The head grower at British Columbia facility Broken Coast Cannabis where legal medical grade marijuana is grown hydroponically. Credit:Broken Coast Cannabis Mr Karelis, a private equity adviser, is a prominent player in the emerging Australian pot industry. It is an industry that, perhaps surprisingly, contains not a single hippie. Instead it is peopled by an extraordinary mix of professionals, including a Liberal parliamentarian turned avocado grower, lawyers, scientists, Canadian pharmacists, Californian and Israeli business people, Slovenian public servants and – odd, this – Australian mining company executives. There are currently three marijuana corporations listed on the Australian Stock Exchange, two of them in the guise of mining companies. The end of the minerals boom has been a blessing for international marijuana concerns in search of ready-made and respectable corporate platforms. "In WA, there are a lot of mining companies that aren't doing much these days, but they have money in the bank, and a shareholder register," said one industry observer. "It's known as a reverse takeover." Israel-based company MGC Pharmaceuticals, for example, which makes marijuana-infused cosmetics and skincare products, has its corporate anchorage in Perth, where it inhabits Erin Resources, a mining company that used to dig for gold in Africa.

Credit:Simon Letch Pending shareholder approval, California-based medical marijuana giant Nutrawerx will next month list on the ASX in the guise of Perth-based uranium explorers, Capital Mining. MGC and Nutrawerx followed the example of a third company, Phytotech Medical, which in January became the first pot company to list on the Australian exchange – and the only one to date to do so under its own name. Its head office is in Perth, but all its operations are carried out in Israel, using weed harvested in Canada and Uruguay. AusCann, privately owned, is unusual in the local dope industry because all its directors are actually Australian. Among them are Mr Karelis, and Dr Mal Washer, Liberal member for Moore until 2013, now a successful avocado grower. The company is planning to plant Australia's first legal marijuana later this year, on Norfolk Island. The corporate reality of medical marijuana is starkly different to its cosy myth. In the US, 23 states now permit sale to registered patients. TV coverage has focused on little street-level dope dispensaries, run by well-meaning folk in rainbow T-shirts, jars of buds on the counter and lovingly tended hydroponic set-ups out the back.

But that's a bit like pretending your local pharmacist never gets a visit from a Pfizer rep. Despite a raft of often contradictory regulations governing pot use around the world, the industry is expansionist, aggressive, defiantly capitalist and occasionally rapacious. The boardroom talk is not of purple haze, Afghan Gold and Bob Marley, but of supply chains, margins, revenues, regulatory compliance, share offers and takeovers. Sparking up a spliff is as out of date as chewing on a poppy in search of a morphine hit. "The key to understanding the medical marijuana industry in the future is to understand that smoking a joint is not a proper medicinal delivery technology," said Andreas Gedeon, president of MMJ Biosciences. Mr Gedeon was speaking to Fairfax Media from Copenhagen, where he had just arrived from Singapore, before heading back to his corporate headquarters in Vancouver. MMJ is one of the most acquisitive of the new medical marijuana companies. Gedeon's trip to Singapore had been to meet with Peter Wall, Perth-based lawyer and chair of Phytotech Medical, to discuss the fine details of a buy-out. If approved, the sale will give MMJ some new labs in Jerusalem to complement its previous purchases – a couple of quality control and dope-growing companies in Canada, and Satipharm, a Swiss production facility. Despite having no plans to operate in Australia, it will also give it a presence on the ASX.

"The ASX was a very welcoming platform [for Phytotech], and the investors were very receptive to the idea," said Gedeon. "Our company slogan is 'from farm to pharma'. Lots of people have great ideas about what you can do with cannabis – but the point is you need a supply chain before you can do any of it." The company's first product, a capsule containing an extract called CBD (from a class of non-psychoactive compounds called cannabidiols), rolled out of its Swiss arm this month. It will be marketed in Europe as a dietary supplement. CBD is a strong focus for the medical marijuana industry. There is evidence that it is effective in controlling seizures in childhood epilepsy, and may be useful in the treatment of some cancers and depression. The fact that it is non-euphoric also means regulators tend to look upon it more kindly than they do the better known stoner-compound THC. In Australia, CBD was classified this month by the Therapeutic Goods Administration as a Schedule 4 substance, removing one major hurdle to its eventual use by doctors. It also cleared the way for it to be produced in Australia, albeit under stringent conditions.

This was good news for California's Nutrawerx (soon to be Perth's Capital Mining), which until recently was planning to purchase another company, Cannabinoid Extracts Australia, and plant a forest of dope plants on its holdings in Tasmania. The deal would have been good news for shareholders. On the global medical marijuana market, CBD sells for up to $AUS90,000 a kilo. The same amount of uranium sells for around 20 bucks. Last week, though, it all went pear-shaped. A vending machine that contains cannabis flower, hemp-oil energy drinks, and other merchandise at Seattle Caregivers, a medical marijuana dispensary, in Seattle. Credit:DAVID RYDER "Unfortunately, the proposed agreement with Cannabinoid Extracts has now been rescinded," said Nutrawerx CEO Michael Sautman this week, citing problems with due diligence. The issue, however, is a set-back rather than an end to Mr Sautman's plans. "Absolutely we will try again," he said. "Our objective is to establish a complete supply chain for medical marijuana in Australia."

Sautman said the main obstacle to a robust medical marijuana industry in Australia is legislative. Federal law mirrors closely the UN Single Convention on Narcotic Drugs, which sets standards for global trade in mind-altering substances. Cannabis was included under the convention in 1961 – the result more of "reefer madness" hysteria than dispassionate research. A bill by Greens senator Richard Di Natale, now before parliament, proposes a more flexible set of regulations. Should the bill be successful – and Prime Minister Tony Abbott is on record as broadly supportive of medical marijuana – then Australia may well enjoy a pot-driven economic recovery. "Australia is a country with amazing agricultural potential for massive grows," said Nativ Segev, head of Israel's MGC Pharmaceuticals, aka Erin Resources. "It also offers opportunities in research and development that we would be remiss to ignore." Mr Segev said his company planned to franchise operations, establishing a supply chain stretching from its patented plant varieties to its finished cosmetics in each territory. "We can go global very quickly," he said. Curiously enough, Segev's company this week won the race to become the first Australian-registered company to gain permission to plant a marijuana crop. On Thursday the company informed the ASX that it had received the green light to establish a dope plantation in Slovenia.

Meanwhile, over on Norfolk Island, dinkum players AusCann plan to sell their first crop of five-metre-high plants to Canada. CEO Harry Karelis, however, sees the domestic market as very significant, should the legislative barriers ever fall. "The Canadian government estimates the medicinal market there to be worth about $1.5 billion in the next five years," he said. "Australia has a population of about two-thirds of that, so you could imagine a medical market here of around $1 billon a year." But the question that hangs over all the talk of medicines and markets is blunt: how real are the claims made for marijuana? Until recently, research into the plant's properties was illegal in most parts of the world, sufficient supplies difficult to obtain, and clinical trials impossible to organise. All the industry figures contacted for this story said they would welcome proper randomised clinical trials for medical uses. However, all also noted that such trials take several years, and that in the meantime anecdotal evidence should be a sufficient basis for doctors to make prescribing decisions. Melbourne University Medical School Professor Emeritus David Penington also doesn't favour waiting for formal testing. He pointed out that there has never ever been an overdose death due to marijuana consumption.

"There is strong anecdotal and epidemiological evidence that it does work," he said. "And it is important to use it to look after people now, while better evidence is being put together. The first responsibility of a doctor is to relieve suffering, and the evidence is very clear that it is useful for things such as relieving the severe pain of advanced cancer, and for moderating a distressing form of childhood epilepsy called Dravet syndrome." His position, however, is not shared across the medical profession. "Anecdotal evidence is not real evidence," said Dr Megan Yap, a Queensland-based consultant paediatrician and pharmacist. Dr Yap used to work in the child protection unit of the Lady Cilento Children's Hospital in Brisbane, and encountered parents using illicit marijuana products to try to control intractable childhood epilepsy of the type caused by Dravet syndrome. It spurred her to initiate a review of the medical literature concerning the treatment. Her study, published in May this year in the Journal of Paediatrics and Child Health, found most studies to be poor and unreliable. She concluded that the evidence for using marijuana products in treating epilepsy in children is scant.

"I would suggest very strongly that clinical trials are necessary," she told Fairfax Media. "The anecdotal evidence is based on the use of products that are not legal. They are non-standardised formulations. You can't know whether the efficacy is the same from batch to batch, product to product." She said she understood why desperate parents would try the treatment, but added that no doctor should prescribe it – even assuming legality – until trials had been completed. "Some parents have children who have 50 or 60 seizures a day," she said. "So you can understand why they try this method – especially when all they can find are anecdotes from other parents. But that's not evidence. It could be from any old Joe. You don't know the context." Dr Yap's fears reflect problems arising from marijuana's increasing respectability. Evidence can be eclipsed by claims of miracle cures, and a huge surge in investment can turn the boom into a bubble. Michael Sautman from Nutrawerx thinks not, however. This is the modern marijuana industry, and the market, not the universe, will decide its fate.

"I don't think it's a bubble," he said. "Because the product is genuine in terms of its effectiveness – it actually is a medicine. "In terms of the frenzy around it now, there's been a lot of pent-up entrepreneurial interest about this for a long, long time. That entrepreneurial interest has only been able to express itself on the black market until now. More conventional business people were unable to participate. "As we've accomplished legal reform, we've seen more and more entrepreneurial interest unleashed. Is that a bubble? No. It's ubiquitous. In every state where there is a path to market for product, there has been huge interest – not from speculators but from people who want to build value." Although still one step away from final approval, this week AusCann began advertising jobs at its Norfolk Island cannabis farm. Successful applicants will be the first people in Australia to earn a legal wage by growing dope. They may well not be the last. And if you don't believe that, ask your stockbroker.

The ancient history of marijuana Around 5000 years ago, Chinese Emperor Shen Nung reportedly became the first person to test the medicinal properties of marijuana. He ate it while sampling a range of plants used by shamans. The dope did him no harm. Whatever he ate next, though, the story goes, turned him green and killed him. In late May, Russian archaeologists discovered two gold bowls dating back 2400 years, caked with old dope crud. They identified them as Scythian bongs. Credit:dangerousminds.net The distinction between recreational and therapeutic uses of cannabis has not always been obvious. The plant has been subject to consumption and trade for so many millennia that even where it first originated is unknown. Best guess is central Asia.

Its earliest reference in Western literature comes from the work of the historian Herodotus (490-425 BCE) who describes Scythian warriors, rulers of the steppes, chucking buds on a fire, inhaling and howling. In late May, Russian archaeologists discovered two gold bowls dating back 2400 years, caked with old dope crud. They identified them as Scythian bongs. By the time of Herodotus, cannabis use was already ancient and widespread. Relics date its use to 10,000BC in Taiwan. The Indian and Nepalese Hindu text Artharva Veda, around 2000BC, calls it a sacred plant. Zoroastrian texts from 700BC list it as medicinal.