Australia & NZ's Bid to Anchor the Pacific Cannabis Trade

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Start with the container ships. In 2024, Australia brought in more than 77,000 kilograms of cannabis, up from just under 45,000 kg the year before -- a jump of roughly 72% in twelve months. Canada supplied about 80% of that volume, which tells you the incumbent supplier relationship built over the last decade hasn't gone anywhere. Meanwhile, across the Tasman Sea, New Zealand quietly crossed a threshold of its own: exports to Australia topped 1 ton in 2024, and Medsafe -- New Zealand's medicines regulator -- has been shaving weeks off its export licensing timelines, with one exporter reporting a drop from 155 days to 8.

Then the numbers get complicated. Australian medical cannabis sales fell 28.5% in the second half of 2025 compared to the first half, according to the Penington Institute -- the first significant decline since the country's medical scheme launched in 2016. That's not a footnote. It's happening at the exact moment import volumes and domestic cultivation are both climbing, and it's the tension this whole story turns on.

So the interesting question for the next three to seven years isn't whether Australia and New Zealand already dominate Asia-Pacific medical cannabis -- they plainly do. It's whether that dominance converts into something bigger: a genuine regional trade hub, the way Canada became for North America or the Netherlands did for Europe. And if it does, the early evidence suggests the beneficiaries will be patients in the UK, Germany, and parts of Asia -- not the Pacific Island nations sitting geographically closest to the action.

Australia's Numbers Tell Two Different Stories at Once

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Look at the raw volume and Australia's story reads like unambiguous growth. Imports nearly doubled between 2023 and 2024, hitting a bit over 77,000 kg, with Canada alone accounting for roughly 80% of everything coming in. Domestic cultivation followed the same arc from a different starting point -- 16,700 kg produced locally in 2021 climbed to 41,328 kg by 2024, a 148% increase in three years. On paper, that's a country building both import relationships and homegrown supply capacity at the same time, which is usually a sign of a market that's still finding its ceiling.

Then H2 2025 happened. Medical cannabis sales dropped 28.5% compared to the first half of the year, the steepest decline the Penington Institute has recorded since Australia's medical access scheme began in 2016. That's worth sitting with, because it's not a demand-side story in the way a market correction usually is. The Therapeutic Goods Administration had 877 cannabis products listed across five categories as of December 31, 2025 -- more product variety than the market has ever had, not less. What changed was enforcement. Regulators tightened scrutiny on high-volume prescribers and telehealth clinics that had been writing a large share of Australia's cannabis scripts, and when that supply of prescriptions contracted, sales followed it down.

This matters for the trade-hub question because it separates two things that are easy to conflate: supply-side capacity and patient-facing demand. Australia has been building supply capacity aggressively -- more imports, more local cultivation, more registered products. But the actual clinical access pipeline, the telehealth-driven prescribing model that made Australia's medical cannabis market grow so fast in the first place, just took a real hit from its own regulators. If that enforcement trend continues rather than settling into a one-time correction, Australia risks a mismatch: cultivation and import infrastructure scaled for a patient base that regulatory policy is actively shrinking. That's precisely the kind of gap export markets are built to absorb -- assuming the product meets the certification bar that European and Asian buyers require, which is a separate and harder problem than simply having volume to sell.

New Zealand's Quiet Pivot From Patient Market to Export Engine

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New Zealand's domestic market has been maturing at a pace that's easy to miss if you're only watching Australian headlines. Dispensing volumes went from 4,875 in 2020 to 265,731 in 2025 -- more than a fiftyfold increase in five years. That's the kind of growth curve you'd expect from a market moving out of its early-adopter phase and into something closer to routine clinical practice. But the more consequential shift isn't domestic consumption. It's that New Zealand has started exporting in real volume, crossing 1 ton to Australia in 2024, putting it in the same rough tier as Thailand and ahead of where South Africa started that same year.

The mechanism behind this is bureaucratic, and it's the kind of detail that doesn't make headlines but actually explains the trend line. Medsafe's average export licence turnaround fell to 6.4 working days in 2026, down from 10 working days in 2024 and 2025, according to Associate Health Minister David Seymour. One exporter's own licence processing time dropped from 155 days in 2023 to 8 days recently -- an almost twentyfold reduction for a single company. When the regulatory bottleneck that slow, cutting it that dramatically doesn't just speed up existing trade, it changes what kinds of deals are viable at all. A 155-day licence turnaround makes short-notice or opportunistic export contracts nearly impossible; an 8-day turnaround makes them routine.

Hemp legislation reform adds another piece: medicinal cannabis cultivators will soon be able to grow low-THC plants without a separate licence, removing a bureaucratic step that previously slowed cultivators trying to diversify their crop mix. And the clearest signal of where this is heading commercially is NZ Grow Co, which launched in April 2026 with an extraction facility in north Waikato built around an integrated model -- cultivation, processing, and export handled under one operation rather than farmed out across separate licensed entities. That vertical integration is a deliberate export-market design choice, not an accident of geography. It's the structure you build when you're optimizing for consistent, certifiable supply chains rather than just growing product for a domestic patient base.

Where the Product Is Actually Going: UK, Germany, and Beyond

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The product New Zealand and Australia are producing isn't primarily headed to their own neighborhood -- it's headed to Europe. UK patients can now access New Zealand-grown medicinal cannabis for the first time, a development backed by New Zealand Trade and Enterprise's promotion efforts abroad. That's a meaningful marker because the UK and Germany represent exactly the kind of regulated, insurance-adjacent medical markets that reward suppliers who can prove consistent quality and pass GMP-equivalent certification -- the same bar Canadian exporters had to clear roughly a decade ago when they built their own reputation as reliable suppliers to European buyers.

That's not a coincidental parallel -- it's the same playbook. Canada spent years building export credibility with the EU and UK before it had any real presence in Asian markets, because European regulatory approval functioned as a trust signal that Asian buyers could rely on secondhand. Australia and New Zealand appear to be following that same sequence: establish UK and German trade relationships first, let those relationships certify the supply chain's reliability, then use that credibility to open doors in Asia. It's a slower path than going straight for the biggest or nearest market, but it's the one with actual precedent behind it.

The corporate moves back this up. Little Green Pharma's 2026 merger with Cannatrek was framed explicitly around scaling export capability rather than simply consolidating two domestic competitors -- a signal that the companies involved see the growth opportunity as external, not local market share. Tilray Medical's March 2026 expansion of its Australian product portfolio was the company's largest ever in that market, which reads less like a bet on Australian patient growth and more like a bet on Australia as a distribution and manufacturing base for the wider region. Multinational cannabis companies don't make their largest-ever portfolio moves in a market unless they think the infrastructure underneath it -- cultivation licensing, GMP certification pathways, export logistics -- is durable enough to build on. The catch is that durability question is exactly what Section 1's H2 2025 sales drop calls into doubt on the domestic side, even if the export side looks solid.

The Import Surge and What It Reveals About Regional Supply Competition

Canada dominated Australia's 2024 cannabis imports, supplying roughly 61,600 kg—far exceeding South Africa (4,900 kg), New Zealand, and Thailand (about 1,100 kg each) combined.

Canada's continued 80% share of Australian imports in 2024 is the single most important number for understanding how much has actually changed in this market. Despite New Zealand's export licensing reforms, despite Thailand's growth, despite South Africa's dramatic entry, the country that dominated Australian imports before this growth spurt still dominates it after. That's a useful check against reading too much into any single new entrant's growth rate.

Because some of those growth rates are genuinely striking. South Africa's exports to Australia went from just 60 kg to nearly 5 tons in 2024 -- a far steeper trajectory than New Zealand's climb past 1 ton. New Zealand and Thailand both crossing the 1-ton mark in the same year suggests a real second tier of suppliers is forming underneath Canada's dominant position, rather than this being a simple two-horse race between an incumbent and a single challenger.

The honest reading here is diversification, not displacement. Australian demand for cannabis product -- import plus domestic cultivation combined -- has been growing faster than any single domestic supply chain could keep up with, which is exactly the condition that invites multiple new suppliers in at once rather than one clear winner. South Africa's climate and cost structure make it a logical bulk supplier; New Zealand's proximity and improving regulatory speed make it a logical premium or just-in-time supplier; Thailand's position gives it a foothold in both the Australian and broader Asian conversation. None of that adds up to Canada losing ground yet. It adds up to the pie getting bigger while the biggest slice stays roughly where it was.

Why the Pacific Islands Aren't Part of This Story Yet

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Fiji, Tonga, and Papua New Guinea come up constantly in cannabis research on the Pacific -- but almost never in the context of regulated trade. Global Initiative research on the region associates these countries primarily with illicit cultivation and transit routes, not licensed cultivation infrastructure feeding a legal export market. That's not a moral judgment about the plant or the people growing it; it's a description of what regulatory apparatus does and doesn't exist. There's no Pacific Island equivalent of Medsafe or the TGA -- no agency capable of certifying GMP-equivalent cultivation, issuing export licences on a multi-day turnaround, or giving a European buyer the paperwork trail they need to accept a shipment.

History is fairly consistent on how trade hubs actually form, and it's worth being precise about the pattern rather than assuming good growing conditions are the deciding factor. The Netherlands became Europe's cannabis and hemp-processing anchor point because it already had pharmaceutical manufacturing infrastructure and a regulatory culture built for handling controlled substances, not because Dutch greenhouses have some unique climate advantage. Canada became North America's hub because Health Canada had decades of experience regulating controlled substances before legalization ever happened. In both cases, the regulatory apparatus came first and the trade volume followed it -- not the other way around.

There's a real counter-case worth taking seriously, though. Pacific Island nations with favorable growing climates could eventually enter contract-cultivation arrangements with Australian or New Zealand processors, supplying raw biomass or early-stage product that gets finished, certified, and exported under an Australian or NZ regulatory stamp. That's roughly how Colombia and Lesotho function in the European supply chain today -- both grow substantial volumes for EU-bound medical cannabis, but neither sets the regulatory terms their product moves under. If Pacific Islands enter this trade at all in the next several years, that contract-grower model is the far more plausible path than any of them building independent export infrastructure from scratch. It would make Australia and New Zealand's anchor role about controlling the regulatory and processing chokepoint of the region, not about linking Pacific growers directly to global buyers.

What Could Stall This Trajectory

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The clearest reason to be cautious about this trajectory is sitting right in the data everyone's already citing: Australia's own domestic sales dropped 28.5% in H2 2025, and that happened faster than any export strategy could realistically compensate for. Regulatory tightening moves in weeks; building new export relationships in Germany or the UK moves in quarters or years. If the enforcement crackdown on high-volume telehealth prescribers continues rather than stabilizing, it could keep shrinking the patient base that Australian cultivators have used to justify scaling up production in the first place -- leaving them with more cultivation capacity and licensed product variety than the domestic market can absorb, dependent on export demand materializing on a timeline it hasn't yet proven it can meet.

New Zealand's export gains carry their own fragility. The entire improvement story -- licence turnaround falling from 10 working days to 6.4, one exporter going from 155 days to 8 -- is a function of current Medsafe policy and current ministerial priorities under Associate Health Minister David Seymour. That's a policy choice, not a structural feature of the New Zealand regulatory system, and policy choices change with governments. A shift in health ministry leadership or priorities could slow processing back toward 2024/2025 timelines without any change in law at all, just a change in administrative emphasis.

There's also a cost factor that gets almost no attention in reporting focused purely on licensing speed: currency exposure and shipping logistics matter far more for a Pacific supply chain feeding European buyers than they do for, say, Canadian product moving into the US or intra-EU trade. New Zealand and Australian exporters are selling into markets 18,000 kilometers away, in currencies that move independently of their own, with shipping costs and transit times that Canadian-to-US trade never had to absorb. None of the current growth data accounts for what happens if currency swings or freight costs spike the way they have in other commodity sectors over the past several years.

And then there's the simplest disciplining fact of all: Canada's 80% share of Australian imports hasn't budged much despite New Zealand posting faster percentage growth. Incumbents built on years of established GMP certification and buyer trust don't get displaced just because a challenger's growth rate looks impressive on a chart. They get displaced, if at all, slowly -- and usually only after the challenger has absorbed several years of the kind of stumbles Australia's domestic market is having right now.

Put the pieces together and Australia and New Zealand's anchor role over the next three to seven years looks less like a hub connecting Pacific Island producers to the world, and more like a two-country regulatory bloc that processes, certifies, and exports directly to Europe and Asia on its own terms. That's a meaningfully different model than Colombia's, which built its export reputation mostly on volume and cost advantage. It's closer to how Israel built its cannabis export reputation -- on regulatory credibility and clinical research infrastructure first, with volume following once buyers trusted the paperwork.

The single indicator worth watching most closely is that H2 2025 Australian sales drop. If domestic enforcement against telehealth prescribing keeps suppressing the patient base while New Zealand's export infrastructure keeps getting faster and cheaper to use, the economic center of gravity for both countries could shift from patient-market-first to export-market-first within this window -- a genuine structural pivot, not just a rough patch in an otherwise steady domestic market.

As for the Pacific Islands, the realistic entry point isn't independent regulatory status -- it's a contract-cultivation agreement with an Australian or New Zealand processor, the Lesotho-to-Europe model rather than the Netherlands-as-hub model. No such agreement exists yet in any documented form. When one does get signed, that will be the moment worth flagging as the actual turning point in this story -- not another year-over-year import chart, but the first time a Pacific Island grower's product enters the trade wearing someone else's regulatory stamp.