It may be thousands of kilometres away from Perth's corporate heart, but Christmas Island is being eyed off to become home to Australia's first medicinal cannabis industry.

The first trials of industrial-grade hemp could be planted on Christmas Island as early as January. ( Supplied )

The planned new direction for the island's economy has been driven by research from Murdoch University that has debunked the myth that the area is unsuitable for agriculture.

The studies show the island is ideal for growing medicinal cannabis.

The work of Murdoch's team is so promising, they stand poised to sign a deal to become the research arm of AusCann, a Perth-based medicinal cannabis company chaired by former Liberal MP Mal Washer.

They plan to plant the first trials of industrial-grade hemp in January, subject to WA Government approval.

"Globally, it's an emerging market and it's just the right time to do it," Murdoch's Centre for Rhizobium Studies research leader John Howieson said.

However like many investors, they are waiting to see the detail of legislation due to be introduced to Federal Parliament by the end of the year before they plan their next business move.

Federal Health Minister Sussan Ley has said her bill would legalise the cultivation of cannabis for medicinal or scientific purposes, potentially giving the green light to the Christmas Island project.

But AusCann is obtaining advice on whether it will also need enabling legislation from the WA Government before it can proceed.

Industry could bring down $16 lettuces

Despite the legislative hurdles, Professor Howieson is excited about the potential for his team's research to transform the Christmas Island economy by creating new export markets and reducing its dependence on imported fruit and vegetables.

A reliance on imported fruit and vegetables on Christmas Island means locals pay top dollar for fresh produce. ( ABC News: Greg Pollock )

It could spell an end to $16 lettuces.

"The island needs a broader economy because it's just [detention centre operator] Serco and phosphate," he said.

"The mining company is community-based and they are now looking at what their kids are going to do after phosphate."

The research came out of the Mining-to-Plant Enterprises (MINTOPE) project - a collaboration established in 2012 between Murdoch, Christmas Island Phosphates and the Department of Infrastructure and Regional Development.

That project saw Murdoch researchers transform former phosphate mining leases into arable land.

They rehabilitated seven hectares of land by growing legumes with roots that were inoculated with a rhizobium, or bacteria, allowing them to convert nitrogen from the air into protein.

Crops trialled included maize, peanuts, soybeans, sorghum and chickpeas - but the most successful was lablab, a bean popular in India, which will be developed for commercial release.

"It showed that you can grow anything you like as long as it's adapted to the subtropics," Professor Howieson said.

Miners eye off green gold

Christmas Island has long looked for new industries to broaden its economy, from reopening its casino to attracting international students.

But Professor Howieson said its geographical isolation and pristine environment made it particularly suitable for products requiring a pristine growing environment, like medicinal cannabis.

The island is symbolic of a recent trend for WA mining companies to shift investment to the new hot stock of medicinal cannabis.

International Goldfields plans to buy 85 per cent of pharmaceutical company Winter Garden Biosciences, which is based in Uruguay, the first country to completely legalise cannabis.

Erin Resources bought the Israeli-based MGS Pharmaceuticals, a firm that is growing cannabis in Namibia.

Meanwhile Perth is also home to MMJ PhytoTech, the first medicinal cannabis company to list on the Australian Stock Exchange.

"There is a lot of hype around medicinal cannabis," AusCann's chief executive Elaine Darby said.

"We have had a lot of inquiries with people asking us 'Are you listed? Can we invest?'"