How big business pushes a product it’s not allowed to advertise

It’s not your typical act of corporate generosity, giving away $3 million worth of cannabis.

That’s what’s on offer from Stanley Brothers, a Colorado-based company that says it has made more than $1.5 million in medicinal cannabis sales since entering the Australian market in January.

The medicinal cannabis industry is coming under the regulatory microscope. Credit: Monique Westermann

The family business has made a fortune in the United States selling Charlotte’s Web, a cannabis oil named after Charlotte Figi, a young girl whose parents found cannabis oil reduced seizures caused by Dravet syndrome, a form of epilepsy.

Now the company is spruiking free cannabis medicine for Australian patients with “life-limiting illnesses and serious medical conditions” who cannot afford treatment.

But Stanley Brothers’ philanthropic gesture has caught the eye of the Therapeutic Goods Administration as the medicines watchdog grapples with the explosive growth of Australia’s medicinal cannabis market, one of the most lucrative in the world.

A Dolphins player last month whose jersey was taped over to block the Alternaleaf logo. The logo has since been removed entirely.Credit: Getty

A crop of entrepreneurs with backgrounds in sectors including medicine, law, real estate, gambling and crypto have capitalised on this boom, setting up dedicated “cannabis clinics” that both prescribe and sell medicinal cannabis products.

As a prescription medicine, cannabis cannot be advertised to the public.

But the clinics, many of which have used coded references to “plant-based medicine”, promote themselves through unconventional means, including Teenage Mutant Ninja Turtles-inspired ads, a cannabis event called Buds & Bowls and even an NRL sponsorship.

Aggressive advertising tactics employed by parts of the industry have also attracted scrutiny from psychiatrists, who are concerned that products containing THC, the main psychoactive ingredient in the cannabis plant, are being inappropriately prescribed to young patients at risk of psychosis.

In the case of Stanley Brothers and its giveaway, a TGA spokesperson said: “The use of testimonials and endorsements about medicinal cannabis and offering or distributing samples of medicinal cannabis products to the public are likely to be promotional and raise concerns.”

A mature cannabis plant grown legally on a farm in NSW.Credit: Janie Barrett

Stanley Brothers met the TGA earlier this month to discuss the regulator’s concerns.

“It’s important to clarify that the Give Back Initiative is a charitable financial assistance program aimed at helping people in need, and we do not consider it to constitute advertising or ‘sampling’ as defined by regulatory standards,” director of marketing Mark De Luca said in a statement.

‘Exponential’ growth

Since its legalisation in 2016, doctors have written more than 1 million cannabis scripts to help with problems ranging from chronic pain to anxiety, sleep issues and depression.

Many patients are paying between $200 and $300 a month for products ranging from oils to flowers, in an industry worth hundreds of millions of dollars.

Barry Lambert, pictured with his granddaughter, donated $33 million to cannabis research. Credit: James Brickwood

So far, the TGA has approved only two cannabis products – one to treat muscle rigidity caused by multiple sclerosis and another to alleviate rare forms of childhood epilepsy.

Prominent investor Barry Lambert and his wife Joy, whose granddaughter suffered from one of the epilepsy syndromes, has donated $33 million to Sydney University to research cannabis treatments and launched his own cannabis company on the ASX in 2019.

Former rugby league star Andrew Johns has used cannabis oil to reduce pain and seizures, which he says may be linked to concussions he sustained while playing the game. Johns now works as an adviser to Levin Health, a company organising clinical trials to research cannabis’ effect on chronic pain, concussion and sports injuries.

But today almost all medicinal cannabis products are prescribed off-label, as they have not undergone TGA assessment for safety, quality and effectiveness.

“It is an unapproved therapeutic that has had an extraordinary rate of prescribing,” says Dr Christine Hallinan, a research fellow at the University of Melbourne.

Hallinan is concerned that cannabis has come to be seen as a panacea and that the medical system’s ability to monitor adverse effects has not kept pace with an “exponential” rise in prescribing, driven by word of mouth and the streamlined access offered by telehealth companies.

“The minute people put ‘medicinal cannabis’ in a search bar, up come all these companies,” she says.

Some in the industry have borrowed elements of stoner culture to attract customers.

Part of an ad for the Healing Leaves clinic, which employed imagery reminiscent of the Teenage Mutant Ninja Turtles cartoon.

Healing Leaves has promoted its telehealth service with the slogan “come out of your shell”, paired with characters reminiscent of Teenage Mutant Ninja Turtles – the ’80s cartoon characters that once featured in a government ad warning teenagers off marijuana.

“We get it bro,” one ad said to potential customers who might be feeling their age. “Hey, we’re all going to the same place, why not enjoy the time you have here.”

Founder Victor Caprio, who also works as a real estate agent on the Gold Coast, said he had no comment.

Last month, several cannabis companies sponsored and gave presentations at Buds & Bowls, a Brisbane event that included DJ sets, lawn bowls and a tent in which patients could vaporise their medicines.

The Buds&Bowls event was sponsored by several cannabis companies, including telehealth clinics.

The TGA said it was aware of the event and, while it doesn’t comment on individual cases, its advertising rules apply to in-person events, speeches and banners just as they apply on social media and online.

John Teh, medical director and owner of the telehealth clinic PlantMed, said his business’s sponsorship of Buds & Bowls was “educational and advocacy based”, not advertising, and the event was a closed forum.

Teh said PlantMed spends nothing on social media marketing and fully complies with TGA rules, which disadvantages the business compared with companies that have large advertising budgets and a willingness to push boundaries.

“Some of the larger companies have got very deep pockets, very large backing and the distinct disadvantage comes because we comply and we follow the regulations, and we don’t advertise directly to patients,” he said.

“The legislation, by accident I think, is directing people to the less reputable, recreational side of medicinal cannabis, to the clinics which haven’t got strong medical boundaries.”

Australia’s biggest clinic

One company with a sizable marketing budget is Alternaleaf, the biggest clinic in Australia, which boasts more than 150,000 patients and soaring revenue.

This year, it partnered with the Dolphins NRL team - the first professional sports sponsorship by a cannabis company in Australia. But the Dolphins have since decided to remove Alternaleaf as a jersey sponsor following inquiries from the TGA, which last month launched legal action against the cannabis business in the Federal Court.

The legal complaint, which did not mention the NRL sponsorship, alleged that parts of Alternaleaf’s website, videos of patient testimonials, social media posts and a light projection the company installed in the Sydney CBD breached advertising laws.

The TGA contends that unauthorised advertising of medicinal cannabis poses a risk of harm to patients who may choose cannabis over other, more suitable products and who may be swayed by information that fails to provide a complete picture of benefits versus risks.

A spokesperson for Alternaleaf’s parent company, Montu, said it would “vigorously defend these proceedings” but otherwise declined to comment on the litigation, which also named managing director Christopher Strauch as a respondent.

The German-born Strauch co-founded Montu in 2019, having previously created TOKEN2049, a cryptocurrency conference business that hosts events in Dubai and Singapore.

He remains an investor in the business, which has also raised more than $5 million in crowd-sourced funds.

Corporate records show Montu earned $96 million in revenue in Australia last financial year – an annual increase of 471 per cent. The company spent $7 million on marketing, including ads on social media, TV, radio and buses.

Late last year, it was telling potential suppliers that Alternaleaf had added roughly 40,000 new patients in the past three months and demand for prescriptions had nearly doubled in the previous quarter.

“They’ve become a monolith in what seemed like overnight,” says Phoebe Macleod, a former lawyer who started the medicinal cannabis business Heyday Medical with her GP brother.

“You’ve got to question, ‘How do they attract that many patients so quickly?’ ”

Macleod says most of the industry is made up of responsible companies that are compliant with the TGA rules. She describes Alternaleaf as an aggressive marketer with a big budget, buying up Google advertising on rivals so that when people search her company’s name, Alternaleaf appears as the first result.

The rise of single-product telehealth clinics is not unique to cannabis – others have sprung up around the weight loss drug Ozempic and nicotine vapes. But they are a departure from the standard model, in which doctors prescribe and pharmacists dispense.

Australian Medical Association guidelines state that doctors should generally avoid dispensing medicines they prescribe unless the benefits to patients outweigh any safety concerns.

“Where dispensing by a doctor does occur, it should be based on clinical need and not be for the purpose of material gain as this introduces risks of real or perceived conflicts of interest,” the guidelines state.

Macleod says Heyday Medical manages conflicts by prominently disclosing its financial interests and allowing patients to opt out of being prescribed products developed by the business.

But Alternaleaf’s spokeswoman, Kelly King, said in a statement there was no conflict of interest in a business prescribing a product it also sold.

“We are building much needed infrastructure and filling the very gaps in the system that otherwise have let patients down,” King said.

“We cannot – and do not – interfere with doctors’ prescribing judgement, nor do we require patients to fulfil their script with our network of dispensing pharmacies.”

Alternaleaf came under fire in 2022 after the news site Cannabiz reported a “community manager” working for the cannabis company had approached medical users on social media.

“We’ve got a few new flowers out,” the manager wrote, offering two tubs of free cannabis and a GP appointment to obtain a prescription, in exchange for reviews on social media platforms such as Reddit, TikTok and Instagram.

Alternaleaf declined to answer questions about the results of an investigation it had promised to undertake into the incident.

‘We do not want to see cowboys’

Jeremy Buckingham, who represents the Legalise Cannabis Party in the NSW upper house, says the vast majority of companies were doing the right thing, abiding by TGA regulations and ploughing money into research and development.

He says the rules around obtaining a licence are very strict but authorities are not doing enough to ensure companies were complying.

“We do not want to see cowboys who are motivated by profit putting the integrity of the system at risk,” he says. “Too many patients, too many users rely on this [medicinal cannabis].”

Legalise Cannabis MLC Jeremy Buckingham said most companies in the medicinal cannabis industry acted responsibly. Credit: Brook Mitchell

The Royal Australian and New Zealand College of Psychiatrists (RANZCP) wrote to AusDoc, a trade publication for doctors, in August after one of its psychiatry newsletters included an advertisement claiming medicinal cannabis could help with PTSD, schizophrenia, anxiety and depression, encouraging doctors to prescribe with a company called CanView.

AusDoc later apologised, saying the advertisement should never have been published and that it was reviewing its advertising processes to “prevent a repeat occurrence”.

Dr Brett Emmerson, chair of the RANZCP’s Queensland branch, said he was receiving “regular reports” of people with schizophrenia who were not being properly screened before they were prescribed THC, the main psychoactive compound found in the cannabis plant.

“Our view is that the medicinal cannabis industry is becoming akin to both the tobacco industry and the alcohol industry,” Emmerson said.

“Their business depends on people using their products, and there seems to be this ever-expanding use of medicinal cannabis for a wide variety of conditions for which there is no evidence.”

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.