Growing cannabis legally will be a step closer on Sunday when federal legislation comes into effect allowing the drug to be grown for medicinal purposes.

Key points: Government accepting applications from Monday for licenses to grow cannabis

Government accepting applications from Monday for licenses to grow cannabis Applicants will have to demonstrate their proposed growing site is secure

Applicants will have to demonstrate their proposed growing site is secure Concerns that if system becomes too complicated people will stick with the blackmarket

The Office of Drug Control will start accepting applications for cannabis cultivation licences on Monday.

People or organisations wanting a licence will need to show they will be supplying either a licensed medicinal cannabis manufacturer or researcher.

They will also have pass a "fit and proper person test" and show that their proposed growing site is secure.

Information briefings on the licencing scheme have attracted hundreds of interested people in the past few weeks, from international companies to small operators.

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There are three medicinal cannabis companies listed on the Australian Stock Exchange and a fourth set to list soon.

Tom Richardson from investment group The Motley Fool Australia said the domestic medicinal cannabis market could be worth more than $75 million a year.

"The US has a well established cannabis market and there's no reason to suppose consumer demand or product pricing in Australia will be any different relative to the two countries population differences," he said.

However, Mr Richardson said investing in the emerging market was far from a safe bet.

"Some of Australia's largest healthcare companies — such as Cochlear that make hearing aids, CSL that make emergency hospital products, or Resmed that makes sleep treatment products — these are all multi-billion dollar markets, so $75 million a year is really a drop in the ocean."

Crops planted by the middle of next year

Bedrocan Australia, which is linked to the Dutch medicinal cannabis company Bedrocan, and the Canadian company Tilray, both say they will be applying for cultivation licenses, as will the Australian companies MGC Pharmaceuticals and AusCann.

AusCann's Managing Director Elaine Darby said the company was hoping to a have a crop planted in Western Australia by the middle of next year and be supplying finished products by the end of next year.

"Initially AusCann's products will be used in some of our clinical studies as well as provided to clinicians who wish to provide from the outset and the key demand areas at this point seem to be chronic neuropathic pain and treatment-resistant epilepsy," she said.

Workers tend to a legal cannabis crop in Canada. ( Supplied: AusCann )

AusCann's first products are likely to be vaporisers and medicines that are placed under the tongue.

The company has partnered with North America's largest legal cannabis producer, Canopy Growthcorp, in order to access the Canadian giant's plant samples, production techniques and data from its 16,000 patients.

Elaine Darby said demand from Australian doctors was already strong.

"They're happy to go off the wealth of information we've got from international studies and also just general patient data. Tens of thousands of patients in Canada have been using this for many years so we have access to all that information," she said.

The first legal cannabis crop was planted earlier this year by the Victorian Government with the Federal Government's approval. The location is secret.

Victorian Premier Daniel Andrews inspects the state's secret cannabis crop. ( Facebook: Daniel Andrews )

Risk people could still buy off black market

As momentum gathers in the medicinal cannabis sector, one of its most prominent advocates in Australia has decided not to apply for a growing licence.

Lucy Haslam spearheaded the national push for medicinal cannabis to be legalised after her son Daniel developed bowel cancer.

Smoking marijuana offered him some relief from the nausea, vomiting and poor appetite caused by chemotherapy.

The Haslam's have bought a farm to grow a crop but now feel there may not be room for them in the cashed up industry.

"It has potential to be a cut-throat industry," Lucy Haslam told the ABC in an interview.

"We're seeing large companies that are very cashed up looking to come to Australia so it is at risk of being all about money rather than all about patients."

For now Lucy Haslam is going to focus her efforts on education.

Plenty of hurdles ahead for industry

She is worried if people do not understand the new system they will keep buying cannabis illegally.

"The risk in that is making a system that is so convoluted and complicated for patients and prescribers that it actually doesn't fulfil the reason it was established in the first place and that people will just stick with the black market," she said.

Investment advisor Tom Richardson cautioned that medicinal cannabis companies still have many legal, political and regulatory hurdles to clear before they can become successful businesses.

"At the moment these companies aren't very good investments because they generate little in the way of revenues or profits which is unsurprising as there's no really established medical cannabis market in Australia," he said.

"Government policy in this sector could change quite quickly, for instance if patients suffered injury or illness as a result of taking the drugs, the government could move to shut down the sector quite quickly."