Australia Legal Cannabis Market

Australia Legal Cannabis Market Size, Market Forecast and Outlook By FMI

The Australia legal cannabis market is expected to expand from USD 148.4 million in 2025 to USD 1,997.3 million by 2035. The market is anticipated to register a CAGR of 30.1% during the forecast period. Hemp is likely to lead with 83.2% share in 2025. CBD is projected to account for 63.5% share of the derivative segment in 2025.

Summary of the Australia Legal Cannabis Market

• Demand and Growth Drivers
  • Medicinal cannabis acceptance is expected to increase as chronic pain and sleep disorder cases expand patient demand.
  • Regulated access through clinical pathways is likely to improve patient confidence in cannabis-based therapeutic products.
  • Clinical research is anticipated to help prescribers assess CBD and THC products with stronger evidence.
• Product and Segment View
  • Hemp is expected to lead the source segment as industrial applications expand across textiles and supplements.
  • CBD is likely to dominate derivatives as low-dose wellness interest improves consumer and pharmacy engagement.
  • Medical use is anticipated to lead end-use demand as patients seek prescribed formats for long-term symptom management.
• Geography and Competitive Outlook
  • Western Australia is expected to lead state-level expansion as cultivation capacity and agribusiness investment increase.
  • Victoria is likely to maintain strong medical cannabis activity through clinical research and pharmaceutical production.
  • Companies with GMP-certified production and tested formulations are anticipated to gain stronger buyer confidence.
• Analyst Opinion
  • Nandini Roy Choudhury, Principal Consultant for Food and Beverage at FMI, suggests, “The Australia legal cannabis market is likely to favor producers with clinical-grade manufacturing and controlled supply systems. Hemp and CBD suppliers are expected to gain advantage as medical access and industrial applications expand across regulated channels.”
• Australia Legal Cannabis Market Value Analysis
  • The Australia legal cannabis market is moving from early regulated access toward a broader medical and industrial product base.
  • Demand is likely to rise as patients seek cannabis-based products for chronic pain and anxiety management.
  • Adoption is expected to improve as pharmacies and telehealth platforms make medical cannabis access more organized.
  • Spending is anticipated to increase as GMP production and domestic cultivation create stronger supply reliability.

Metric	Value
Market Size in 2025	USD 148.4 million
Projected Market Size in 2035	USD 1,997.3 million
CAGR (2025 to 2035)	30.1%

Analyzing Australia Legal Cannabis Market by Top Investment Segments

The Australia legal cannabis market is segmented by source into marijuana and hemp. By derivatives, the market includes CBD, THC, and others. Based on end-use, the market is divided into medical use, recreational use, and industrial use. Regionally, the market is analyzed across Eastern Australia, Southern Australia, Northern Australia, Western Australia, and Central Australia.

By Source, Hemp Leads with 83.2% Share

In terms of source, the hemp segment accounts for 83.2% share. Locally grown hemp is fueling innovation in industries like sustainable construction and eco-apparel. Hempcrete used in homes and buildings is celebrated for its insulation, durability, breathability, and fire resistance.

Hemp fibers are being incorporated into textiles and bioplastics, offering environmentally friendly alternatives to conventional materials. AgriFutures Australia and industry groups are investing in agronomic research, best-practice manuals, and processing infrastructure to support growth. These efforts aim to make hemp production economically viable and regionally distributed.

By Derivative, CBD to Lead with 63.5% Share

Based on derivative, the CBD segment registers 63.5% share. CBD (Cannabidiol) is growing in popularity in Australia due to increasing public awareness of its potential health benefits, easing regulatory restrictions, and rising demand for natural wellness products. As consumers seek alternatives to traditional pharmaceuticals, CBD is being embraced for its reported ability to support relief from anxiety, stress, chronic pain, insomnia, and inflammation conditions that affect a significant portion of the population.

One major driver behind CBD’s popularity is the regulatory shift. Since 2021, low-dose CBD products have been allowed to be sold over-the-counter in pharmacies (Schedule 3 classification), subject to approval by the Therapeutic Goods Administration (TGA).

By End-use, Medical Use Segment Registers 82% Share

In terms of end-use, the medical use segment captures 82% share. Medical cannabis enjoys growing acceptance within the clinical community, particularly for treating chronic pain, cancer therapy side effects, PTSD, and insomnia. Companies like ECS Botanics, Althea Group, and Cann Group have invested heavily in clinical-grade cultivation and GMP-certified manufacturing. These investments support a regulated and scalable supply chain tailored to medical demand.

Challenges

Regulatory Ambiguity, High Entry Barriers, and Prescription Bottlenecks

The Australia legal cannabis market continues to be impacted by regulatory inconsistency across federal, state and territory jurisdictions. Although medicinal cannabis is legal through the Therapeutic Goods Administration (TGA) via the Special Access Scheme (SAS-B), access for patients is significantly impeded due to complicated prescription processes, limited GP training and no products available through pharmacies.

OTC CBD pathway still in limbo with no S3 products approved. High costs for licensing, cultivation, GMP compliance, and product testing create steep hurdles for start-ups and disincentive small-scale domestic innovation.

Opportunities

Domestic Market Expansion, Export Potential, and Health Consumer Demand

Australia’s federally legal cannabis industry is on track for mass-growth despite systematic hurdles, thanks to increasing public acceptance, potential therapeutic use cases, and international export markets. The ant nociceptive and anti-anxiety activity provide a perspective on new therapeutic applications.

With legislative pressure now building for adult-use legalization largely through public activism and political discoursethe stage is being set for a larger recreational market. Australia’s role as a global supplier of pharmaceutical-grade cannabis is further reinforced by the growing exports of GMP-certified medical cannabis to European and Asia-Pacific markets.

State-wise Outlook

Western Australia

Driven by its arid climate, vast land availability, and its investment in cannabis agribusiness infrastructure, Western Australia is fast emerging as a leading cultivation and export hub. As licenses for the cultivation, research, and processing of medicinal cannabis continue to expand, companies across Perth and its perimeter are expanding greenhouse space and collaborating for global supply. And the state’s efforts to diversify its agriculture, shift towards biopharma production, and home grow is fuelling local demand for compliant cannabis eco-systems.

Region	CAGR (2025 to 2035)
Western Australia	30.2%

Queensland

Near Brisbane, Queensland is developing into a cannabis research and development and manufacturing powerhouse, largely around therapeutic cannabis, chronic pain and clinical trials. Biotech firms and universities based in Brisbane are working on THC and CBD formulations, while in the Sunshine State's rural areas indoor and outdoor growers are ramping up their operations. State support for agricultural technology parks and pharmaceutical innovation zones is helping speed commercialization of cannabis-based wellness and prescription-grade products.

State	CAGR (2025 to 2035)
Queensland	30.0%

New South Wales

New South Wales is pioneering medical cannabis access programs, prescription volumes and pharmacy distribution networks, creating Australia's largest legal cannabis consumer base. Getting The Goods: Sydney and Newcastle is the home base for major players, providing telehealth cannabis consultations, dispensary services, and compliance-grade packaging with the flexible guidelines surrounding patient pathways and regulation set forth by the state government, the rapid adoption seen among chronic illness patients (such as chronic pain and epilepsy) has pushed the demand for cannabis oil, capsule and vaporizer- based products.

State	CAGR (2025 to 2035)
New South Wales	29.8%

Victoria

Victoria became the first Australian state to legalise medicinal cannabis, leading the nation in policy innovation, pharma-grade production and integration into public healthcare. GMP certified cannabis extraction, clinical research and product standardization leading companies are based in Melbourne. Victoria is set to be the long term leader in medical cannabis exports and precision therapeutics with the Government continuing to support the cannabis R&D drive with the Medicinal Cannabis Industry Development Plan.

State	CAGR (2025 to 2035)
Victoria	30.1%

Leading Legal Cannabis Suppliers in Australia

The Australia legal cannabis market is in a growth phase, supported by evolving regulatory frameworks and increasing public acceptance. Key players such as Cann Group Limited, Zelira Therapeutics, AusCann Group Holdings Ltd., Bod Australia, Althea Group, and others are focusing on developing high-quality medicinal cannabis products.

These include oils, topicals, and low-dose CBD formulations tailored for therapeutic use. Emphasis is placed on clinical-grade standards, pharmaceutical compliance, and controlled domestic cultivation. Companies are investing in research, patient education, and product innovation to expand their portfolios.

The market is also witnessing growing collaborations between healthcare providers and cannabis firms to enhance medical access. Strategic partnerships, contract manufacturing, and expanding export capabilities are strengthening Australia's global position in the medical cannabis sector.

Recent Development

• In July 2024, Althea Group Holdings formed a 50/50 joint venture with Flora Growth Corp. to launch cannabis-infused beverages in the USA market under the Peak USA JV LLC. Six beverages are planned for release through online and retail channels in Q1 FY25.
• In March 2024, Althea Group Holdings signed an exclusive distribution agreement with Flora Growth to supply Vessel brand vape pens and smoking accessories in the UK medical market, leveraging Althea's extensive network.

Key Players

• Zelira Therapeutics
• Bod Australia
• Incannex Healthcare
• MediPharm Labs Australia
• Creso Pharma

Key segmentation

By Source:

• Marijuana
• Flower
• Oil & Tinctures
• Hemp
• Hemp CBD
• Supplements
• Industrial Hemp

By Derivates:

• CBD
• THC
• Others

By End-Use:

• Medical Use
  • Chronic Pain
  • Anxiety and Depression
  • Cancer
  • Arthritis
  • Diabetes
  • Glaucoma
  • Migraines
  • Epilepsy
  • Multiple Sclerosis
  • AIDS
  • Amyotrophic Lateral Sclerosis
  • Alzheimer’s
  • Post-Traumatic Stress Disorder (PTSD)
  • Parkinson’s
  • Tourette’s
  • Others
• Recreational Use
• Industrial Use