Australia’s booming medical cannabis market, now the largest outside of North America, has seen a dramatic shift in consumer preference over the last two years.
According to official data from the Therapeutic Goods Association (TGA), analysed by Cannabiz.au, medical cannabis pastilles accounted for less than five per cent of the market in 2024.
By December 2025, the share of pastilles prescribed through the TGA’s Special Access Scheme had skyrocketed to over 25%, overtaking oils to become the second most prescribed dosing form behind flower.
This shift is one of the most dramatic seen in any market without regulatory intervention, and Breathe Life Sciences, the manufacturing subsidiary of ASX-listed Bioxyne (ASX:BXN), claims to be behind it.
“Before we started, companies were importing gummies from Canada,” CEO Sam Watson told Business of Cannabis.
“We’ve now got what I think is the biggest GMP cannabis gummy manufacturing site in the world. We can do three million pastilles a month.”
After starting in the UK’s CBD industry in 2018, Watson is now returning to where his cannabis journey began, hoping that he can ignite a similar shift in Britain.
Breathe Life Sciences
After spending two years selling CBD health and wellness products across Britain, Germany and Japan during the CBD boom, Watson took his company to Australia in 2020 to break into the burgeoning medical cannabis market.
Having secured its first wholesale, import and export licences, Breathe Life Sciences (BLS) had initially planned to pursue the vertically integrated route, owning its own prescribing clinics like the market’s largest players Montu and Curaleaf.
Watson explained that after ‘struggling around with that for a while, and gaining a little bit of traction, we saw a big gap in the market, an opportunity for manufacturing.’
In February 2024, BLS secured the country’s first licence covering the full suite of cannabis dose forms, including oils, flower, vapes, capsules, suppositories and pastilles.
This four-year period, between entering the Australian market and obtaining it’s GMP licence was, Watson said candidly, spent building the internal capability to apply. “It took us that long to get our act together, to have the right people in place,” he said.
The company now manufactures white-label products for more than 200 Australian medicinal cannabis brands alongside its own Dr Watson line, positioning itself as the infrastructure layer beneath much of the market.
“We were the first company in Australia to launch medicated pastilles, gummies, and we pretty much built that segment in Australia.”
He added that he estimates the company now holds roughly two-thirds of the domestic market for the dose form, with the company’s facility able to produce up to three million pastilles a month. “That’s the entire Australian market we could fill, basically.”
His company’s ability to scale quickly comes down to its digital quality management system, the documentation and processes behind GMP manufacturing that, in his words, used to fill a room with half a million bits of printed paper. That system, now digitised, is what BLS plans to export to new markets.
This model, and the IP it’s built upon, appears to be working commercially. Bioxyne reported record Q2 FY2026 revenue of A$17.2 m, up 112% on the prior corresponding period and 21% quarter-on-quarter, with A$2.5m in positive operating cash flow. Cash receipts hit A$18.4m for the quarter. The company’s full-year guidance stands at A$65–75m in revenue and A$11.5–13.5m in EBITDA.
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Homecoming plans
In December, BLS announced that it had secured a site in the Scottish Borders comparable to the size of its Australian facility, alongside major funding from the South of Scotland Enterprise Fund (SOSE).
This £848,250 in funding, consisting of a five-year £500,000 loan and a £348,250 grant, will be used to develop BLS first UK-based facility, expected to create up to 100 jobs for the region within three years.
Asked why he chose the Scottish site, Watson explained that the plot was not only perfect for BLS’s needs, but more crucially, that he had received a warmer welcome and more support from the local authorities than ‘various English’ sites he explored.
Just like the Channel Islands, which have opened their arms to the medical cannabis industry and seen its potential for economic benefit and local job creation, Scotland looks to be taking a similar stance.
“The support we’ve had from the Scottish Borders Council, local government, the South of Scotland Enterprise scheme, they’re all very supportive,” Watson said. “If we get this right, we’re going to be a significant employer in the region.”
Clean rooms and strong rooms reportedly broke ground in early 2025, with Watson targeting the facility to be operational and releasing product by the end of the year, pending MHRA inspection and Home Office-controlled drugs licensing.
“The MHRA are pretty proactive and reasonably responsive,” he said. “The Home Office controlled drugs licence takes a little bit longer. But if we’re up and running by the end of the year, we’re on track.”
With the vast majority of the UK medical cannabis supply still being imported from abroad, a burgeoning domestic cultivation market is emerging.
Companies like Glass Pharms, Celadon Pharmaceuticals, and Dalgety have all cited inconsistencies inherent in an import-reliant supply chain as motivators for enduring the heavy financial and resource burdens of launching cultivation operations in the UK.
According to Watson, this is also a major driver of his move to the UK, arguing that the UK lacks sufficient domestic manufacturing infrastructure to keep pace with demand.
But while the supply chain case for domestic manufacturing is clear, the question of what BLS can actually produce in the UK remains unresolved, and it goes to the heart of whether Watson can replicate his Australian success in Britain.
The pastilles problem
The success of its pastilles operation has not only made it one of the leading players in the Australian market, but had a transformative impact on the market itself.
However, despite ongoing reports that the MHRA is increasingly pushing back against flower in the UK market over its inherent associations with the recreational and black markets, it also appears cautious of pastilles as a dosage form.
Watson confirmed that BLS has been unable to export its Australian-made pastilles into the UK, and pointed to resistance from within the agency, adding that BLS’s key point of contact in the MHRA is ‘quite adamant that pastilles are not a dose form they want to support’.
“Flower makes probably the least sense in terms of any of the dose forms,” he said. “You can’t standardise it easily. If you get prescribed 10 grams, you’ve got to measure it out yourself. In contrast, pastilles offer very precise dosing, consistent across every single unit. It’s as good as capsules, better than oils even.”
Watson said establishing a UK manufacturing base may ultimately strengthen the case for changing the MHRA’s position, particularly if the company can generate domestic clinical data.
“If we can show enough data to convince them this is an appropriate alternative dose form that is necessary and gives patients more choice, that’s something in the back of our minds,” he said.
Watson is keen to position the company as something broader than a cannabis business. BLS is Australia’s first TGA GMP-licensed manufacturer of psychedelic and psychoactive medicines, and recently fulfilled its first orders for MDMA capsules for use in PTSD treatment trials, a segment forecast to reach A$14 billion globally by 2032.
“The way we see ourselves is as an investigational medicine manufacturer,” Watson said. “Cannabis just happens to be one of our streams. We make MDMA, we make psilocybin, we could start making Viagra and paracetamol.”
Whether that breadth translates to the UK operation remains to be seen. For now, the more immediate question is whether the company that turned pastilles from a novelty into a quarter of Australian prescriptions can persuade British regulators to let it try the same thing here.
