Australian medicinal cannabis companies could benefit from supply concerns as parts of the world face a shortage of cannabis, for both medicinal and recreational uses.

The explosion in the use of cannabis for medicinal purposes, combined with increased recreational usage as jurisdictions begin to wind back draconian laws preventing it, has created unprecedented demand for the drug.

But this has led to shortages in some parts of the world, in particular Canada, one of the world’s most progressive countries when it comes to the green stuff.

When recreational cannabis sales began in Canada in October last year it soon led to shortages, with three Canadian provinces lacking stock. Medicinal cannabis supply concerns datedx back even further.

Meanwhile, THC Global (ASX:THC) boss Ken Charteris told the ABC there is a “shortage globally for pharmaceutical grade GMP produced product”. GMP stands for good manufacturing practice.

However, Chris Damas, a cannabis industry analyst, told the Financial Post that a correction was on the way.  “I’m forecasting an oversupply in dried cannabis by January 2020,” he said.

In Australia, usage of medicinal cannabis has been growing quickly, with the Therapeutic Goods Administration’s special access scheme allowing authorised doctors to prescribe their patients medicinal cannabis resulting in nearly 10,000 scripts being written.

The growing number of patients accessing medicinal cannabis, as well as increased recreational use, represents an opportunity for Australian manufacturers, such as MGC Pharmaceuticals (ASX:MXC).

MGC Pharma recently acquired a licence allowing it to cultivate cannabis. Along with research partner RMIT, the company will conduct botanical and pre-clinical — in animals, rather than humans — trials focusing on the optimisation of breeding and cultivating processes and extracting material to assess the efficacy on prostate, melanoma and other cancer cells.

This content is produced by Star Investing in commercial partnership with MGC Pharmaceuticals. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.