Austria approaches cannabis with an emphasis on treatment and harm reduction rather than criminalization, which has both kept residents out of prison, and - combined with the product type limitations, barriers to access and cost of formal medical cannabis – distanced them from the country's formal market. Although it has been greater than ten years since the medicinal use of cannabis was first permitted, the market is still quite barren in terms of available product formats and formulations. Though cannabis use has historically been high in the country, much of it continues to take place on the illicit market, and the prospect of a less restrictive medical market is not yet on the horizon.

COVID-19 had a mild impact on medical cannabis patient growth in 2020, as patients' access to trained physicians who provide prescriptions was limited. But considering that Austria's medical cannabis market was already quite small and prescribed products were (and are) essential to the vast majority of patients, the pandemic is not forecasted to influence patient purchasing behaviors over the long-run. In 2021 the market is expected to recover and continue its modest growth.

Austria’s laws do not consider the consumption of controlled drugs to be an offense. The Narcotic Substances Act that came into effect in 1998 made a distinction between personal use due to drug-related health problems and criminal offenses like trafficking. The differentiation was based on the quantity possessed, the frequency of use, and the nature of the substance. The law aimed to create a clear distinction between offenses regarding consumption and criminal dealing, with an emphasis on treatment and harm reduction rather than criminalization of personal use. This model was instead largely focused on discouraging the sales, trafficking, and cultivation of cannabis. This approach was further ingrained in Austria's system when, in January 2016, under the adopted principle of “therapy instead of punishment”, personal possession of up to 20 grams of THC or 40 grams of THCA was decriminalized.

With regard to production, in 2008, the country passed a law allowing cannabis cultivation in order to extract active substances for research and medicinal purposes. Individuals were also permitted to grow cannabis at home, as long as THC content remains below 0.3%. Practically, this means that plants need to be harvested before cannabis goes into the flowering phase, because it is likely to exceed the THC threshold after that point. Although the intention behind this regulation was to allow low-THC cannabis use while prohibiting Austrians from accessing the psychotropic effects of higher THC product, the legal status of cannabis in Austria has led to a confusing regulatory environment and enforcement challenges. This is largely because the law does not clearly delineate between what constitutes the intention to grow for personal use versus sale.

The medicinal use of cannabis has been legal since 2008 for qualifying patients who receive a detailed prescription from a certified physician. Patients can purchase medical cannabis from a pharmacy, though most product formats (including dried flower) are not permitted. Rather, only the three following finished pharmaceutical formulations may currently be purchased at pharmacies:

• A synthetic THC analogue (Nabilone), approved for nausea and vomiting due to chemotherapy
• The THC/CBD oromucosal spray Sativex, approved and available for spasticity in multiple sclerosis
• Plant-derived THC (dronabinol), approved for patients who suffer from nausea and vomiting due to oncological treatment and palliative care

Reimbursement of cannabis products is typically covered by insurers only if the patient is suffering from cancer or multiple sclerosis.

The Austrian Agency for Health and Food Security (AGES) is the only entity permitted to cultivate medical cannabis in Austria for the manufacture of dronabinol and related scientific purposes. AGES is responsible for determining annual production volume and price alongside its contractual partner, C3 (acquired by Canopy Growth Corporation), which extracts THC for dronabinol production.

While the production of medical cannabis is allowed among individuals, its sale is technically illegal, with the exception of dronabinol, Sativex (GW Pharmaceuticals), and Nabilone (marketed as Canemes) – which are the only cannabis-based pharmaceuticals permitted on Austria’s commercial market. These pharmaceuticals make up 100% of formal medical cannabis sales in Austria today.

The roughly 1,400 pharmacies around Austria are the only facilities that can distribute medical cannabis, and they must receive approval from the Ministry of Health in order to administer prescriptions to qualifying patients.

Though commercial cultivation is not permitted within the country (restricted to the public entity, AGES), the importation and sale of limited pharmaceutical cannabis preparations is allowed.

Beyond AGES-grown and C3-manufactured dronabinol, the two drugs that can be imported to Austria and sold through its medical program today are cannabis-based Sativex and Nabilone (Canemes), a synthetic THC pharmaceutical. Dronabinol tends to be the most commonly prescribed cannabis derivative because it is offered at a lower price point than the other approved pharmaceuticals and has a domestic supply chain.

Austria will experience only modest growth from 2020 to 2025 with a CAGR of 5%, resulting in a market value of $18 million in 2025. As discussed, finished pharmaceuticals will be the only product type distributed in 2020 and will constitute over $14 million in sales.