Maribyrnong City Council set to end pursuit of establishing medicinal cannabis industry

A council in Melbourne’s west was keen to get involved in the medicinal cannabis supply chain, but those plans have gone up in smoke. Vote in our poll.

A Melbourne council with high hopes of starting a medicinal cannabis business has abandoned its plans, despite community support, after a report concluded the idea was a “major risk”.

On Tuesday night, Maribyrnong councillors endorsed an officer’s recommendation to end the pursuit of establishing a local cannabis industry as an alternative revenue stream to supplement ratepayers.

Last year, Maribyrnong City Council undertook a feasibility study to assess whether it should establish an enterprise with the objective of cultivating, producing and manufacturing medicinal cannabis, or any other involvement in the medicinal cannabis industry.

Maribyrnong Council undertook a feasibility study to assess whether it should get involved in the medicinal cannabis industry to increase its revenue stream. Picture: Generic

It followed a positive community consultation process where 74 per cent — 444 of 600 — residents surveyed supported council entering the medicinal cannabis business.

Maribyrnong City Council set aside $103,000 in the 2022-23 Budget for the project.

The Medicinal Cannabis Feasibility and Risk Assessment Report, tabled for Tuesday’s meeting, explored the council’s options within its legal and regulatory parameters.

It stated that cultivation and manufacturing are currently assessed not to be feasible due to significant time lags in achieving a profit.

The report asserted that had council got involved, the distribution stage of the supply chain had the best chance of being feasible and profitable.

But it conceded a number of weakness associated with distribution-based businesses such as profitability being limited to the distribution fee and the stringent regulations involved in storage, handling and disposal of cannabis.

Of the feasible options, the author stated that the council could pursue four methods: launch a wholly owned and controlled distribution business, acquire one, partner to establish a new distribution business, or, partner with an existing one.

However, a risk assessment determined there was a high level of risk associated with all options.

It also noted the Local Government Act does not permit investment in assets with higher risk than return.

Councillor Michael Clarke, who moved the original motion to test the community’s appetite for such a project, said the project had great potential but sat outside the “risk curve”.

Maribyrnong councillor Michael Clarke said he was confident residents would welcome initiatives that eased the burden and reliance on ratepayers. Picture: Supplied

“While it is disappointing, the upside is this study demonstrates our willingness to investigate alternative revenue streams and we take these things seriously, we don’t just shoot from the hip,” Cr Clarke said.

“Our council is willing to explore any and all options to reduce the financial burden on ratepayers, and I think residents welcome that.”

Cr Clarke said councils were limited in what industries they could venture into due to competitive neutrality.

Ernst & Young were contracted to prepare the feasibility study.

Mayor Sarah Carter said despite the medicinal cannabis industry experienced rapid growth since legalisation in 2016, it faced numerous obstacles.

“After careful consideration, it is evident that the challenges and risks involved with this type of venture outweighed the potential benefits for our community,” Cr Carter said.