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Driven by changing laws, growing medicinal demand, and increased investor interest, Australia's cannabis sector is quietly gathering steam. Australia is positioned as a major participant in the global green wave as nations all around enable access to both medical and recreational cannabis. For smart investors, this area offers both a lot of growth potential and a fair amount of risk. See what's going on with cannabis in Australia and some of the cannabis stocks on the ASX platform.

The Australian cannabis sector includes both medicinal and recreational use. According to Australian Institute of Health and Welfare website, Medicinal cannabis was legalized in Australia in 2016, with significant changes introduced in 2021 to improve accessibility. These changes made it easier for healthcare professionals to become authorized to prescribe medicinal cannabis to patients.

Further, 3% of individuals aged 14 and older in Australia reported using cannabis for medical purposes in the previous 12 months, according to the National Drug Strategy Household Survey (NDSHS) conducted in 2022–2023. Among these users, 22% were always prescribed cannabis by a doctor, up from 20.2% in 2019. This represents a growing demand of cannabis for the medicinal use.

Growth Drivers for Cannabis Sector

Government Support to Boost Cannabis Sector: The medicinal cannabis industry is largely driven by continued government support. Notably, the government has implemented significant policy changes to improve accessibility, making it easier for healthcare professionals to prescribe medicinal cannabis. These supportive policies have played a key role in facilitating the industry's development and expansion.

Global Partnerships: Accelerating Growth in Medicinal Cannabis: Medicinal cannabis cultivation projects from other countries may help the industry to grow rapidly. International collaboration and investment can enhance production capacity, improve supply chains, and accelerate the overall development of the sector.

As per the various media reports, Australia is an important exporter due to its regulated and high-quality production standards. Its main markets include portions of Asia, the United Kingdom, and Germany. This global reach increases the investment attraction of domestic cannabis enterprises.

Few ASX-Listed Cannabis Stocks to Watch

1. Cann Group Ltd (ASX: CAN)

Founded in 2014 and headquartered in Melbourne, Australia, Cann Group Limited (ASX: CAN) is the first company to receive a medical cannabis cultivation license from the Australian Government in 2017. This ASX-listed cannabis company is focused on breeding, cultivating, manufacturing, and supplying medicinal cannabis for sale and use within Australia and approved export markets.

As per the quarterly report ending March 31, 2025, production at the Mildura facility is still on pace, with 1,534 MT of dried flowers delivered this quarter. This is an increase of 20% over the previous quarter. Annual production is predicted to be around 5.3 Mt, with the last quarter expected to be particularly high as the factory operates at maximum capacity.

To strengthen its operational liquidity and sustain innovation momentum, Cann Group Limited (ASX: CAN) has recently secured a $836,469 funding advance against its expected R&D tax incentive refund for FY25. This capital injection, facilitated by Radium Capital, is set to enhance Cann’s ability to push forward with product development, cultivation expansion, and commercialization efforts in the high-growth medicinal cannabis space.

From the financial analysis front, the company registered a 23.8% decline in revenue, falling to $6.46 million in 1HFY25 from $8.48 million in 1FY24. Despite the drop in topline, the company managed to reduce its net loss by 25.4% and bringing it down to ($10.69) million as compared to ($14.33) million in the previous year.

Meanwhile, the stock is currently trading at its all-time low of $0.014 with a market capitalization of ~$9.33 million, having broken below its recent support levels of $0.038 and $0.026. It also trades below all key moving averages (i.e., MA-20, 50, and 100), and the Relative Strength Index (RSI-14 days) stands at ~24, indicating that the stock is in oversold territory. Overall, the stock's performance remains weak.

Weekly Chart (Source: Investing.com)

2. Vitura health limited (ASX: VIT)

Vitura Health Limited (ASX: VIT) was founded in 2018 and is headquartered in South Yarra, Victoria, Australia. It sells and distributes medicinal cannabis products throughout Australia. It operates in two main segments: (1) Sales and Distribution, and (2) Clinics and Services. Its operations include CanView, an online platform that facilitates dispensing, prescribing, and medication management for alternative therapies; Doctors on Demand, a leading provider of virtual, on-demand healthcare services; BHC, a distributor specializing in alternative therapies; CDA Clinics, which provides medicinal consultations and prescription services; and Cannadoc, a medicinal cannabis clinic that offers telehealth consultations.

From a financial performance standpoint, the company reported revenue of $62.6 million in the first half of FY25, representing a modest rise of 4.5% compared to the first half of FY24. However, net profit declined significantly by 49%, falling to $1.57 million in 1H FY25 from $3.12 million in 1H FY24. This decline was primarily driven by higher costs of sales and increased IT-related expenses. The company’s current ratio stands at 1.51x, indicating a strong liquidity position to meet short-term obligations. Additionally, debt-to-equity (D/E) ratio is 0.44x, reflecting a relatively low level of financial leverage.

Meanwhile, the stock exhibited a weak performance as it corrected nearly 11% in the past 6 months, currently trading below its all-key moving averages (i.e., MA-20, 50, and 100). The Relative Strength Index (RSI-14 days) stands at ~43.2, indicating neutral price momentum. Overall, technical indicators suggest a weak price action trend. As of 27 May 2025, the stock is trading at $0.070, with the market capitalization of ~$44.37 million.

Weekly chart (Source: Investing.com)

IDT AUSTRALIA LIMITED (ASX: IDT)

IDT Australia Limited (ASX: IDT) is involved in the research, manufacture, development, and sale of active pharmaceutical ingredients (API) and finished dose forms (FDF) products in Australia and international markets. Its service offerings include microbiological and analytical testing, clinical packaging, and pharmacy services. It also provides products and solutions related to medicinal cannabis and psychedelics, oral finished dose medications.

From the financial front, the company reported total revenue of $10.54 million in 1H FY25, reflecting a solid 83% rise compared to 1H FY24. Net loss is also seen as a decline of 16% to $(3.25) million in 1H FY25 from $(3.86) million in 1H FY24, driven by an increase in sales revenue. The debt-to-equity (D/E) ratio stood at 0.17x, indicating a relatively low level of leverage. The current ratio came in at ~1.52x as of 31 December 2024, reflecting decent liquidity to pay its short obligations.

Meanwhile, the stock has been trading sideways for the past year and is currently positioned below all key moving averages (i.e., MA-20, 50, and 100). However, it continues to trade above its key support levels at $0.097 and $0.090. The Relative Strength Index (RSI-14 days) stands at ~46, indicating neutral price momentum. Overall, technical indicators indicates a weak price action trend. As of 27 May 2025, the stock is trading at $0.100, with a market capitalization of $42.10 million.

Weekly chart (Source: Investing.com)

Conclusion

Medicinal cannabis products typically contain the chemical compounds THC (tetrahydrocannabinol) and CBD (cannabidiol). According to the National Drug Strategy Household Survey (NDSHS), the use of medicinal cannabis products has been increasing year over year and is expected to continue rising in the future. However, Australia’s cannabis sector may still be in its early innings, but the trajectory is promising. With an eye on quality, global reach, and medical credibility, Aussie pot stocks are riding the green wave with increasing strength. For investors willing to handle the volatility, this space offers the potential for significant upside in the coming years.

However, it is important to note that potential market uncertainties—including regulatory changes, pricing pressures, and evolving public sentiment—could present challenges to future performance.