Realistic expectations for New Zealand’s cannabis market: Q&A with Rua Bioscience CEO Manu Caddie

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With the launch of New Zealand’s medical cannabis program two months away and a referendum to legalize adult-use marijuana slated for later this year, businesses from around the world already have their sights set on the Oceanic market.

New Zealand’s Medicinal Cannabis Agency will become operational April 1, when regulations laying the industry’s regulatory foundation take effect.

Among those preparing to capitalize is Manu Caddie, CEO of Rua Bioscience in New Zealand’s Tairawhiti region.

Rua Bioscience, a medical cannabis company founded in 2016, was a finalist for a Regional Game Changer Award at the inaugural MJBizDaily Awards in December.

Caddie said the country’s regulations installed the framework for a sustainable industry.

“The best thing the New Zealand regulators did was listen carefully and work closely with both prescribers and the industry in developing regulations that are reasonable and can work well to create a sustainable sector,” he said.

Caddie spoke with Marijuana Business Daily about opportunities for import and export, collaboration and what local businesses can learn from Canadian turbulence.

What are some realistic expectations for the New Zealand market in 2020?

It will be tight, but I think we will see New Zealand products on the market by the end of the year.

Until then, patients will see more imported product.

The challenge will be that prices will still be fairly high for imports and domestic products, because of the outlay that’s required.

Unfortunately, the regulations do not provide any public subsidy of medical cannabis (for patients) at present.

Because most cannabis products are unapproved – without clinical data – it will be unlikely (the Pharmaceutical Management Agency) will subsidize anything in the near term.

Are there opportunities for international medical cannabis businesses in New Zealand, and where in the supply chain?

As a new company in a new industry, we’re looking for strategic partners who have more experience than us.

New Zealand is well regarded in Asia, so there’s opportunities as Asia opens up to partner with New Zealand companies.

There’s also opportunities to partner with New Zealand’s researchers and entrepreneurs in areas like genetics, robotics and lighting, as well as to transfer or collaborate on technology.

I think there’s opportunities for companies that have stable plant varieties – they can supply and license those and potentially partner on breeding.

There are some North American and Australian companies looking to provide regulatory and design consulting, extraction and manufacturing services for New Zealand companies – there are obvious benefits and a few challenges with some of those options.

What markets are you looking at?

The government sees exports as the only way to make sure there is a sustainable industry in New Zealand.

Asia’s slowly opening up, and we see that as a big opportunity. In the short term, Europe and Germany are clear opportunities, as is Australia.

Flower to Europe makes sense – and extract-based products to Australia, whether that’s sublingual wafers, sprays or tinctures.

Canada looks like it’s oversupplied.

To what extent is the recreational cannabis referendum binding?

The current government says it’s binding, and I think if the same parties are in government post-election, they’ll progress with it quickly. The opposition parties seem a little less committed.

I think it would be brave to ignore (the referendum result) if there is strong public support. But it could be close, which would give room to wriggle out of it.

It’s still unclear just how binding it really is. Even the current government says that it will be up to the new government to work through when and how it implements the legislation.

What can New Zealand’s cannabis businesses learn from Canada’s recent experience?

Those adjustments in the market are quite helpful to bring more realism and logical valuations to companies, so I think it’s a good thing overall.

It’s a correction that needed to happen.

We’re looking at realistic valuations and expectations, rather than hyper-inflated ideas of grandiosity that are not grounded in reality.

We’re starting small and scaling as we need to, rather than building production capacity when we haven’t proven that we can grow it to (Good Manufacturing Practice) GMP standards, let alone have the customers available to purchase it.

Not overcapitalizing is important.

Any chance CBD products will be sold over the counter in pharmacies, as opposed to by prescription?

It’ll be an uphill battle to get CBD taken out of prescription only, but we’re working on it.

We’ve been working through that with the regulators over the last six months.

Sort of a parallel process to these regulations, but it’s a separate Medicines Classification Committee that recommends what should be classified.

How long does it take to get GMP-certified?

Generally, we have good access to regulators.

New Zealand has a Mutual Recognition Agreement with the European Union and Australia, which will help access those markets.

The regulator will audit cannabis facilities for GMP.

Our company is looking to have (regulators) visit in April or May to do their audit on our first GMP batch, and they have 30 days to write their report and give it back to us.

Any issues they identify can then be addressed. It could be within two months that we have GMP certification, so June-July is what we’re aiming for.

Actual markets are much more modest than perceived demand for pharmaceutical product at this stage.

New Zealand’s complete medical cannabis regulations are available here.

More details about New Zealand’s medical cannabis scheme are available here.

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].

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