Medicinal cannabis

Medicinal Cannabis venture not proceeding after thorough assessment

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Medicinal cannabis

Update - 21 June 2023

At the June 2023 Council meeting, it was decided not to proceed with the proposed Medicinal Cannabis venture after conducting a feasibility and risk assessment process.

The findings of the assessment revealed challenges and risks associated with the industry, outweighing the potential benefits for our residents.

Ultimately, it was concluded that the potential risks associated with these options outweighed any community benefits.

Background

Maribyrnong City Council is committed to seeking alternate revenue streams and external funding opportunities to reduce the reliance on rates.

The idea to set up a business to cultivate, produce and manufacture medicinal cannabis was proposed in a Notice of Motion in September 2021.

With the rapidly rising domestic demand, it was felt a medicinal cannabis enterprise had the potential to bring in a solid income stream from a legal product to not only offset rates, but also deliver employment opportunities and contribute to the wellbeing of community members with chronic health conditions for whom conventional medicines do not work.

Medicinal cannabis products are legal, high-quality medicines prescribed by a doctor to treat illness or pain associated with:

epilepsy
multiple sclerosis
symptoms associated with cancer
pain; and
symptom relief in palliative care.

Community Engagement

Following the Notice of Motion, we asked our community if they would support Council entering the medicinal cannabis business. A survey to gather feedback, and a public webinar and forum with the Vietnamese community to provide information and answer questions, were undertaken during five months of engagement, from September 2021 to January 2022.

74% of the 600 survey respondents supported the idea of the Council entering into the medicinal cannabis business, provided it can demonstrate the viability of the venture.

The common themes for support included:

health benefits for the greater community
an opportunity to reduce rates
local employment opportunities, and
the proposal being a progressive venture for the Council.

A public forum was also held on Thursday 30 September to answer community questions. A recording is available below and responses to these questions are available on this page under Forum Q&As

Medicinal Cannabis Survey 2021

Would you support Council in seeking alternate funding opportunities to offset rates? Required

Yes

Any comments to add to the questions above? Required

Would you support Council entering the medicinal cannabis business? Required

Yes

Any comments to add to the questions above? Required

Do you have any ideas of other alternative funding streams to reduce rates? Required

Yes

Any comments to add to the questions above? Required

Suburb Required

Braybrook

Footscray

Kingsville

Maidstone

Maribyrnong

Seddon

West Footscray

Yarraville

Other outside of Maribyrnong Council area

Tottenham

Ignore this field. It is used to detect spammers. If you enter anything into this text box, your submission will be rejected. Ignore this field. It is used to detect spammers. If you enter anything into this text box, your submission will be rejected. Ignore this field. It is used to detect spammers. If you enter anything into this text box, your submission will be rejected.

The survey form is now closed. Thanks for your contributions.

Timeline

Timeline item 1 - complete

15 September 2021 - 28 January 2022

Gather community feedback
Timeline item 2 - complete

First Quarter 2022

Report to Council
Timeline item 3 - complete

April to September 2022

Feasibility Study and Risk assessment undertaken
Timeline item 4 - complete

June 2023

Report to Council

Translated information

Arabic - Medicinal Cannabis translated information
PDF (327.96 KB)
Greek - Medicinal Cannabis translated information
PDF (307.58 KB)
Italian - Medicinal Cannabis translated information
PDF (37.50 KB)

Translated information

Arabic - Medicinal Cannabis translated information
PDF (327.96 KB)
Greek - Medicinal Cannabis translated information
PDF (307.58 KB)
Italian - Medicinal Cannabis translated information
PDF (37.50 KB)
Macedonian - Medicinal Cannabis translated information
PDF (304.07 KB)
Spanish - Medicinal Cannabis translated information
PDF (37.99 KB)
Simplified Chinese - Medicinal Cannabis translated information
PDF (412.68 KB)
Vietnamese - Medicinal Cannabis translated information
PDF (329.84 KB)

FAQs

What is medicinal cannabis?
What is recreational cannabis?
Apart from adding the word medicinal – what’s the difference?

FAQs

What is medicinal cannabis?
Medicinal cannabis products are legal, high quality medicines prescribed by a doctor.
They come as a pill, oil, nasal spray or some other form of plant extract. Medicinal cannabis products are used to relieve symptoms of medical conditions and the side effects of some treatments.
What is recreational cannabis?
Cannabis, or marijuana, has been around for a long time and is historically associated with recreational drug use. Recreational cannabis usually comes in the form of dried leaves and flowers of the plant and is usually smoked or eaten. Its use, or smoking cannabis for medical reasons, is prohibited in most states of Australia.
Recreational cannabis use, or smoking cannabis for medical reasons, is prohibited in Australia. The use and sale of synthetic cannabis, which is also usually smoked, is also banned in most states and territories in Australia.
Apart from adding the word medicinal – what’s the difference?
Medical cannabis products isolate the useful cannabinoids from the ones that give the illegal high.
Putting it another way, medicinal cannabis is like buying a bottle of Shiraz from a shop. Shiraz is wine made from particular grapes; the ingredients are listed on the label, you know what region it is from, and the alcohol percentage.
Recreational cannabis is like buying a bottle of moonshine from your neighbour; it comes in an unmarked jar, you’re not sure what it’s made from, or what effect it will have. It’s a bit of a gamble.
Medicinal cannabis products are used to treat illness or pain and are prescribed by a doctor. Recreational cannabis is not a medicine – it is a drug.
What medicinal products are available?
Medicinal cannabis is a prescription medicines which means a doctor needs to assess a patient’s needs, and make a decision about whether there is an appropriate medicinal cannabis product for them. Products vary, depending on the symptoms or condition. The way that you take them can vary too.

While the majority of products are available through import, more locally available products are expected to become available as the Australian medicinal cannabis industry becomes more established.
What can medicinal cannabis be used for?
Medicinal cannabis has been shown to relieve pain, prevent or reduce vomiting and also has anti-inflammatory and antioxidant properties.
Certain medicinal cannabis products may be useful in treating:
- Epilepsy
- Multiple sclerosis
- Symptoms associated with Cancer and cancer treatment (such as nausea, pain and loss of appetite)
- Pain
- Symptom relief in palliative care
Given it is only in recent times that people have turned to cannabis as a way to treat symptoms or illness, there is not yet any long term formal evidence for doctors to rely on when thinking about prescribing medicinal cannabis to a patient. There can also be side effects.
Can anyone use medicinal cannabis?
You can only access legal medicinal cannabis products through a doctor or specialist, and only if they believe medicinal cannabis will help treat your condition. They will need to decide which medicinal cannabis to prescribe and to get any necessary government approvals.
Currently only one medicinal cannabis product is approved by the Therapeutic Goods Administration (TGA) for supply in Australia. This medicine treats muscle stiffness in multiple sclerosis sufferers.
How available is medicinal cannabis in Australia?
In 2015, the Federal Government passed laws allowing cannabis to be grown for medical or scientific purposes. This opened the door for trials and research.
Since 2016, the Office of Drug Control has issued 78 licences to companies under the Narcotic Drugs Act 1967 (ND Act) for cultivation, production and manufacture of medicinal cannabis. Import licences have also been granted to a number of companies under Regulation 5 of the Customs (Prohibited Imports) Regulations 1956.
Who’s making it in Victoria?
In recent years, Australia has begun to embrace medicinal cannabis as a new treatment for patients with chronic pain and illness. From clinics to retail to pharmaceutical and production there has been a heavy investment in the growth of the medicinal cannabis market.
Althea is an Australian owned producer, supplier and exporter of pharmaceutical grade medicinal cannabis based out of Victoria. CannaTrek, IDT, Medigrowth and MediPharm are other cannabis companies based in the State.
What do we know about the market potential?
By the end of 2019, over 28,000 prescribing approvals had been issued to patients, involving more than 1400 doctors, mostly GPs. Most of these prescriptions were for chronic non-cancer pain, anxiety, cancer-related symptoms, epilepsy and other neurological disorders. This was a 10-fold increase over the previous year. More than 70,000 approvals are projected by the end of 2020.
Given this increase in demand, Australia’s medicinal cannabis industry is forecast to reach $5billion by 2025.
But why would Council want to get into the medicinal cannabis business?
Council is committed to seeking alternative revenue streams and external funding opportunities to reduce over reliance on rate revenue.
With the rapidly rising domestic demand for medicinal cannabis, an opportunity exists to establish an enterprise with the objective of cultivating, producing and manufacturing medicinal cannabis within the City of Maribyrnong.
Such an enterprise has the potential to bring in a solid income stream from a legal product to not only offset rates, but also deliver employment opportunities and contribute to the health and wellbeing of community members with chronic conditions for whom conventional medicines do not work.
How easy would it be for Council to get into the Medicinal Cannabis business?
Not easy at all. While legally able to embark on such a venture, Council would need to jump through a significant number of hoops to gain approval, including the need for a licence to produce medicinal cannabis.
So what happens now?
Council is seeking to understand the appetite of the community and other stakeholders for offsetting municipal rates through the establishment of a medicinal cannabis operation.
A detailed feasibility study (including commercial and legal due diligence and preliminary costings) and a risk assessment would need to be undertaken before progressing the idea further.
How do I let you know what I think?
You can provide your feedback to us via our digital engagement portal Your City Your Voice, email us at communityengagement@maribyrnong.vic.gov.au or call our customer service team on (03) 9688 0200.
What happens if the community is not on board with the idea?
We will carefully weigh all the feedback we receive. If the opposition is overwhelming, the proposal will not proceed.
More information
Office of Medicinal Cannabis Medicinal cannabis - health.vic
Where is your business plan?
We understand the community wants to see more details by way of a Business Plan that would provide a comprehensive assessment of the proposal, financial future and need for outside funding for example.
Council is not at this point yet.
Before developing a business plan Council would need to first undertake a feasibility study and risk assessment. This would be key to identifying the operational model - for example, outdoor, greenhouse, indoor – costs, timeframes, and business structure – to determine whether the proposal is achievable.
If the proposal is not achievable, no business plan would be needed. The proposal would not proceed.
Council will only undertake a feasibility study and risk assessment if the community confirms an appetite for Council to proceed during the current engagement.
What monetary investment is Council proposing?
Council is not proposing to invest any money into the actual proposal at this stage.
Council would first need to understand the operational model, costs, timeframes and business structure before being able to provide a figure around the potential monetary investment. This includes not just the type of operation – outdoor, indoor, greenhouse – but also the scale of the operation – all of which will determine the likely cost.
Council is not at that stage yet. These matters would be identified as part of a feasibility study which Council will only consider undertaking once the community appetite for the proposal is known.
The cost of a Feasibility study and risk assessment is estimated to be in excess of $100,000.
What will the start-up costs be?
We do know that starting a medicinal cannabis tends to be more capital intensive than other start-ups and includes: operating costs (salaries, security, equipment), licencing fees, equipment and plants, consultants to provide the necessary expertise, costs associated with a location, depending on which business model was chosen, and compliance, accounting for example.
In 2016, Deloitte prepared a report for the Department of Health Office of Drug Control providing an estimate of the costs of cultivating and manufacturing medicinal cannabis, which would need to be investigated and updated to today’s costs to provide a clearer picture of what this might look like in dollar terms.
Modelling the cost of Medicinal Cannabis (odc.gov.au)
But, from what we understand at this stage, it would likely be in the millions as opposed to hundreds of thousands of dollars.
How long will it be before you expect to see any profit?
This would depend on a number of factors, not the least of which would be securing a licence, but we estimate this could be three to four years. Council would know more following a feasibility study.
What about a site?
The feasibility study would need to first identify the operational model – outdoor, greenhouse, indoor – before Council could start to think about potential locations. Any potential site would need to align with the proposed business method determined by the study – outdoors, greenhouse, indoors.
A feasibility study and risk assessment has not been undertaken. Council will only take this step if the community confirms an appetite to proceed during the current engagement.
What about decontamination costs for a site?
This would depend on any site chosen. Council is not at this point yet.
Will the CEO or any officers get paid from this business?
No Council officers or Councillors would receive any benefits from such a venture.
What happens to our assets if you channel money from scheduled repairs and maintenance to fund this?
Grants money, funding from potential partners, a loan or calling on reserves are all potential options to help fund a start-up, should this be supported by the community and the feasibility study which will ultimately outline the matters critical to understanding what funding would be needed and best avenues to secure it.
You must have been working on this behind the scenes for a while. How much have you already spent on this project – what has already been devoted in the way or resources?
This is a proposal put forward by the Mayor and supported by Councillors.
Council has not been working on this behind the scenes. Officers have provided formal advice, which was legally reviewed, around Council’s ability to undertake such a venture prior to the Notice of Motion being moved.
Officers have also facilitated community engagement to support the request in the Notice of Motion to test the community appetite for Council proceeding with the proposal.
$5,000 has been spent on this support.
How would you work with the government/regulators?
As cannabis is a heavily regulated product, there is a cascade of conditions that must be met by an operator. Council would need to work with government, both state and federal, and its agencies, including the Office of Drug Control to secure the necessary licences and permits.
If the ASX shows a few of the biggest players are seeing a fall in their share value is this a wise investment?
There is evidence to show that while still in its infancy, the potential for growth in medicinal cannabis has many investors taking notice with those once backing tech firms switching to the cannabis industry.
It is true that 2021 was a mixed bag for the 22 plus ASX cannabis stocks, though with more rises experienced than falls, but the stock market is not a reliable market barometer.
This is because share value is more about a view of how well an individual company is likely to perform over time based on past financial performance and achievements, as opposed to a view on the state of the market. That is, share value reflects how well a company is doing in a particular given industry not how well a given industry is faring based on the performance of an individual company.
What capability and experience does Council have to deliver on this?
Council does not currently have the expertise to run a medicinal cannabis business. It does however, have the ability to work with those who do. This is a potential opportunity for Council to partner with government and private industry –the scientists and experts – to establish a business that promises benefits to its ratepayers in a number of areas – employment, rates relief and health and wellbeing.
How much additional revenue needs to be generated to make a meaningful difference to reducing rates?
Any additional income Council can earn from sources outside of rates will reduce the amount required from ratepayers. Ratepayer views will differ on what constitutes a meaningful difference depending on the amount of rates they pay and their personal circumstances. We know from community feedback that any reduction Council can make however, would be welcomed.
Experts agree there is huge potential in Australia’s medicinal cannabis market. Forecasts by Prohibition Partners predict an enormous explosion in value over the next ten years reaching $3 billion by 2028.
Council’s earning potential will depend on the operational model advanced, area cultivated, and quantum manufactured but there is potential to bring in hundreds of thousands of dollars, if not millions, annually.
• Chart: Huge potential in Australia's medicinal cannabis market | Statista
What guarantees do ratepayers have that returns will be directly funnelled into reducing rates to individuals?
An iron clad one. Council is committed to seeking alternate revenue streams and external funding opportunities to reduce the reliance on rates. The proposal is to offset municipal rates through the establishment of an enterprise with the objective of cultivating, producing and manufacturing medicinal cannabis– noting this also as an opportunity also to create jobs and support the health and wellbeing of those in the community suffering chronic illness.
Who will be financially and legally responsible for the venture if it does not work, or if Council is sued down the track?
Council.
Will this be subsidised for lower income families?
Council is proposing to manufacture, cultivate and produce, not sell medicinal cannabis to the public, which is currently only available on prescription. As such the issue of subsidies for lower income families is not something that would be within Council’s control.
On what basis will council proceed?
Council will only move to the next stage, which would be to undertake a feasibility study, if the majority of respondents who provide feedback support this.
What's the demand like for medicinal cannabis at the moment that council is aware of?
Demand for medicinal cannabis has been growing rapidly in recent years, with the Therapeutic Good’s Administration special access scheme (SAS-B) approvals for patients more than doubling in the last year.
As I understand it, some years ago the old Footscray Council got into a large amount of debt. How can we ensure this won't end being another debt trap if it fails?
A feasibility study would ultimately outline the matters critical to understanding funding needs and best avenues to secure it.
But, grants money, funding from potential partners, Government, a loan or calling on reserves are all potential options to help fund a start-up, should this be supported by the community.
Should the venture prove successful, what guarantees will the council implement to avoid selling the business in the future, to a private enterprise?
If the venture goes ahead, it is intended the business would remain in the hands of Council to ensure all profits are directly funnelled into reducing rates for residents in the City of Maribyrnong.
Has Council contacted medicinal cannabis producers, elsewhere in the country to gain advice as to start up costs?
We are not at this stage yet, but if the community is supportive of the idea this would be done as part of a feasibility study to better understand the operational model, costs, timeframe and business structure.
There are strict guidelines on security measures for any medicinal cannabis enterprise due to significant risk of "diversion" of cannabis. Councillors and council staff were not elected or employed with a view to whether they are "fit and proper persons".
As the questioner correctly states: Council would need to demonstrate it is able to comply with the requirements of the Office of Drug Control to obtain a licence, should the proposal proceed to this stage. This includes the likes of security measures around any cultivation site and providing evidence those involved are ‘fit and proper persons’ to the satisfaction of the ODC.
Councils have obligations relating to planning and other approvals and oversight. Entering into this enterprise is in conflict with council's core roles in this regard.
Maribyrnong’s proposal is to investigate the opportunity to partner or to operate a medicinal cannabis venture. This is novel. As noted, Lismore City Council’s involvement in the CannaPacific venture was in relation to its role as a regulator, not operator.
Council’s legal advice has confirmed it is able to enter into such a venture but also recognises challenges in regards to deliberation planning matters, for which it is also responsible. This would need to be further investigated.
What will happen if this venture goes south and ends up costing the council money? What happens to rates then?
Grants money, funding from potential partners or investors are all potential options to help fund a start-up, should this be supported by the community and a feasibility study, yet to be undertaken.
If this goes well, how will the rates cap be managed?
The rates cap is set by Government and determines the maximum increase Council can adopt. Council is able to set rates below the rates cap currently, provided it can service its activities adequately with a lower rates take. If this venture goes well, Council could potentially set a zero increase, regardless of the cap limit, on an ongoing basis.
The feasibility study will identify any financial risk. The rates can increase only in line with rates cap.
What guidelines will be introduced in regards to the baseline of rates garnering if there is a low year?
It is too early for us to answer given no feasibility study has yet been undertaken to determine the operational model, costs, and forecast earnings.
Not all roads in the Municipality are sealed yet council wants to risk ratepayers’ funds in an industry they know little about. Why doesn’t council provide basic facilities before taking on other risky ventures?
Being able to earn income independently of rates would enable Council to both reduce the amount levied from rates and, depending on the amount of extra income earnt, deliver additional services which may include sealing all unsealed roads in the municipality, for example, amongst other things.
Will you need a doctor’s referral to access it?
The Therapeutic Goods Administration (TGA) of Australia regulates the supply of medicinal cannabis, which can only be prescribed by a doctor.
Maribyrnong rates are in the highest quartile in Melbourne. What makes council think they can compete commercially on Cannabis if they can’t compete with other councils on rates?
Every Council is different in the number of services offered and the amount of revenue it generates other than rates eg parking revenue, ticket machines etc.
Medicinal cannabis would be a business venture. Council is currently dependent on rates revenue to fund its 60 plus services and capital projects to maintain assets.
Will the Council be sharing the information they have used to determine the growth potential and market opportunity for this idea?
Readily accessible data available on both Government and industry websites provide information on the current market and forecast growth. Council has not investigated this in detail as yet. This would be included in a feasibility study if the community supports the idea.
Why doesn’t council focus on fiscal responsibility to reduce rates and provide basic ratepayer services first?
Council delivers 60 different services and maintains an extensive asset base through the delivery of capital and asset improvement projects. Council is aware of its fiscal responsibilities and delivers a balanced budget every year.
What difference will it make to all the non-ratepayers in the community? How will they benefit?
Non-ratepayers already benefit from the services and activities funded by ratepayers – i.e libraries, roads, waste, parks and sporting facilities. Where Council is able to deliver more and better services (without increasing the impost on ratepayers) all of its community would reap the benefit.
Has the Council considered local green power generation as a business idea?
Council is committed to investigate opportunities to reduce rates through alternative funding opportunities. Yes, local green power generation is among a variety of ideas under consideration.
How can the mayor genuinely say a successful enterprise won't be sold off, given that councillors only hold office at the pleasure of the voters. There is absolutely nothing to stop a future council from selling it off.
Council’s stated intent is to ensure any venture remains in the hands of ratepayers for their benefit. A future Council could make a different decision if there were no legal impediments preventing it from doing so.
Would it be better if the Council bought shares in an ASX listed company that is already established and making profits?
This idea is not just about creating an income to reduce the reliance on rates, but a potential opportunity for Council to establish a business that promises benefits to its ratepayers in a number of areas – employment, rates relief and health and wellbeing.
Council is also unable to invest in a private medicinal cannabis enteprise, as there are restrictions on the type of investments Council can make as outlined in the Local Government Act.
If a feasibility study will cost $100k+ and if $3m+ will need to be spent to get the venture up and running, what is the bottom line of public money that the Council is willing to lose before they give up on the venture?
Council is not intending to lose any money. At this point in time the only amount it is considering investing is the amount needed to fund a feasibility study, if the community supports the idea, to better understand funding implications on which decisions could then be made.
If this is already a crowded market why is this idea being considered?
While growing, the industry is relatively new in Australia. There is still room for new players to enter the market and money to be made. A feasibility study will identify more robustly the markets potential.
In regards to running costs for council services, and admitting that rates are high, why is MCC at a level of $3326 expenses per property, and providing services as per head?
The average rate per residential property in Maribyrnong is ($1,901.93) and average rate per property is $2,341.76.
The indicator of expenses per head is dependent on the density of population.
The total expenses for providing the current level of services is the same and not dependent on whether it is divided per head or per property (Different indicators).
Every Council is different in the number of services offered and the amount of revenue it generates from sources other than rates eg parking revenue, ticket machines etc.
Maribyrnong has fewer ratepayers than other local authorities to share the burden with generally; fewer commercial properties (who pay increased rates) compared to some local authorities to reduce the amount residential ratepayers need to cover; no other income streams compared to some local authorities who also run their own business ventures. As such it is heavily reliant on its residential ratepayers to cover the bulk of service delivery costs, which is why it is investigating medicinal cannabis as an alternate revenue stream.
What services will be available for the everyday people once this project is up and running? Will the products be available in pharmacies over the counter?
Council is a long way from getting a venture like this up and running. It is currently only seeking community support for the idea to facilitate a feasibility study understand funding implications among other things.
Council is also proposing to manufacture, cultivate and produce – not sell – medicinal cannabis, which is currently only available on prescription.
The suggestion that council would keep 100% of the profits if there is a partnership arrangement afoot?
While there is an opportunity to look at a partnership arrangement, this is yet to be investigated as we are not quite at that stage yet. If the community is supportive of this idea, the feasibility study would look at potential business structures.

Important Links

Medicinal Cannabis - Alcohol and Drug Foundation (adf.org.au)
Medicinal cannabis | Cannabis in Victoria | Crops and horticulture | Agriculture Victoria
Cannabis Companies Australia List: Guide To Cannabis Manufacturers (cannabisplace.com.au)

Important Links

Medicinal Cannabis - Alcohol and Drug Foundation (adf.org.au)
Medicinal cannabis | Cannabis in Victoria | Crops and horticulture | Agriculture Victoria
Cannabis Companies Australia List: Guide To Cannabis Manufacturers (cannabisplace.com.au)
Medicinal Cannabis | Office of Drug Control (odc.gov.au)