
GREG HUNT
Federal Health Minister

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

38:41

Aerials. Mountains, rivers

Music

38:47

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.

38:52

Smith 100%. Super:
ROSS SMITH
Venture capitalist

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.

39:08

Smith fishing

Music

39:18

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.

39:22

Smith 100%

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", you know, "Where to next? What are you going to invest in next?" I said, "Mate, I'm investing in cannabis for the next 10 years." As long as this -- the party's only just beginning. I mean people got no idea how big this is going to be. This is going to be huge.

39:36

Smith fishing

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.

39:57

Smith 100%

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.

40:13

Karelis 100%

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

40:23

Smith fishing

40:31

Credits [see below]

40:41

Outpoint after credits

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