The Australian government is investing AU$3 million ($2 million) into researching the benefits of medical cannabis use for pain relief among cancer patients.

The Morrison government is channelling money from its Medical Research Future Fund to conduct the clinical studies. More than 11,000 Australians have been approved to receive medical cannabis since it was legalized in 2016, with most of those approvals made this year.

But the federal government wants to increase the evidence base to help doctors across the country make more informed decisions when prescribing it.

Grease star Olivia Newton-John is a high-profile advocate of medical cannabis in her home country, and the government release praised her for shining a light on the benefits associated with medicinal cannabis during her battle with breast cancer.

“This year, through treatment and medicinal cannabis, I am feeling fantastic,” she said. “I hope to be able to soon offer [medical cannabis] to everyone – that’s my dream.”

Health Minister Greg Hunt hailed the cannabis industry’s potential to boost exports, employment and economic growth, particularly in rural areas of Australia. The first medical cannabis cultivation licence was granted in March 2017 and Hunt said the country is now up to 78 licences.

Last month, Australian firm Little Green Pharma began exporting medical marijuana to Germany, Europe’s largest market. Germany has previously relied on imports from the Netherlands and Canada, and Australia is now bidding to muscle in.

The government said it has cut red tape and supported the industry by giving applicants with Major Project Status priority. Any projects that can create jobs, improve export prospects or develop the industry have had their licensing applications expedited.

The next step would be legalizing recreational cannabis use. Last week the Australian Capital Territory became the first territory to do exactly that when lawmakers passed a landmark bill.

It would allow residents to possess and grow cannabis for recreational purposes, although sales would still be outlawed. This puts the ACT, which contains the nation’s capital, Canberra, at odds with the federal government.

Home Affairs Minister Peter Dutton has branded the law “dangerous” and said the federal government might override it.

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