The uptake of medicinal cannabis products in Australia continues to boom, but most providers of the herbaceous material are not reaping the benefits because of oversupply, commoditised pricing and investor indifference.

According to the Therapeutic Goods Administration (TGA), 633,307 patients were issued with medicinal cannabis prescriptions in 2023 via authorised doctors (the Authorised Prescriber Scheme).

This compared with 327,560 patients in 2022 and 150,178 in 2021. Close to one million patients have signed up since 2016, when medical cannabis was first legalised under strict access conditions.

The normal prescription route is only available for two approved cannabis medicines, for the relatively narrow indications of epilepsy and Dravet syndrome.

While clinical trial evidence is evolving, the nascent sector is supported by influential parties including the independent Penington Institute, which champions approaches to reduce drug-related harm.

The institute describes Australia's medical cannabis evolution as "more gradual" than elsewhere, but gaining momentum.

"There are many benefits to broadening access to regulated cannabis," the report says.

"In addition to being a promising treatment option for various health conditions, medicinal cannabis presents a mostly untapped opportunity to treat people with cannabis-use disorders."

Most ASX 'pot stocks' have struggled to find traction with investors, with a number of leading players falling on hard times.

But in a patch of weeds – literally and metaphorically – a small number of stocks are thriving. These include the WA-based Little Green Pharma (ASX:LGP), which is holding its own in the local market whilst eyeing expansion opportunities in Europe.

LGP has reported record unaudited quarterly revenue of $7.3 million for the March quarter, 34 per cent higher than the December 2023 quarter and 36 per cent higher year-on-year.

LGP also chalked up a record $25.6 million for the 2023-24 financial year ended March 31 2024, up 30 per cent, with cash burn of $2.84 million and $500,000 of positive cash flow.

The month of March was operating cash flow positive in its own right, resulting in an end-of-year cash balance of $5 million (up 35 per cent).

LGP's Australian sales rose 27 per cent quarter on quarter to and European sales were up 150 per cent, albeit off a low base of six customers (three of them new).

The company attributes the quarterly revenue surge to the introduction of the cheerily-monikered flower product CherryCo, which contributed nearly $2 million of the turnover.

Introduced in late December CherryCo's low-cost range consists of six flowers, ranging in THC intensity from 18 per cent to 26 per cent.

(THC refers to the psychoactive tetrahydrocannabinol, which is one of the key 'ingredients' in medical cannabis and is used to treat a wide range of conditions).

The CherryCo premium range consists of cherry-picked, boutique cannabis flower, "focusing on terpenes, flower size, appearance and THC content."

Currently Australia accounts for about 90 per cent of LGP's turnover, with the remainder from Europe. But LGP CEO Paul Long says the company's greatest potential lies on the Continent, where both medical and recreational cannabis laws are in the throes of liberalisation.

In supplying Europe LGP has an on-the-ground advantage over many of its rivals: in 2021 the company paid $21 million to acquire a state-of-the-art facility in Denmark from to Canada's Canopy Growth.

In what Long dubs as "probably the single-biggest cannabis industry development since legalisation in Canada in 2018", Germany on April 1 removed cannabis from the country's narcotics list.

Allowing for limited home cultivation and personal use, the reform was no April fool's prank.

Rather than eroding the market for medicinal cannabis, Long argues the recreational measure is likely to improve access pathways, "all the way from prescription, clinic appointments and direct-to-patient delivery."

In France, the company has been was involved in a government-funded medical cannabis pilot – aptly named Pilot – that ended in late March.

LGP was one of only three companies to supply Gallic patients during the nine-month transition period – and now has a head start for competing in the heavily-regulated market thereafter.

"France remains a significant European Union opportunity for LGP, given the population size, LGP's first-mover advantage and the company's material contribution to the trial," Long says.

Elsewhere in Europe, LGP supplied its first shipment of its Australian grown flower to its Polish distribution partner, Medezin. LGP also reports "encouraging" demand for flower products in the UK and Switzerland.

But not everything has gone the company's way with its second-string psychedelic drug arm, Reset Mind Sciences.

LGP had intended to demerge Reset by way of an in-specie distribution to LGP shareholders and list on London's AIM exchange.

The action was pitched at bolstering Reset's value as a focused, stand-alone entity in a go-go sector. But AIM decreed that because psychedelic-assisted therapy was not permitted in the UK, the company could not list.

Undeterred, Reset continues to work on developing a variant of synthetic psilocybin (magic mushrooms) for treatment-resistant depression.

A trial has been launched at Perth's Harry Perkins Institute of Medical Research, with two dosing sessions carried out to date.

Meanwhile, Long points to the fundamental untapped value of LGP shares, given the value of its net assets are almost double its circa $40 million enterprise value.

He notes that LGP's subdued share price has mirrored that of its US counterparts, rather than its ASX peers.

Given that, he is heartened by the decision of the US Department of Health and Human Services to recommend that cannabis be recategorised from schedule one to schedule three – a 'lesser' legal category shared by substances such as steroids or testosterone.

If adopted, "the likely flow on-effects include a re-rating of all Australian medicinal cannabis companies – including LGP."