Tag Archives: Aurora

By Dr. Markus Roggen, Amanda Assen

What do Aurora Cannabis, Tilray and Pfizer all have in common? They all produce and sell products used for medicinal purposes, they are top competitors in their field and they all have statements on their websites claiming that science is one of the most important things to their business. But unlike Pfizer, Aurora and Tilray do not have any positions in the executive suite for scientists or medical personnel. This led us to wonder, why does the structure of their corporate ladder (as well as so many other cannabis companies) not align with what they claim to be their values?

According to Aurora Cannabis, “Science is at the core of what we do”.¹ Look up the definition of “core” and you will get “foundational, essential, central, and enduring.”² Sounds important. Meanwhile, Tilray’s main page states: “For the therapeutic value and risks of cannabinoid-based medicines to be fully understood, Tilray believes it is critical to evolve current scientific understanding of the field.”³

You would assume that somebody in the executive suite would have a position and an educational background relating to the central and enduring part of a business, right? We looked at 10 of the biggest Canadian cannabis companies, their founders’ educational backgrounds and whether there were executive positions for science, R&D or medicine (Table 1). We also looked at the same data for the top 10 biggest pharmaceutical companies (Table 2). As expected, every pharmaceutical company had upper-level (C and/or P level) positions for scientists and/or medical personnel. However, only 2 of the 10 cannabis companies had this.

To figure out why this is, (as scientists) we did some research. It turns out, the consensus is scientists are bad at commercialization. Scientists are rarely successful as CEOs because they are (usually) not good at attracting customers and get confused by things like revenue models.⁴ As Akshat Rathi bluntly put it, “just because you are the smartest person in the building does not make you capable to run a company.” In fact, many CEOs of life science companies got to the top by pursuing business, finance, marketing or sales. In the 90s, some life science companies took a chance on scientists and hired them as CEOs, but when they hit financial turmoil, they quickly undid this.⁵

So maybe scientists aren’t always cut out to be the CEO of a company. But that still doesn’t explain why so few large cannabis companies have a chief scientific/medical officer, or even a president of R&D.

Maybe we are looking in the wrong place. Maybe their value of science can be demonstrated by their spending on research. Typically, a larger agricultural company will spend 9% or more on R&D, and a smaller company will spend 2-4%.⁶ Meanwhile, the major pharmaceutical companies we looked at spent between 12 and 25% of their revenue on R&D during their most recent fiscal year. Since a cannabis company falls somewhere in between we approximate they would spend around 9-12%.

However, Canopy Growth was the only company that fell into our prediction range, spending 10.5% of their revenue on R&D in 2021.⁷ Tied for a distant second place were Charlotte’s Web and Aurora Cannabis (a subsidiary of Tilray), spending 4.6%. At the very bottom were Tilray which only spent 0.16% on R&D and TerrAscend which spent 0.21% during their most recent fiscal year.^8,9 With most of the cannabis companies, we saw a gradual decrease in R&D funding over time, which intensified with the Covid-19 pandemic.

So why the heck are these companies going on about how they value science? To give them the benefit of the doubt, maybe they do think they value science, but they don’t know how to value it.

It’s hard for a company to take actions that show they value science if there are no voices for scientists at the executive level. After all, how can you make decisions based on science if nobody in the room understands it? Sure, we saw the argument that people who make it to the top can “learn enough science to ascend to the executive suite without much trouble”.⁵ But what is “enough science”? The mitochondria is the powerhouse of the cell?

This leads to our argument for putting scientists in the executive suites of cannabis companies and giving them a more powerful voice. Whereas scientists are not good at marketing, those in managerial roles tend to overly rely on intuition – even when the evidence is against them.¹⁰ For those relying on intuition, R&D is an easy target during times of crisis (like a global pandemic). Cutting costs in R&D yields a short-term immediate increase in profit and the negative impacts are often not felt until years later.¹¹ However, cutting R&D investment is the opposite of what you should do during a time of crisis. Evidence suggests companies that maintain or even increase spending in marketing and R&D and focus on operational efficiency (such as process optimization) are the ones that will come out as the top competitors in the long run.^12,13 Having a chief scientific officer or an executive for R&D with a scientific background can help sustain companies by promoting R&D during hard times and indicating what projects will be the most promising to help the company optimize their processes.

Having a scientist in the executive suite can also help keep everyone in check. “Senior execs live in a feedback loop of positive reinforcement making them unlikely to question their decisions,” according to Stefan Thomke and Gary Loveman.¹⁰ They claim the best way for those in managerial roles to avoid over relying on instinct and break out of that positive feedback loop is by “thinking like a scientist”. This involves not letting bias get in the way of truth, studying anomalies, being skeptical, developing strong hypotheses, producing hard evidence and probing cause and effect. To add to this, we think a major part of thinking like a scientist is by having at least one high up in the team. In our own company, giving equal value to scientific voices has resulted in all parties learning and thriving by making fact-based decisions.

Finally, scientists deliver! To be a scientist (with a PhD), one must master the field, find a gap in the knowledge, then fill that gap – all for little pay and no guarantee of a job at the end. This makes them dedicated workers whose main goal is to contribute something unique to their field, or in this case, their company.¹⁴ Having someone up top who is dedicated, passionate, innovative and trained to look for gaps in knowledge can be an invaluable voice in the executive suite. They are likely to point out potential money-saving solutions (i.e.: optimizing extraction conditions) that others up top may not have thought of on their own.

If you feel strongly that science is at the core of what you do, and you already know that R&D is crucial for the long-term survival of your company, you are already on the right track. In addition to this, consider giving a voice to scientists at the executive level in your company. The cannabis industry is still in its infancy. This means there is potential for R&D in more than just new product development. Basic stuff like extraction, modifying plants to be heartier against harsh conditions and pathogens, curing and safety testing processes have all barely been studied and optimized to reduce costs. These things won’t be solved by a Juris Doctor, an MBA or even an engineer, they will be solved by scientists, and it will take a scientist up top to ensure the whole company recognizes the importance of these projects.

Table 1: Top cannabis companies stats on founders and their educational backgrounds, presence of scientific executive positions and spending on research and development

Company	Founders	Founder’s Educational Backgrounds	Science executive position?	% Revenue spent on R&D
Aphria Inc. (now owned by Tilray)	Cole Cacciavillani and John Cervini	Cole: B. Eng John: Born into a family greenhouse business	Chief science officer Garry Leong: B.Sc. Chem, M.B.A. Quality Management ¹⁵	NA
Canopy Growth Corp	Bruce Linton and Chuck Rifici	Bruce: Ba Public Policy, Minor: Economics. ¹⁶ Chuck: B. Eng, MBA	no	10.5% ¹⁷
Aurora Cannabis Inc. (subsidiary of Tilray)	Terry Booth, Steve Dobler, Dale Lesack and Chris Mayerson	Terry: Master Electrician¹⁸ Steve: B. Eng Chris: Concrete business Dale: Electrician and homebuilder	no	4.6% ¹⁹
Village Farms International Inc.	Michael A. DeGiglio	BSc Aeronautic Science	no	No data available on R&D expenses
Tilray Inc	Brendan Kennedy, Christian Groh, Michael Blue	Brendan: Ba. Architecture, Msc: Eng, MBA²⁰ Christian: Ba. unknown, MBA²¹ Michael: Ba. Finance, MBA²²	no	0.16% ²³
Ayr Wellness Inc	Jonathan Sandelman	Juris Doctor, Law Degree²⁴	no	No data on R&D spending available
TerrAscend Corp	Michael Nashat	Pharm. D . Post doc in Neuroscience²⁵	no	0.21% ²⁶
HexoCorp	Sebastien St-Louis	Ba. Economics, MBA ²⁷	no	3.09% ²⁸
Fire & Flower Holdings Corp	Trevor Fencott	Ba (unknown), and Law degree²⁹	no	No data on R&D spending
Zenabis Global Inc (now owned by hexo corp)	Rick Brar, Mark Catroppa, Monty Sikka	Rick: Ba. (unknown) Mark: Ba. Finance ³⁰ Monty: Ba Accounting and Finance³¹	Chief science Officer: Natasha Ryz PhD experimental medicine.³²	NA

Table 2: Top pharmaceutical companies founders and their educational background, presence of executive positions for scientists and spending on R&D

Company	Current Executives	Educational Background	Science executive positions?	% Revenue spent on R&D
Amgen	Robert A. Bradway	BSc. Biology, MBA³³	Chief Medical officer: Darryl Sleep, M.D. ³³ Senior VP in R&D: Jean-Charles Soria PhD molecular Biol, MD	18.5% ³⁴
Sanofi	Paul Hudson	Ba. Economics, honorary doctorate in business³⁵	Executive VP, R&D: John Reed, MD, PhD in Immunology³⁵	14.51% ³⁶
Bristol-Myers Squibb	Giovanni Caforio	MD.³⁷	Chief Medical Officer: Samit Hirawat, MD. Rupert Vessey: Executive VP: R&D PhD molecular immunology ³⁷	24.58% ³⁸
Takeda	Christophe Weber	PhD. pharmacy and pharmacokinetics, Msc. pharmaceutical marketing, accounting, and finance³⁹	Director President, R&D: Andrew Plump, MD. Ph.D. in cardiovascular genetics ³⁹	14.25% ⁴⁰
AbbVie	Richard A. Gonzalez	No college degree. Practical experience in biochemistry research.	Vice chairman and president, R&D: Michael E. Severino, MD, Bsc biochem⁴¹	12.60% ⁴²
Novartis	Vasant Narasimhan	Bsc. Biology, MD, Msc Public policy	President, Biomedical research, James Bradner M.D. President innovative medicine, Victor Bulto: Msc. Chemical engineering, health economics, and pharmaeconomics, MBA. Chief medical officer, John Tsai BEng. MD⁴³	18.04% ⁴⁴
Merck	Robert M. Davis	Ba Finance, MBA, Juris Doctor⁴⁵	Executive VP and president of Merck Research Laboratories; Dean Li MD, PhD cardiology⁴⁵	25.14% ⁴⁶
Johnson & Johnson	Joaquin Duato Vanessa Broadhurst Peter Fasolo	Joaquin: MBA, Master of international management Vanessa: Ba, Master of Business Administration Peter: PhD in organizational behavior, Msc. Industrial Psychology, Ba Psychology⁴⁷	Executive VP, Chief Medical Safety Officer; William Hait MD. PhD Oncology Executive VP, Pharmaceuticals R&D; Mathai Mammen MD. PhD Chemistry	15.69% ⁴⁸
Pfizer	Dr. Albert Bourla Sally Susman Payal Sahni Becher Rady Johnson	Albert: Doctor of Veterinary Medicine (biotechnology) Sally: Ba Government Payal: Ba psychology, Msc Psychology Rady: Accountant⁴⁹	Chief Development Officer: William Pao: MD. PhD oncology Chief Scientific Officer, Worldwide R&D: Mikael Dolsten; MD. PhD Tumor Immunology⁴⁹	17.01% ⁵⁰
Roche	Dr. Severin Schwan, William N. (Bill) Anderson, Dr. Thomas Schinecker, Dr. Alan Hippe	Severin: Ba economics, PhD law William: Msc in management and chemical engineering Thomas: Bsc genetics, Msc molecular biology, Phd molecular biology Alan: Ba, Phd in administration⁵¹	CEO Roche Diagnostics; Dr. Thomas Schinecker; PhD in Molecular Biology⁵¹	23.563% ⁵²

References:

Aurora Webpage. Auroramj https://www.auroramj.com/#science.
Definition of Core. Merriam-Webster Dictionary https://www.merriam-webster.com/dictionary/core?utm_campaign=sd&utm_medium=serp&utm_source=jsonld.
Tilray Brands WebPage. https://www.tilray.com/.
Rathi, A. Why scientists make bad entrepreneurs—and how to change that. Quartz (2015).
Mintz, C. Science vs. Business: Who Makes A Better CEO? Life Science Leader (2009).
Fuglie, K., King, J. & David Schimmelpfennig. Private Industry Investing Heavily, and Globally, in Research To Improve Agricultural Productivity. US Department of Agriculture, Economic Research Service (2012).
Canopy Growth R&D expenses. https://ycharts.com/companies/WEED.TO/r_and_d_expense.
Tilray R&D expenses. Ycharts https://ycharts.com/companies/TLRY.TO/r_and_d_expense.
TerrAscend R&D expenses. Ycharts.
Thomke, S. & Loveman, G. Act Like a Scientist. Harvard Business Review (2022).
Knott, A. M. The Trillion-Dollar R&D Fix. Harvard Business Review (2012).
Gulati, R., Nohria, N. & Wohllgezogen, F. Roaring Out of Recession. Harvard Business Review (2020).
Soferman, R. Why You Shouldn’t Cut R&D Investments In Times Of Crisis And Recession. Forbes (2020).
Madisch, I. Why I Hire Scientists, and Why You Should, Too. Scientific American (2018).
Havn Life Sciences Inc. Announces Appointment of Gary Leong as Chief Science Officer. https://apnews.com/press-release/accesswire/science-business-life-sciences-inc-aphria-inc-319a516963144b308d146d97dee0dc69 (2020).
Bruce Linton. Elite Biographies https://elitebiographies.com/biography/bruce-linton/.
Canopy Growth Page . Ycharts https://ycharts.com/companies/CGC.
Lee, A. 20 Things You Didn’t Know About Terry Booth. Money Inc (2020).
Aurora Cannabis page. Ycharts https://ycharts.com/companies/ACB.
Brendan Kennedy Profile. linkedin https://www.linkedin.com/in/kennedybrendan/.
Christian Groh Profile. Bloomberg https://www.bloomberg.com/profile/person/17139193.
Micheal Blue Profile. Bloomberg https://www.bloomberg.com/profile/person/18227502.
Tilray Page. Ycharts https://ycharts.com/companies/TLRY.
A Jonathan Sandelman Profile. zoominfo https://www.zoominfo.com/p/Jonathan-Sandelman/2245250.
Dr. Michael Nashat Appointed President & CEO of TerrAscend. https://markets.businessinsider.com/news/stocks/dr-michael-nashat-appointed-president-ceo-of-terrascend-1012862002 (2018).
TerrAscend Page. Ycharts https://ycharts.com/companies/TRSSF.
Sebastien St-Louis Profile. Linkedin https://www.linkedin.com/in/sstlouis/?originalSubdomain=ca.
HEXO Corp Page. Ycharts https://ycharts.com/companies/HEXO.
Trevor Fencott Profile. bezinga.com https://www.benzinga.com/events/cannabis-conference/speakers/trevor-fencott/.
Mark Catroppa Profile. linkedin https://www.linkedin.com/in/markcatroppa/.
Monty Sikka Profile. linkedin https://www.linkedin.com/in/monty-sikka-3024a1a6/.
Natasha Ryz Profile. crunchbase https://www.crunchbase.com/person/natasha-ryz.
Senior Management Amgen Page. Amgen https://www.amgen.com/about/leadership.
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Bristol Myers Squibb Stocks Page. YCharts.
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Takeda Pharmaceutical Co Stocks Page. YCharts.
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Abbvie Inc Stocks Page. YCharts https://ycharts.com/companies/ABBV.
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Novartis AG Stocks Page. YCharts https://ycharts.com/companies/NVS.
Merck Executive team Page. Merck https://www.merck.com/company-overview/leadership/executive-team/.
Merck Stocks Page. YCharts https://ycharts.com/companies/MRK.
Johnson and Johnson Our Leadership Team Page. Johnson and Johnson https://www.jnj.com/leadership/our-leadership-team.
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Roche Holding AG Stock Page. YCharts https://ycharts.com/companies/RHHBY.

May 10, 2022

Aurora Launches New Product Line in UK

By Cannabis Industry Journal Staff

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Aurora Cannabis announced today that they will be launching a new product line for patients in the United Kingdom. The Berlin-based company says they are debuting new cannabis extracts for the United Kingdom that meet EU GMP standards and are developed using, “a new extraction process has been developed to ensure the terpene profile of its products consistently remains at a high level,” according to the press release.

The new product line comes from Aurora Nordic, their facility located in Odense, Denmark. While the press release does not disclose exactly what kind of extraction technology and post-processing methods are involved, they claim their processes result in consistent concentrations of cannabinoids and rich terpene profiles.

Back in 2019, the UK loosened their rules around medical cannabis and allowed a handful of cannabis-derived drugs to be prescribed. Shortly after the British government began loosening restrictions around hemp-derived CBD and medical cannabis, Aurora made its first foray into the UK market. Still, only a small number of patients actually get medical cannabis prescriptions and accessibility is still a hot button issue in the country.

Trisha Cassidy, managing director for Aurora Cannabis in the UK & Ireland, says they are still trying to get into the market further, working on accessibility, advocacy and reimbursement issues through the NHS. “We are dedicated to helping improve access to medical education for healthcare professionals and are happy to share our medicinal cannabis knowledge and expertise,” says Cassidy. “The effectiveness and tolerability of medical cannabis has already been shown in several clinical studies and even more data from 20,000 UK patients will become available once the first patient registry for medical cannabis in Europe is completed. The UK market is still young and much work needs to be done to dismantle the obstacles that continue to prevent patients from receiving the treatment they need. Aurora is committed to these patients and will continue its dedicated work in the UK.”

January 4, 2022

Aurora Cannabis Delivers Largest Shipment to Israel

By Cannabis Industry Journal Staff

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Aurora Cannabis Inc. sent out a press release today announcing that they have completed their largest shipment of cannabis to Israel yet. The Canadian company says the shipment of medical cannabis is worth roughly C$10 million, making it their largest shipment and possibly the largest cannabis import in Israel’s history.

Aurora is working on building their market presence in Israel as they continue to focus on international expansion. They claim that they are the leading Canadian licensed producer in global medical cannabis by revenue.

Miguel Martin, CEO of Aurora Cannabis Inc., says they are watching the world slowly begin to embrace cannabis just a bit more. “It’s an exciting time for the global cannabis industry, as we’re seeing growing acceptance and thoughtful regulation of both medical and adult-use cannabis across Europe and in key markets like Israel,” says Martin. “With strong local relationships, as well as support from our patients and consumers, we look forward to continuing to expand our international business to complement our total cannabis portfolio.”

Aurora also announced a joint venture in The Netherlands back in November of 2021, joining their regulated adult-use pilot program. The shipment of medical cannabis to Israel was delivered in December and will be posted in their second quarter revenue of 2022.

November 4, 2021

Flower-Side Chats Part 10: What’s Next for Audacious

By Aaron Green

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Flower continues to be the dominant product category in US cannabis sales. In this “Flower-Side Chats” series of articles, Aaron Green interviews integrated cannabis companies and flower brands that are bringing unique business models to the industry. Particular attention is focused on how these businesses navigate a rapidly changing landscape of regulatory, supply chain and consumer demand.

Audacious (OCTQB: AUSA) is an Aurora (TSX: ACB) spinoff formerly known as Australis Capital, Inc. They have focused on an asset-light expansion strategy whereby they leverage their expertise in designing cannabis facilities in exchange for favorable cost plus arrangements for a percentage of the facilities’ production.

We interviewed Marc Lakmaaker, SVP of Capital Markets at Audacious. Prior to joining Audacious, Marc worked with Terry Booth at Aurora. His background is in investor relations.

Aaron Green: Marc, how did you get involved in the cannabis industry?

Marc Lakmaaker: I was working for an investor relations agency. and one of my colleagues left and she had a cannabis client that I took over, which was Bedrocan, Canada. I started working with them. They were then acquired by Tweed, which became Canopy. The guy I was working with at the time at Bedrocan was Cam Battley, who then went to Aurora. As soon as he joined Aurora, he said, “I need some help.” So, I came in house and worked there until July 2019. When I left, I set up my own agency, but by that time, I’d been working with Terry Booth for a few years. Then, this past December, Terry got in touch with me and said he needed my help. It was after the concerned shareholders had won the shareholder battle around Australis and the rest is history. So, I’ve now been working with Audacious, which was Australis, since December of last year, roughly.

Green: Just quickly on Australis: So, Audacious is basically a spin off of Aurora, correct?

Lakmaaker: Correct. So, at the time, Aurora had a couple of US assets on its balance sheet, a piece of land an annuity through a company Michigan. We were listed on the TSX. We were going to list or had just listed on the NYSE and were arranging for loan facility with a syndicate of banks. They said, “even though these assets are dormant, you can’t have any US assets on your balance sheet.” So, we spun Australis off – a little bit how Canopy had spun off Canopy Rivers. But it was really the idea that Australis is going to become the foothold for Aurora in the US cannabis market because Aurora has back-in rights.

The management team was put in place and started making some investments in the cannabis space, but kind of drifted away, sort of more into FinTech. First, it was FinTech related to cannabis and then FinTech, full stop. That’s when the shareholders were like, “we don’t agree with this.” Then the proxy battle started in which the dissident shareholders, or the concerned shareholders, won overwhelmingly. The Board left. The management team left. A new management team was put in place, a new Board in place, and it was kind of a restart.

So, we feel like we’re a bit of a startup. But a very rapidly moving startup. We’ve done an incredible amount of work in just the last seven to ten months. There was a lot of housekeeping to do. A lot of stuff related to restructuring the company, dealing with the departing management teams, dealing with bringing new management, etc. There were some deals that had to be unwound… Housekeeping if you will.

Green: Australis went down the FinTech route. What are the plans for Audacious now?

Lakmaaker: We’ve already started. We pivoted right away. In early January, we announced two acquisitions. One of ALPS, and the other one of Green Therapeutics. ALPS is really what is enabling us to execute on our strategy. It’s a very different strategy. It’s an asset light model, because we figured out that in order to grow quickly in this market without spending huge amounts of shareholder money, you need to be able to get into markets in a capital-light fashion. ALPS is the world’s preeminent greenhouse design company. Not just greenhouses, but also indoor facilities. They’ve got a 35-year track record in fruits and vegetables. They’ve got an eight-year-plus track record in cannabis – and built some of the best facilities in the world. They’ve got a lot of IP.

Marc Lakmaaker, SVP of Capital Markets at Audacious (formerly Australis)

The proof point of that is our relationship with Belle Fleur. It’s a social equity license holder in Massachusetts. We helped them build their facility. We’re not contractors, but we do the design and engineering. We help them with partner selection. We do the construction management. We bring in a general contractor. Then we do the commissioning, and optionally, post-commissioning services, making sure that the facilities are dialed in. In return for all that IP, because what people know that what they get at the end of it is high quality, consistent cannabis and very low operating costs, we ask our clients to dedicate a certain percentage of their canopies to grow with our cultivars. Those we will buy back on a cost plus arrangement and we use that to launch our brands into whatever jurisdiction.

So, in Massachusetts, we’re working with Belle Fleur. We’re getting 10% of their canopy. We’re buying it back at cost plus 5%. So, we don’t have to sink money into building the facility. We’re not carrying the cost of capital there. We’re also not paying wholesale prices. And these relationships are locked in for a long time. I can’t remember if it was five or 10 years. So, it’s a very, it’s a different strategy, but it’s not contrarian – it’s very de-risked, that allows us to launch into new countries.

Then for Green Therapeutics, we’ve got a number of award-winning brands like Provisions and Tsunami. We’re kind of phasing out GT Flowers and there will be something else in its place. We also acquired Loose, which caters to a younger demographic, with a high potency shot beverage line that is now for sale in California.

We also have a partnership with PBR, the Professional Bull Riders Association. There’s some statistics around that that just absolutely blew me away – 83 million permanent fans! That’s 25% of the US population. I think the average income is $70,000. That’s well above the national average and the general split is fairly even too; it’s 53/47, male/female. Proper American sport! They have hundreds of hours of exposure on CBS. They’ve got 2 billion imprints on social media. So, with PBR, we launched Wreck Relief, which has several recognized and approved pain products in the lineup.

Green: What markets are you in right now?

Lakmaaker: Right now we’re in Nevada with cannabis products. This is our home market where our head offices are in Las Vegas. We’re in California. We just bought a dispensary in San Jose that comes with a partnership with Eaze. On top of that, we’re operationalizing in Missouri and Oklahoma, and officially building in Massachusetts.

Then through ALPS because they does both cannabis and non-cannabis, we’re in a number of states. We’re looking to get more of the supply deals. We’re also doing a lot of vegetable facilities throughout the entire world. We’re in Europe, we’re in Asia, in the Middle and in North America, we build these facilities from the desert up to the Arctic.

There’s a big movement right now to produce food that is safe and has a smaller carbon footprint. So, our facilities are kind of inherently more sustainable. They use up to 95% less water, less labor, less energy, they are less prone to disease, crop failure, everything. And because you are local producing for local communities, you reduce the transport carbon footprint.

Green: What in your personal life or in cannabis are you most interested in learning about?

Lakmaaker: I really like the sciences. I’m a chemical engineer by training. I think what is going to take an incredible flight in the years to come is the application of medical scientific research that’s being done right now. To me, that’s fascinating because the cannabis plant is something special. It’s got such a broad utility that we know, anecdotally. I think we’re moving towards a world where we’re going to see a lot of breakthroughs on the medical side.

I’m very excited about the other end too – cultivation. I think tissue culture is going to play an incredible and important role.

Green: Thanks Marc, that concludes the interview.

Lakmaaker: Cheers, Aaron.

July 21, 2021

5 Pivotal Trends Propelling Growth For the Medical Cannabis Market: 2021-2027

By Priya Deshmukh

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Growing awareness and public support for medical cannabis around the world has pushed regulatory authorities to consider the legalization of medical cannabis, which remains the major factor driving growth for the medical market. Cannabis-based medication has conventionally been used and studied to be an effective therapeutic solution for various disorders. Increasing R&D activities for the development of novel solutions and applications has led to various formulations being approved by The United States Food & Drug Administration (FDA). For instance, in 2020, the FDA had approved application of Epidiolex for treating seizures related to tuberous sclerosis complex in patients aged one year and above. On account of shifting interest towards the benefits of medical cannabis and significant technological advancements, application of medical cannabis is increasing rapidly, which is positively impacting the overall business space.

According to Global Market Insights, Inc., the medical cannabis market size was valued at USD 22.4 billion in 2020 and will record exceptional growth numbers in the coming years, considering the emergence of the following trends:

Development of new products by key market players

Prominent players operating in the medical cannabis industry such as Canopy Growth Corporation, Aurora Cannabis Inc., Aphria Inc., GW Pharmaceuticals, ABcann Medicinals Inc., The Supreme Cannabis Company, etc. are focusing on strategies pertaining to product development and acquisitions in order to gain a strong market presence. Citing an instance in 2018, GW pharmaceuticals, announced that it had received an FDA clearance for its first plant-based pharmaceutical cannabidiol for treating rare pediatric epilepsies. Apparently, the approval helped the company expand its portfolio while giving it the innovator’s advantage in cannabis-based treatments.

Rising demand for treating nausea conditions

Medical cannabis is finding extensive usage in the treatment of nausea conditions especially for the patients undergoing chemotherapy, as a part of cancer treatment. Numerous tetrahydrocannabinol- and cannabidiol-based medications have been approved for treating the symptoms of nausea. The rising incidences of cancer and nausea segments across medical cannabis markets is anticipated to register a substantial CAGR of 18.4% through 2027.

Increasing preference for topical route of administration

Topical administration of medical cannabis is gaining prominence as topical solutions such as lotions and creams can be directly applied to the skin for the treatment of an injury. They are also replacing opioids for injury-related pain management as these have shown several side effects. Topical products also allow for self-administration that’s minimally invasive, while exhibiting limited side effects. With increasing adoption of topical route of administration, the segment is estimated to register an appreciable valuation of $5 billion by 2027.

Higher sales through dispensaries

Dispensaries have become a prime distribution channel globally. Considering the stringent regulatory scenario around medical cannabis, its consumption and sales are highly monitored by authorities in order to avoid any abuse or instances that lead to addiction. It is relatively easy for both suppliers and consumers to engage in a conventional brick and mortar store model under a regional medical cannabis program. Given that, dispensaries are anticipated to retain dominance in the market over the coming years. In 2020, the segment had held a sizeable market share of 58.4%.

Rising consumption of medical cannabis in Latin America

South American countries like Argentina and Chile are the major consumers of medical cannabis in the region. While Argentina has legalized the domestic cultivation of cannabis, Chile is known to have a history of medical cannabis with various clinical trials being performed since 2014. The country is one of the leaders in the LATAM medical cannabis industry wherein the regulatory authorities keep on simplifying the laws time and again. With favorable regulatory scenarios, the regional market is projected to expand significantly by recording a CAGR of 20.9% through 2027.

May 3, 2021

How Private-Sector-Led Information Sharing Can Transform Cybersecurity in the Cannabis Industry.

By Andy Jabbour, Ben Taylor

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The cannabis industry’s advancement towards legalization continues to dominate national headlines, from the stance of incoming Attorney General Merrick Garland to deprioritize enforcement of low-level cannabis crimes, Senate Majority Leader Chuck Schumer’s continued advocacy, to the recent passing of legislation in New York, New Mexico and Virginia (the first in the South) to authorize adult-use cannabis. While these updates are likely to intrigue customers and investors alike, they are also sure to draw the attention of cyber criminals who could look at the relative youth of the industry, as well as its rapid growth, as a prime target of opportunity for nefarious acts.

In order to understand risk mitigation best practices across a wide spectrum of private sector industries, this article will first identify the current security environment in order to understand the threats, briefly highlight specific case studies and assess the risks and identify methods that individual organizations, as well as the cannabis industry as a whole, can take action to enhance security and preparedness and to develop resiliency against future attacks.

Understanding the Threats

For an industry that has operated in a largely cash-based system for much of its existence, the idea of security is not foreign. Typically, these concerns focused on physical security implementation. The topic has received plenty of coverage, including a recent article in this journal articulating Important Security Considerations When Designing Cannabis Facilities. While an audit of physical security measures is a valuable part to any all-hazards threat assessment, securing a growing online network – from email to online finances to connected devices within cannabis facilities – can pose more unfamiliar challenges. When consulted for this article, Patten Wood, a former VP of marketing for a prominent west-coast cannabis retail brand noted: “While the topic of cybersecurity is critically important to customers, businesses, and the industry at large, it isn’t top of mind for many of the cannabis companies that I’ve experienced.” Understanding what risks are present is the first step to mitigating them, so we must first discuss several common cyber threats for the cannabis industry.

Phishing: Phishing happens when cybercriminals impersonate a trusted individual or entity, typically through email. The goal in this instance is to get the target to share confidential information or download software that can allow unauthorized access into an organization’s network. Phishing is one of the most common types of cyberattacks as it is relatively easy to conduct and surprisingly effective.

Ransomware Attacks: Ransomware attacks are used to gain access to a computer network and then lock and encrypt either the entire system or certain sets of high-value files, which can compromise important business information, and impact client and vendor privacy. A ransom is then demanded for restoring access, but paying the ransom comes with its own risk as it doesn’t guarantee the files will be restored.

Cyber Extortion: Similar to ransomware attacks in their design, cyber extortion typically deals with a threat of leaking personal information and will generally demand payment in cryptocurrency in order to maintain their anonymity.

Lumu: 2020 Ransomware Flashcard

Remote Access Threats: As 2020 has forced organizations to rethink how they conduct business and shift to more remote operations than they had in the past, it can open up several new threats. According to a survey by IT social network SpiceWorks.com, six out of every ten organizations allow their employees to connect their company-issued devices to public Wi-Fi networks. Utilizing unsecured Wi-Fi networks opens the user up to man-in-the-middle attacks, allowing hackers to intercept company data. Unsecure Wi-Fi also brings the threat of malware distribution. An additional consideration with remote workers is the uptick in cyber attacks against remote access software referred to as remote desktop protocol (RDP) attacks. According to Atlas VPN, RDP attacks skyrocketed 241% in 2020 and we’ve seen numerous RDP attacks against critical infrastructure throughout the pandemic and across all industries.

Internet of Things (IoT) Leaks: With IoT devices running everything from security systems to automated growing operations, the convenience has been a huge boost for the industry. Unfortunately, many IoT devices don’t have sophisticated built-in security. Another common problem is the tendency of users to keep default passwords upon installation, which can make devices easy for cyber criminals to access. Once they are inside the system, malware can easily be installed, and the actors can move laterally throughout the network.

Personal and Medical Record Security: Many cyberattacks expose some level of personal data, whether that be customer, employee or vendor information. An extra consideration for retail operations that either treat medical patients, or medical and adult-use customers, is the additional information they must store about their clients. Medical facilities will maintain protected health information (PHI), which are much more valuable on the dark web than personally identifiable information (PII). But even adult use facilities may keep government-issued ID or other additional information above that of a typical retailer, which makes the potential value of their information much more intriguing for a cybercriminal.

Assessing the Risks

Depending on where your organization lies in the seed to sale chain, you will have different levels of risk for various types of attacks. We briefly discussed ransomware attacks earlier. Ransoms can range widely depending on the size of the organization that is attacked, but the ransom alone isn’t the only risk consideration. Businesses must also factor in the cost of downtime (an average of 18 days in 2020) caused by the ransomware when evaluating the impact to business operations, as well as reputation. While small – medium businesses are absolutely at risk, especially given their relative lack of cybersecurity resources and sophistication, a recent trend involves “Big Game Hunting” where cybercriminals are targeting larger organizations with the potential for bigger paydays. Criminals understand that big business can rarely afford major delays, and may be more able and willing to pay, and pay big, for a return to normal operations.

Below are several examples of attacks which have either directly impacted the cannabis industry, or have valuable lessons the industry can learn from.

GrowDiaries: In October 2020 researcher Bob Diachenko discovered that 3.4 million records including passwords, posts, emails and IP addresses were exposed after two open-source application Kibana apps were left exposed online. As a platform for cannabis growers around the world (who are not all growing legally), this type of exposure puts the community at great risk, and can lower user confidence in the product, as well as putting them at personal risk of harm or legal ramifications. The applications being left open is a prime example of either a lack of good cybersecurity policies, or not following through on those policies.

Aurora Cannabis: On December 25^th, 2020 Canadian company Aurora Cannabis suffered a data breach when SharePoint and OneDrive were illegally accessed. Included in the data that was compromised was credit card information, government identification, home addresses and banking details. The access point coming through Microsoft cloud software is a prime example of some of the challenges facing businesses who have an increasingly remote workforce yet still need that workforce to access critical (and usually highly sensitive) information.

THSuite: A database owned by seed to sale Point-Of-Sale (POS) software provider THSuite was discovered by researchers in December 2019. The database contained PHI/PII for 30,000 people, with over 85,000 files being exposed. The information that was left accessible included scanned government IDs, personal contact information and medical ID numbers. Clearly this gets into HIPAA territory, which can result in fines of up to $50,000 for every exposed record.

Door Dash: As cannabis delivery apps become more prevalent, it’s good to reference how similar businesses in other industries have been targeted. In May of 2019 nearly 5 million user records were accessed by an unauthorized third party, exposing PII and partial payment card information.

Taking Action

On an organizational level, employee training, password hygiene and malware protection are some of the basic and most important steps that should be taken by all organizations. But, if “knowledge is power,” the best defense for any organization against cyber threats is a well-informed organization- including leadership down to the front-line employees. Excellent tools to assist in this are Information Sharing & Analysis Centers/Organizations (ISACs/ISAOs). ISACs were established under a presidential directive in 1998 to enable critical infrastructure owners and operators to share cyber threat information and best practices. The National Council of ISACs currently has over 20 member ISACs including Real Estate, Water, Automotive and Energy. ISAOs were created by a 2015 executive order to encourage cyber threat information sharing within private industry sectors that fall outside of those listed as “critical infrastructure”. Christy Coffey, vice president of operations at the Maritime and Port Security ISAO (MPS-ISAO) says information sharing enabled by the executive order is critical. “We need to accelerate private sector information sharing, and I believe that the ISAO is the vehicle.”

According to Michael Echols, CEO of the International Association of Certified ISAO’s (IACI) at the Kennedy Space Center, security experts have long understood that threat information sharing can allow for better situational awareness and help organizations better identify common threats and ways to address them. “On the other side, hackers in a very documented way are already teaming up and sharing information on new approaches and opportunities to bring more value (to their efforts).” The ongoing crisis surrounding the Microsoft Exchange Server Vulnerability demonstrates that different cybercriminal groups will work simultaneously to abuse system flaws. As of March 5^th it was reported that at least 30,000 organizations in the U.S. – and hundreds of thousands worldwide – have backdoors installed which makes them vulnerable to future attacks, including ransomware.

Below are several links to recent products that have been shared by various ISACs/ISAOs, which are provided as an example of the type of information that is commonly shared via these organizations.

If organizations are interested in learning more about enhancing their cybersecurity resiliency through private-sector led information sharing, please reach out to the newly formed Cannabis ISAO at ben@cannabisisao.org

March 17, 2020

Australian Producer MGC Pharma Gains Access To Polish Pharmacies

By Marguerite Arnold

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Publicly listed Australian firm MGC Pharma has now entered Poland. The company just announced a commercial wholesale agreement with a local NGO called Cannabis House Association. CHA is also pairing with the Forensic Laboratory of the Faculty of Law and Administration at the University of Lodz. The plan is to support a large-scale research project in Poland.

This is a first of its kind situation in Europe, even more interesting that it is happening here (as opposed to say Germany). The idea is to examine the societal, financial, medical and public health ramifications of the use of cannabis.

There are approximately 15,000 pharmacies in Poland, most of which are authorized to dispense cannabis. Indeed, estimates of how many Polish patients there are ranges from between 300,000 – 600,000. Numbers could also be well higher.

Poland does not represent the only European landing of late for MGC. Indeed, the company also began importing cannabis into Ireland – as of December, 2019.

CannEpil MGC — CannEpil, the company’s first pharmaceutical-grade medical cannabis product for the treatment of refractory epilepsy.

While it is based in Australia, MGC also has a production facility in Slovenia.

What Does Polish Reform Look Like on the Ground?

Poland is in an interesting position in the cannabis debate right now. Policy tends to follow Germany on many issues. However much the situation is different here than Germany, there are also obvious similarities – starting with the reluctance of authorities to encourage anything but imports into the medical market.

However, while the situation facing patients is not exactly analogous to Germany (it is more like Ireland or the UK right now), the country is clearly moving into a strategic position in the global cannabis economy.

Poland is also clearly at least beginning to implement reform that appears to track its larger neighbor next door.

A Short History of Polish Cannabis Reform

For the past few years, ever since 2017 in fact, when Poland “legalized” medical use, patients have been stuck with few options. Indeed, the only real access route to obtaining the plant or cannabinoid medicines legally is literally crossing the border, in person, in a place like Holland or Germany. Obtaining the drug in another country and then making the border crossings to get it home is not an attractive situation for anyone. This option, obviously is prohibitive for almost everyone. And dangerous for caretakers and patients alike, and clearly not sustainable.

Like Germany, in other words, Poland appears to be moving cautiously to implement the idea of cannabis reform starting with imports first. Even though there is a burgeoning local hemp industry in the country with hopes to not only to supply domestic patients, but also to export over the border into higher wage economies. See Germany, for starters.

Starting in 2018, Canadian companies began to enter the market. Aurora and Canopy Growth in particular, targeted Poland aggressively. But they are far from the only companies eyeing the country as a lucrative market. Macedonian, Czech and Israeli firms are all eyeing the ground.

Developing Market Issues

Poland is however on the front lines of this debate in a way that its richer European neighbors are not. With an exchange rate that is roughly 4 zloty to 1 euro, expensive cannabis imports will be even further out of reach for patients than they are in say Germany.

Further, there is an active and enthusiastic burgeoning domestic cannabis economy on the ground already – although locally, capital is scarce.

MGC’s experiment, in other words, represents a first step not only in business development for their own products, but a potential opening of a national acceptance about the use of this drug – not to mention who pays for the same – and where it is produced.

In the aftermath of COVID-19 hitting Europe, German ministers (for one) are already suggesting that the country secure its pharmaceutical supply chain by producing more drugs in the country rather than relying on supply chains that reach to Asia for more conventional products.

It is likely that this conversation will also begin to expand to cannabis, not only in Germany of course, but also Poland.

In the meantime, MGC Pharma has managed to go where no other private cannabis company has gone in Europe so far – and in a way that will pay off not only for them, but the entire cannabis conversation.

February 11, 2020

European Cannabis is the Emerging Market to Attract North American Investment

By Mark Wheeler

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Europe continues to be the new frontier of medical and wellness developments in the cannabis industry, with various sources predicting that Europe will become the world’s largest legal cannabis market over the next 5 years. Key related statistics, include:

A population of over 740 million (over double US and Canada combined)
Total cannabis market estimated to be worth up to €123 billion by 2028 (€58bn medical cannabis (47%), €65bn recreational cannabis (53%))
Over €500 million has been invested in European cannabis businesses (including significant expenditure in research and development, manufacturing and distribution)

To reiterate this belief, this month, hundreds of industry experts and delegates will be attending Cannabis Europa in Madrid, to discuss the expansion of cannabis across Europe and the challenges facing the industry across the member states of the EU and the UK.

Global mainstream leans to European strength

Since late 2018, major global operators have made substantial moves into the cannabis sector. Anheuser-Busch InBev, the world’s largest beer company and maker of Budweiser, entered into a partnership to research beverages infused with two types of cannabis. Constellation, owner of Corona beer, announced a commitment for $4 billion investment in Canadian cannabis company Canopy Growth. BlackRock Inc, through five actively managed BlackRock funds, has invested into Curaleaf Holdings Inc, a dispensary operator, for a not too insignificant investment sum of $11 million (as at March 2019). Such international investments prove that cannabis has moved from the fringes and into the mainstream.

When considering the impact of mainstream cannabis, it should be recognised that major European countries have approved or are planning on implementing, legalisation of medicinal cannabis. The UK, Germany, Italy and the Netherlands already have legal systems in place for medicinal cannabis and France and Spain are currently reviewing key legislative reform to align themselves with international practices. At present the German market is the third largest cannabis market (in terms of size) behind the US and Canada.

In addition to medicinal cannabis, several key European countries have systems in place, or are developing systems, or considering the reform of existing systems, to approve cannabis with THC content at a recreational level. The Netherlands already has a system and Luxembourg’s health minister in August 2019 announced the intention to legalise cannabis for Luxembourg residents. The Luxembourg government is lobbying EU member states to follow suit.

Whilst the EU has a labyrinth of laws in relation to edible CBD (as a novel food) which make the regulatory landscape complex, there has been an explosion of CBD products for vaping and cosmetics. Of course, with each of these products being subject to different local laws (some aligned between EU members states) in relation to vaping and cosmetic related regulations. The Brightfield Group has predicted a 400% increase in the European CBD market (including vaping liquid) from $318m in 2018 to $1.7 billion by 2023. There is also an expansion into applications for CBD with animals with many US manufacturers of CBD-infused pet food.

The European Parliament’s health committee has been calling for properly funded scientific research and there are motions to establish policies to seek to incentivise member states to advance the studies of medical cannabis, with a priority on scientific research and clinical studies – the first step necessary to drafting legislation, designed to better support the industry.

Where does the UK sit within cannabis?

Medicinal cannabis famously saw a legalisation, of sorts, by the then Secretary of State, Sajid Javid, who provided the authorisations for prescriptions for the high profile cases of Billy Caldwell and Alfie Dingley. Subsequently, on 1 November 2018, this was codified into law by an amendment to Schedule 2 of the 2001 Misuse of Drugs Regulations. This allows clinicians to prescribe cannabis as an unlicensed medicine.

There have, of course, been some high profile licensed medicines. The UK company, GW Pharmaceuticals, is the largest exporter of legal medical cannabis in the world, cultivating medical cannabis for production of cannabis-based medicines (e.g. Epidiolex & Sativex). Epidiolex (manufactured by subsidiary Greenwich Biosciences) became the first cannabis-derived medicine approved for use in the US for treatment of seizures caused by Lennox-Gastaut and Dravet syndromes (both severe forms of epilepsy).

When considering the level of research development and investment in the medicinal field, it is no surprise that the UK is the world’s largest producer and exporter of medical cannabis. Research published by the International Narcotics Control Board indicates that the UK produces over 100,000kg a year of medicinal cannabis.

Previous guidance from the National Institute for Health and Care Excellence (NICE) indicated that further research is required to demonstrate the benefit of medicinal cannabis, citing its cost versus evidenced benefit. However, there is now renewed confidence in the UK following NICE’s approval of two cannabis-based medicines produced by GW Pharmaceuticals, Epidiolex (cannabidiol) oral solution and Sativex (nabiximols), for routine reimbursement through the NHS.

Following the re-categorisation of medicinal cannabis in November 2018, a number of clinics have been established where specialised clinicians can start the process of prescribing cannabis based medicinal products (CBMPs). Whilst this route is not fast, and challenges are well documented as to the satisfaction of prescriptions made in the UK, there is momentum behind the development of this as a means for providing genuine and established medical care. A significant step in October 2019, was the CQC registration of one such cannabis clinic, Sapphire Medical Clinics Limited.

In November 2019, a project backed by the Royal College of Psychiatrists was announced with the aim to be the largest trial on the drug’s use in Europe with a target of 20,000 UK patients.

The UK medicinal cannabis sector is establishing a research-based approach to expand usage in the UK and across Europe.

How North America compares to Europe

Canada

Canada, as a first mover within the cannabis sector, has a multitude of large companies which are well-capitalised and have substantial international footprints. The Canadian exchanges have large listed companies looking to Europe with the intention of acquiring or investing into European operations. As of the date of writing, the 10 largest cannabis companies in Canada have an aggregate market cap of over $23.5 billion (and all registered cannabis companies in Canada having an aggregate market cap of over $46.5 billion).

Listed companies have had a tough time over the last 6-12 months with a slowdown in the market as a natural re-balancing occurs – part of which is due to rapid expansion and heavy investment into cultivation by all the major participants in the market. Over the next 6 -12 months we can expect to see management changes (some of which will be voluntary and some of which will be imposed by institutional pressure) to introduce different skill sets at board and senior management level to facilitate the oversight and leadership necessary for large pharmaceutical companies. Many operations have expanded into highly regulated products and complex supply chains whilst still operating with fundamentally the same team that established the operations with entrepreneurial efforts but, perhaps, a lack of experience in these sectors. The recent announcements by Aurora Cannabis and Tilray demonstrate that these restructurings and costs reductions have already commenced. However, with increased experience at board level and an improvement of profitability focused on sustainable business practices, should come new opportunities on a global scale for these North American operations.

The US

The US market, because of the complexity of state and federal laws not being fully aligned, is closer to its infancy than the Canadian market. This is not too dissimilar to the European market. That said, there are a number of well-funded and quite large US enterprises. A limited number of these, such as Tilray, are looking to expand into Europe.

Many of the companies in the US have, and continue to, expand quickly so we can expect to see a number of mergers and acquisitions. We are likely to witness Canadian and US entities merging with one another with the potential for acquisitions for operations within Europe. It is unlikely that the North American companies will risk their capital through organic growth so would be expected to be identifying “turnkey” solutions.

One of the major challenges facing US companies is the complexity of supply and distribution. This is largely a result of the complexities for state and federal laws interacting with one another as well as international importation and exportation with US states.

How you can invest within the UK and Europe

Developments in the fields of research and development are anticipated to add further weight to the lobbying of government and regulatory bodies across Europe.The UK remains, despite the events of Brexit, a major financial hub for Europe. The London market has seen the growth of several investment and operation cannabis companies. This includes private companies such as; EMMAC Life Sciences Limited and the operations formerly trading as European Cannabis Holdings (now demerged into several new entities including NOBL and LYPHE) as well as publicly listed companies; including Sativa Group PLC (the first publically listed cannabis specific company in the UK) and World High Life Plc, both operating on the NEX Exchange.

The Medical Cannabis and Wellness Ucits ETF (CBDX), Europe’s first medical cannabis ETF fund, domiciled in Ireland, and which has been passported for sale in the UK and Italy, has also caused a renewed stir within the market with a further platform for listed investment.

As the regulatory framework evolves further there is an anticipation that more medicinal cannabis and CBD related enterprises should have the opportunity to list on public exchanges, whether in the UK or in European countries.

Conclusion

Despite a period of slow down following the natural rebalancing of the fast-growing North American markets for the cannabis sector, there is renewed confidence in the expansion of the industry. Developments in the fields of research and development are anticipated to add further weight to the lobbying of government and regulatory bodies across Europe.

There is an increased push for a public dialogue and consultation in relation to medicinal and recreational cannabis in the UK, backed by several mainstream media platforms. This is likely to be shaped in some parts by national debates in Luxembourg and other European countries as they consider their own domestic laws.

With European parliaments across the EU (including the UK) hopefully having time freed up to discuss other political matters now that Brexit is progressing, the next 18 months should prove an exciting time within the European cannabis sector.

February 11, 2020

German Medical Cannabis Imports Doubled in 2019. So What?

By Marguerite Arnold

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Germany, for all of the other developments going on right now (globally) is still chugging forward, in integrating medical cannabis. It is slow going – but certainly going.

In terms of overall numbers, there is certainly an interesting story to tell. The import of medical cannabis grade flowers also more than doubled last year over 2018.

Hooray.

But does the “average” German patient have easier access even with more product in the market?

Answer: There are certainly more Germans with more cannabis prescriptions. See the increase in imports and the numbers from the statutory health insurers.

But even though these are clearly positive signs, it has not necessarily gotten much easier so far. That said, it is about to get quite a bit cheaper.

The Mainstreaming of the German and EU Cannabis Market

National pride aside, the German government is in fact the entity which got this whole ball of wax rolling here, and it is they who still determine the pace of regulated change. The cultivation of medical cannabis is now fully underway in the country, with Demecan still in the most interesting position. Aurora has just gotten another certification and is back on the ground in pharmacies.

But many issues remain.

On the ground, pharmacists cannot get enough product on a reliable basis. Patients are still caught in the never-ending merry-go-round of chasing down willing doctors, battling insurance companies for reimbursement and trying to have a good relationship with their local pharmacist. If, of course, they can afford both the drug itself, along with its outlying costs and frustrations to access, and their health insurance company plays ball.

Even then, chances are, the most seriously ill patients are still relying on “other” sources. A reference wholesale price (of €2.30 a gram set by the German government last year) is likely to stabilize the market if not pricing. For everyone – not just those on public healthcare.

The plant is becoming commoditized, even if slower than most people in the industry long to see.

On top of that, while certification is currently gaining steam in the industry, especially in Europe, there are many problems and issues remaining – on everything from processing of the flower to registration of products made from it. And in both the medical and recreational market.

Overall, in other words, markers are all good. But the process is going to be (very) slow if steady for the next several years.

Don’t Expect Continual Explosive Growth

Dronabinol is still at least a third of the public healthcare market. The majority of patients who receive the drug still fit the same overall treatment profile (chronic pain). And doctors are still highly reluctant to consider it as a more standard practice.

But the most important conversation, by far, is still basic legalization and regulation beyond that. That too will change. Not to mention the recreational discussion now absolutely on the table. Four years of a medical market only continue to open doors, not close them. And elsewhere, across the continent, reform is generating new producers from not only southern Europe but just about everywhere else on the globe where cannabis is becoming legit.

For the next year, however, as all of these issues continue to be debated, and at both a national and increasingly local level, don’t expect “explosive” anything.

Those who have established themselves are dug in. It is going to be trench warfare from now on out, barring a major surprise, for the next few years.

What Is Likely To Change The Equation?

CBD battles are absolutely strategic manoeuvres through the intricacies of this regulatory shift (legalization of the plant). This alone, particularly for the next few years, is likely to also move the conversation forward – and not just on the medical front.

It is also patently obvious that governments (starting with Italy) are beginning to again consider the topic of limited home grow and recreational reform.

But the most important conversation, by far, is still basic legalization and regulation beyond that. And until that happens, nothing will be “normal” about a market that is clearly being allowed to grow, in a market which is being carefully tended and managed.

“Explosive” in other words, is far from the agenda of anyone in authority who is making the decisions. And that includes regulated market growth and numbers for the next 48 months at least.

January 23, 2020

Constellation Has A Moment Of Reflection But Not Sour Grapes Over Canopy Investment

By Marguerite Arnold

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Constellation Brands, the beer brewer behind Corona and Modelo, has finally admitted the obvious. Its four-billion-dollar bet on the Canadian cannabis company Canopy Growth in 2018 was a long-term play for market share, not immediate profitability. Indeed, Canopy has yet to turn a profit and its shares are down 30% from this time last year. So far Constellation has lost $71.1 million of its investment in the cannabis industry company leader. That is 19.25% of its total investment in 18 months. In other words, hardly insignificant.

That said, Canopy is not, by any stretch of the imagination, “down for the count.” If their overexpansion plans and statements over the last three years have been, at best, optimistic, they have not done anything broadly different than any of their other major competitors (see Aurora for example). And have still emerged, financial bloodbath although it has been so far, four years after entering the European market at least, with global presence that is not going anywhere. Even if in some markets overall sales are lower than hoped or anticipated.

At least two quarters of real reorganization and reshuffling in every office on every continent the country does business in have at least resulted in a major victory in Luxembourg at least that will bear fruit for years to come. That is a strategic victory worth a few dings along the way.

Starting, almost certainly, in 2021, when changing laws in Europe will also allow the company to bring together its background and reach in the spirits industry to a world that is finally opening to the blending of the cannabis world into the same.

This year, in other words, will almost certainly see the company continue to service its existing steady business in multiple countries – however unfancy that may be. And it is decidedly not glam here. In places like Germany the company is essentially only holding onto market share in the medical market by its purchase of the largest dronabinol maker in the country.

That said, beggars cannot be choosers. Aurora in contrast, is looking at a serious review of its cultivation licenses and practices. In the meantime, Canopy snagged a lucrative contract for a strategic, central country in the European debate – Luxembourg – that no matter how small, that will create at least a trickle of medical sales until the country changes its laws.

One of the things that the Canadian cannabis industry has in spades, and this is absolutely true of Canopy, is accurate business acumen about market entry timing and overall strategy.

No matter how much cannabis industry execs, in other words, have only been positive and upbeat before, this statement by Constellation also signals a change in the way Canopy presents itself externally.

Mistakes have been made. It is time to clean house and move on.

What other new industry in the lifetimes of those alive today, continues to admit its mistakes and pivots less than a decade after its global birth in continual pivot and expansion mode? The only other one that comes close is of course the internet. And these days, more specifically, Internet 2.0.

So, as the world says hello to 2020, Canopy seems to be sending its new year message. Trimming the sails after a wild, wild year, and setting course again, for a greener horizon.