Tag Archives: canadian

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Israel Imports Cannabis: What Happened to Exports?

By Marguerite Arnold
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Canndoc, an Israeli medical cannabis producer, just received a shipment of 250kg of dried whole flower cannabis. The company, a subsidiary of InterCure, just signed a strategic cooperation agreement with Canada’s Tilray.

Interestingly the agreement is both for the import and export of flower. So don’t count out a stream coming the other way. Or, more likely, the export of seed and cannatech related to the same.

Everything goes both ways – yin and yang. Even in this industry.

However what this also does is set up Tilray to have an excellent shot at being partnered at least with the first Israeli exporters when local demand is satisfied. And that, given their strategic footprint globally, but particularly in Europe, is a very unique advantage in a cannabis map that is shifting, literally, as the year becomes the new decade.

What Gives With The Ex-Im Discussion Anyway?

Israeli producers have longed for the day when they can bring their considerable tech and research advantage if not plant genomes and medicines to a global market. The medical program in Israel was originally funded largely by American federal money while domestic reform was fought, tooth and nail until the middle of the last decade. And of course so far, at least, despite Illinois clocking over into the 11th recreational state as of January 1 of this year, has remained stalled on a federal level in the U.S.

However, no matter the shifting politics of Israel (where lets not forget, the government is also mired in scandals and it appears the Israeli president, Benjamin Netanyahu delayed the export of cannabis in a deal with the U.S. to move the capital to Jerusalem), one thing was made clear last year by government officials: Israelis come first.

Tel Aviv, Israel

It is likely to be an attitude that spreads – particularly in places like Europe and even more so Germany. So far, the entire market here has been met with imports. This is the first year that there is regular medical production hitting pharmacy shelves thanks to Demecan and the former Wayland (now ICC).

Indeed, Wayland basically did the same thing in Germany as Tilray is doing now in Israel, although the firm had to sink a huge capital expenditure into setting up its cultivation sites. And at far greater cost.

Tilray appears to be hitching a ride on an existing industry to expand its reach, markets and of course, IP. Israeli cannatech, for sure, is going global.

How Could This Impact Other Discussions?

There are two places this development is likely to impact policy discussions outside of Europe where home grow has, let’s not forget, also hit Italy in the last months. But similar ripples are afoot everywhere right now – from Portugal and Spain to Greece. While exporting can be a lucrative game, should it come at the expense of domestic citizens?

The first place this issue has already been a theme is obviously Canada, where this spectre was much in the room last year as the country transitioned to recreational while its top companies also established themselves abroad. In Europe this was mostly done without cultivation domestically except in a few rare instances. See Tilray in Portugal, Demecan in Germany, ICC in Italy and all of the partnerships between the top Canadian cultivators and Danish, Greek and Maltese producers.

israel flagThe second place this will undoubtedly have an impact, however, is very much likely to be the United States. While most pundits agree that federal reform is at least a year or so off (roughly equivalent with European change of a recreational kind), this discussion is already in the room.

These days, six years after Colorado and Washington State upped the ante, companies may operate separate operations in multiple states, but of course, cannot ship across the border of any of them.

As soon as federal reform hits however, also expect to see these discussions going on at a state level across the United States. With healthcare devolving very much to the states, locally grown cannabis is going to play a major role in all of these discussions (starting with the opioid epidemic). If not, as many expect, an influx of cannabis from south of the border.

Those days, however at least in the U.S. are still several years away. In Israel, however, as Tilray lines up a unique profile across all of said jurisdictions, look for intriguing cannabis developments coming soon, in multiple jurisdictions.

The Launch of Cannabis-Related ETFs In Europe

By Marguerite Arnold
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Here is the headliner: As of the second week in January, there will be a cannabis related exchange-traded fund (ETF), trading on the Frankfurt Stock Exchange (or Deutsche Börse), the third largest stock exchange in the world and the meeting point between equities and the vast majority of institutional investment globally.

The Medical Cannabis and Wellness UCITS ETF (CBSX G) will trade on Deutsche Börse’s Xetra.

London-based ETF provider HANetf is the creator of the fund.

The idea is to create a fund with targeted exposure to the European market. And as a result, it is bound to be interesting. Especially as the companies included must go through a due diligence process that will only include equities traded on stock exchanges like the NYSE, Nasdaq and TSX.

This of course is no guarantee, particularly given the scandals of the major Canadians last year (who are listed on all or an assortment of the above).

Indeed, in the eyes of German authorities, this is not necessarily all that significant. And that in and of itself is a watchword of caution here. Namely the Deutsche Börse put the entire North American cannabis equity market under special watch two years ago and that has not changed since then. That said, with legalization now clearly in Europe, things in general look a lot different on the ground.

What will be really intriguing is when the fund (or the ones inevitably to follow) that look at the discussion from a European market perspective.

Purpose Investments, the Canadian partner involved, has over CA $8 billion in assets under management as of last month and across a range of ETFs.

Solactive, the German company which independently calculates the index, may also be unknown to North Americans in particular. In Germany, particularly Frankfurt, they have developed, since their founding in 2007, a reputation for being not only quirky, but not risk averse. In other words, decidedly “non-German,” at least by stereotype. And cannabis right now, particularly with this approach, is an inevitable development. This could, in fact, do very well. The problem, however, that is still in the room is the vastly different levels of compliance – but that too is a risk calculation that is to the people at the table, no different than certain kinds of commodities.

That alone makes this ETF intriguing simply because it will indeed be evaluated by German eyes – if not processes.

Significance

Things are clearly normalizing on both the accounting and reform front. The growth of the regulated Canadian market and the increasing focus on regulation of all kinds is only going to make things less risky for investors.

Bottom line: Good development, but won’t be the last. By far.Further, there are not many public European companies, yet. That may also change. However, for the moment, they are still a trickle (and all over the map).

What is intriguing is the timing of the fund. If not what it potentially spells for the public markets. And further the obvious research the Auslander team have done in finding the right European-based partner. Look for interesting things indeed.

This is the first real foray into Europe by anything outside a single stock offering on a European equity market.

For Germans, in particular, who are extremely risk averse, and tend to invest in other kinds of securities if not insurance to build up their pensions, the equity markets sniff a bit too much for most of “North American scam.” Far from cannabis. Yet some Germans do invest in the markets. As do other Europeans.

Bottom line: Good development, but won’t be the last. By far.

Canadian Cannabis 2.0: Going Beyond GPP

By Lindsay Glass
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One year after Canadian recreational cannabis’s historic date of October 17th, 2018, in comes Cannabis 2.0, which will see edibles containing cannabis and cannabis concentrates enter the legal recreational market. As of October 17th, 2019, there are seven classes of legal cannabis products in the marketplace, making Canada an innovative leader in this evolving industry.

The launch of cannabis edibles and concentrates into the legal market has also led to changes in the regulatory framework and the introduction of new best practices in terms of Good Production Practices (GPP). This should not come as a surprise, as these products are introducing the inclusion of cannabis and food products.

Since Oct 17th, 2019, we have seen a significant amendment to the Cannabis Regulations through the addition of sections 88.93 and 88.94, stating that holders of a license to process cannabis edibles or extracts must identify and analyze all potential hazards and have control measures in place to prevent, eliminate or reduce these hazards from occurring. Any license holder that conducts activities related to cannabis edibles, extracts or produces an ingredient used in an edible or extract must also prepare, retain, maintain and implement a preventive control plan (PCP). To indicate that cannabis edibles and extracts regulations resemble other regulated food commodities, would not be an understatement.

By having license holders establish food safety practices similar to the ones being used by federally regulated food commodities, it is allowing cannabis producers to implement a preventive approach by focusing on safety and reducing hazards in their operation.

According to the Cannabis Regulations a license holder’s PCP must include the following:

  • Identify all of the biological, chemical and physical hazards that could contaminate or could be at risk of contaminating any cannabis product or anything that could be used as an ingredient in producing a cannabis product. Once all of the hazards have been identified, you need to determine the likelihood of that hazard occurring
  • The measures to be taken to control each identified hazard. Each control measure must then describe the task involved, how the monitoring task is carried out, who will be performing the monitoring task and how often the monitoring task is carried out
  • A description of the critical control points, which are the steps in the process where a control measure is applied and is essential to eliminating a hazard. Next are the measures to be taken to monitor a critical control point
  • A description of each cannabis product produced or ingredient that will be used in a cannabis product, including extract contents, permitted & prohibited ingredients, exceptions, naturally occurring substances and uniform distribution
  • A description of corrective action procedures for every critical control point
  • A description of verification procedures

What else comes with the collaboration of these two commodities in a regulatory environment? The need for industry to adapt and move beyond the basic GPP and pharmaceutical requirements and start thinking in terms of preventative controls and food safety. By encompassing the GPP requirements, traceability, employee training and now a complete hazard analysis and preventive control plan, you have the makings of a full food safety plan. However, food safety plans can be comprehensive and difficult to manage by utilizing a manual system.

HACCPCompanies that are serious about the integration of cannabis edibles and extracts into their operations, will need to implement compliance and traceability technology that will facilitate an automated system. In return, you will streamline all monitoring processes throughout the production, packaging and storage stages of the system. This is crucial to a preventive control plan. An automated solution will also help with record keeping, document management and corrective actions, as license holders deal with failures in real time to avoid negative impacts on their products.

There are many compliance software platforms available in the industry and choosing the right one for your operation is a task in itself, as not all software platforms for the cannabis industry are created equally. Although many seed-to-sale platforms handle regulatory requirements and some document management, these platforms do not see cannabis as food products, and therefore, are leaving companies with a void in this aspect of their operation. When looking for a software platform that will encompass all of your regulatory needs, pay particular attention to systems that are designed for the food industry but have adapted to cannabis. These systems will be the most dynamic when it comes to implementing preventive control plans, handling in-depth traceability with recall plans and the ability to become completely digital.

For more information on how to automate your food safety plan for cannabis edibles and extracts, please contact Iron Apple QMS to learn about our online Cannabis QMS.

Italy Sets New Pace For Recreational Cannabis & Domestic Cultivation

By Marguerite Arnold
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The Italian Supreme Court seemed to take a page from both Israel and Thailand last year (who announced exports and reform legislation on Christmas Day 2018). In the dying days of 2019, on December 19, the court ruled in what is basically a landmark decision for not only the country but the continent, that small-scale domestic cultivation of cannabis (both of the CBD and THC kind) is legal.

Even more intriguingly, the ruling was ignored for several days in Italy before being picked up by news agencies. This in turn has apparently set off a much wider and predictable debate about the use of the plant in the country – either for medical and or recreational purposes. Many are doubtful that any legislation will pass formalizing the inevitable in the near future (one attempt has already been killed), but one can never know these days. This is an issue that perennially takes countries and politicians by surprise as populations warm quickly to the concept of medical reform.

That said, so far efforts to formalize the ruling into law have been slapped down by the center right Forza Italia Party. Further, if a right or center right coalition comes to power in Italy as widely expected, it is likely to try to overturn the court ruling legislatively which has been described at least in such circles as an “absurd verdict.”

It is important also to understand this distinction if not label and how it translates both internationally and domestically.

In Canada, reform was championed by economic liberals (who are basically centrist, globalists if not free traders) and libertarians more than any other label. However initially, reform was driven not by political campaigns but rather a national challenge to prevailing cultivation law at the supreme court. This then became the legal basis for reform legislation of both the medical and recreational kind.

In the U.S., cannabis reform is frequently championed by states’ rights advocates, who are from a European perspective, extreme right wing. Right down to opposing the federal imposition of not only civil rights but other kinds of regulatory law. Including in this space. This also includes absolute hostility to anything resembling “national” if not “single payer” federal healthcare.

The two issues obviously overlap, intersect and create many strange juxtapositions if not outright contradictions and paradoxes. And many strange bedfellows.

This disconnect of course is also what has held back a united front on passing federal reform no matter how much this has allowed recreational to now spread to 11 American states as of January 1 this year. As a result, for now and certainly for several years after the next presidential election, barring a surprise realignment of politics in the U.S., there is unlikely to be any progress on federal reform. But in the U.S., cannabis legalization is a “purple” issue. Trump, for example, still opposes any national change – although if the election is tight, look for a lot of promises from both sides.

Across the Atlantic however, what Italy’s new judicial stance on the subject means for the first time, is that there is potential for a real fight on the ground from a political grass-roots front in a socially conservative European state. This is also intriguing for another reason. Italy’s health ministry also just cancelled one of Aurora’s cultivation licenses. For all the naysayers on the significance of this development, this should not be discounted.

Kind of like a Canada or Mexico moment for the continent indeed.

Not to mention what this discussion does for the CBD discussion. Both in Italy and elsewhere.

Look Homeward Deutsch Angel

Advocates across the continent if not the UK, are of course, also watching closely. Germany in particular, tried to avoid this exact discussion three years ago, but it is unlikely that advocates at least, will let this continental victory rest. Starting with the fact that this is a debate that was firmly shut off in 2017 with the passage of the medical cannabis insurance coverage law to widespread patient frustration and huge patient issues with access ever since. Even though, in fact, Guenther Weiglein, the German patient who brought the suit, took it as far as he could legally. His right to domestic cultivation, along with the few patients who managed to avail themselves of the same right before the law changed, are no longer allowed to do so.

european union statesSo of course, beyond charging the debate in Italy, this development will also increase pressure in Germany (for starters) as well as other European countries to reconsider what so far at least has been verbotten and largely because of Germany’s lead so far.

Even in places like Holland, Denmark, Portugal, Spain and Greece, the domestic cultivation discussion has been off the table. Luxembourg, and just outside the EU, Switzerland, has not raised this prospect.

That may well change in all of these countries plus others as the clock now starts to tick down to the end of 2021.

Regardless, early predictions about the pace of change as well as the size of the markets have largely been wrong.

So, for all the intriguing possibilities, this is not a slam dunk, but certainly a strong charge down the court in the right direction.

Top International Cannabis News Stories of 2019

By Marguerite Arnold
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Cannabis as a news story and an industry moved forward again this year, albeit in a rather more halting way than the last few. The volatility of the market in fact was one of the largest stories of the year, particularly after the events of this summer.

It’s Been A Wild Ride Kind Of Year

This time last year, the world was in a tizzy over the literally billions of bucks invested into a few top Canadian cannabis companies. This year, predictions are definitely a little more sober when it comes to the future of cannabis stocks. Most of the industry has taken a major beating this fall.

That said, the current correction was in the cards for just as long. What goes up, dramatically, must come down.

That said, this is not the whole picture of the industry – not by a long shot. Reform ain’t going back. Patient numbers are climbing, albeit slowly.

Here in Europe, the first and so far biggest public tender on cannabis was finally concluded in Germany with Aurora, Aphria and the cannabis company formerly known as Wayland (ICC) winning the bid lots for domestic cultivation this spring.

The British, who waffled around all year on what kind of “animal” cannabis actually is, celebrated that anniversary late in the year with a highly limited scope of coverage by the NHS.

And Luxembourg threw down the gauntlet on “recreational” within an aggressive timeframe (by 2022) and tripling its medical cannabis training budget for doctors next year.

International Cannabis Is Growing Like…A Weed

The most interesting discussions right now are clearly emerging on the international front. Cannabis became an internationally mainstreaming commodity this year as patient numbers began to climb on the continent.

Canopy_Growth_Corporation_logoThis in turn has led to the normalization of the idea at least of an export trade in cannabis not only across Europe but globally as companies target the region. Cross border cannabis companies, in other words, are a “thing” that blossomed this year – and frequently, while sometimes financed by Canadians, called another country home.

The announcement of at least the first German wholesale reference price this year will also do wonders to start to normalize prices across not only the EU but all those hoping to export here.

That in turn will have global impact.

Regulation Is Beginning to Materialize

For those who thought that higher standards were a passing fad, the events of this year, particularly of the latter half of it have confirmed one thing for sure: Regulatory muster is here to stay.

GMPTo add to the general confusion, however, international standards on medical products and even food are absolutely in the mix as countries find that standards, measurements and production processes might be similar, but on the ground, still differ. Harmonization is a word many in the cannabis industry are hearing now, and not just in the medical space, but also the food and supplements market.

The initials “GMP” are on the lips of many this year. Not to mention another exciting development the cannabis industry from abroad did not see coming and still broadly does not understand – namely Novel Food.

The War For Reform Is Being Fought On Several Fronts

Inevitably, just as in the United States, the fights in the room right now as well as legislative gridlock are focusing on some strange nitty gritty. For example, cannabidiol (CBD) is just one cannabinoid from the plant. It is a chemical substance. Yet, suddenly, in Europe, this discussion is being bogged down in pseudo-scientific discussions in the name of public policy about whether CBD is a “new kind” of food.

The structure of cannabidiol (CBD), one of 400 active compounds found in cannabis.

Ultimately this is a discussion about regulation – whether CBD and hemp production should be regulated differently than they are right now – and whether the plant should be put in a different bucket than, say, tomatoes. Or when extracted, tomato juice.

GMP is also a very strange discussion which has still not exited the stage – mostly because of the lack of uniformity internationally between Canada and European states although that is moving in the right direction.

The last issue of course, which has been looming from the Canadian side for several years, including of course all the pesticide scandals, new regulations on the cultivation of all plants for human consumption. Even German farmers are up in arms (with a recent tractor protest in Berlin that paralyzed the city).

Cannabis is in the bullseye on all fronts.

Auld Lang Syne

If there was a theme to the industry as of this summer, it was clearly that things cannot continue as they have. The CannTrust Scandal absolutely encapsulated all that is wrong with the industry.

That said, there is every reason to believe that the most egregious scandals (or at least quite so many of them) are a passing fad. Indeed, many in the industry are in fact committed to turning over a new leaf (for the new year or just because).

The good news? There is every sign of course that it will.

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The European Cannabis Industry In Review: 2019

By Marguerite Arnold
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european union states

2019 opened with a strange vibe in the air on the cannabis front. Israel and Thailand set the stage with dramatic reform announcements last Christmas. And as the calendar counts down to 2020, the larger players all seem to be licking their wounds (if not stock prices).

But cannabis reform is not just about profits on the public markets. What has gone down and where and ultimately, has the year lived up to its promise?

Reform Marched On In Several Countries

At this point, reform is certainly “too big to fail.” There will be no going back anywhere no matter the laggards still in the room.

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Photo: Ian McWilliams, Flickr

From the perspective of opening patient access (and markets beyond that), There were several big stories on the medical front this year – and – in a real first for the EU – of not only the medical, but recreational kind as well.

Germany of course is going, relatively speaking, like “gangbusters” on the medical front although supply, quality and supply chain issues are still in the room. Even more so now because the German government has also announced, for the first time, a public reference wholesale price per gram of floss. That alone is big news, although expect that too to drop (see Aurora’s pricing for Italy, for starters).

In the UK, the NHS finally got down to brass tacks and negotiated a bulk discount for GW Pharmaceuticals cannabis drugs for a very narrow band of patients (mostly child epileptics and MS patients). A tiny minority of the estimated 1.4 million daily British “medical” users including those suffering from chronic pain can afford imports. The rest is all black, or in the case of CBD, gray market.

In France, the country finally got on the reform bandwagon with a “medical trial.” This means that all the major countries in the region are finally on board with some kind of reform. That too is a meaningful move.

Poland is also opening – a good sign for the remaining conservative countries in Europe still on the fence.

And in a real first (although do not get too excited just yet), on the “recreational” front, it is not just Holland that is in the room any more. Both Denmark and Luxembourg announced that they were opening this conversation. In Denmark and Holland’s case, this is in the form of “trials” in places where operational grey markets have already been established. In Holland, this is of course, regulating the “coffee shop” trade in large cities like Amsterdam. In Denmark, the new “trial” will be on the grounds of a revived hippy experiment called Christiana, that morphed predictably into the control of gangs over the last generation.

Luxembourg, however, seems intent on setting the benchmark if not timeline and is moving aggressively in one direction. As a result, as of this year, the strategic “heart” of Europe is now on the schedule to go full monty by 2022. That said, it is a country of about half a million people. Further, no matter the inevitably hype on the way, don’t expect the country to turn into a big cannabis hub- nor encourage pot tourism even from neighboring Europeans.

The end of 2021 is the time to watch for all things recreational. In the meantime, including next year, look for increasing “experiments” in other places. Particularly of the Swiss variety (where both recreational and medical products are sold via pharmacies.)

THC Is Being Accepted As Having Medical Efficacy

No matter the controversy in the room, and the strange inclinations of the British NICE to try to undo forty years of medical knowledge about the impact of THC on chronic pain, medical cannabis and specifically medical cannabis with THC has made its global medical debut as of this year.

UKflagThat said, the push is on to “pharmacize” the product.

Flower (floss) is in the room, in other words, but the future is looking towards oils and distillates – at least for the medical market long term. And a lot of that will also come increasingly to this market from places like Portugal, Spain, Greece and other European markets now moving into the cultivation space seriously.

Then again, there is still a lot of road to travel. Wags who predicted that German health insurers would never pay for floss cannabis just five years ago were wrong.

CBD Is Not All Its Cracked Up To Be

For all those who sang “Free the CBD” this year, Europe has taken a rather conservative and concerted push back. From Austria to Italy and Sweden to Poland, the path to market for any product containing CBD has been a tough one this year.

Just some of the many CBD products on the market today.

That said, perhaps it is a call for more standardization- no matter how painful that might be economically. At a presentation given at this year’s IACM medical conference in Berlin, a medical researcher revealed the results of a study he had conducted on the accuracy of labelling of these products in several European countries. The industry has not standardized, labelling is all over the place in terms of accuracy – and the claims about “medical efficacy” are hard to swallow for substandard over-the-counter product.

If the CBD-based part of the industry is to thrive here, it will have to find a way to establish and certify itself. That appears to be going on in Italy right now. It also impacts every cultivator from Portugal and Spain to Eastern Europe looking at the possibilities right now.

However, with labelling and other EU cross currents in the room, this route to the industry has been fraught this year with all the cross winds and those are not likely to dissipate next year or indeed for the next several.

The Cannabis Winds Of Trade Are In The Air

While it may be a bit ironic, given that international trade has pretty much always been a hallmark of the development of the modern cannabis industry, next year will undoubtedly be the year of “International Cannabis Trade.”

GMPNo matter the problems “back home,” as of this year, a German-based manufacturer of GMP-certified product got fully underway (see ICC/Wayland’s success this year). That, along with the final decision on the first German cultivation bid, has clearly shaped a market that is still changing. And that change is driven by the admission, even by authorities, that there is not enough legal cannabis grown in the country.

That means that the strength of the German market will continue to drive policy (see the recent announcements on wholesale pricing) as well as demand that will be met across the continent.

Along the way, cannabis reform is also being driven locally. And that means, no matter the trials and tribulations of the Canadian part of the sector, which perhaps can be considered aptly warned for getting a bit too big for its britches, and no matter how faulting, the winds of reform are still afloat. Just perhaps, on the cards for next year and those to come, blowing from many more points on the globe.

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Aurora Medical Cannabis Flower Unavailable In Germany Pending Review By Authorities

By Marguerite Arnold
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aurora logo

For now, at least, Aurora is AWOL in German pharmacies.

Sources who did not wish to be identified from apothekes here confirmed to Cannabis Industry Journal that Aurora product was currently unavailable throughout the country. The same sources also confirmed that Aurora contacted them about the suspension.

The fallout over less than quality cannabis entering at least the Danish and German markets, as reported by CIJ repeatedly this year, continues to make waves, globally. This newest development seems to be a step up in seed to sale inspections of late as a response from governments who have to deal with normalizing cannabis laws and different standards no matter what else is going on.

That this development also comes on the heels of not only the scandals at CannTrust and Hexo (both Canadians with aspirations in the EU), but many reports on the ground from distributors and pharmacies in Germany of mouldy if not pesticide tainted cannabis ever since 2017, is also significant.

Substandard product is clearly coming from somewhere.

As CIJ also reported, this issue also appears to have flared between Holland and Poland this year right before Italy also cancelled one of Aurora’s cultivation licenses lately on the grounds of GMP compliance this fall.aurora logo

High Quality Supply Chain Issues Are In The Room

This newest development with Aurora is the first sign that German authorities at least, appear to be taking notice.

As Marijuana Business Daily is reporting, the review is of a “proprietary step” in the production process related to a method used to ensure the shelf life of flower cannabis. Aurora has stated in return, that their “products are sourced from an EU GMP certified facility and are safe to consume.”

Sourced or not from a certified facility, the devil, when it comes to EU GMP, is in the details at the source. Not to mention the product on the ground as it ages. And those particularities, on a global level, are still being worked out in a process known broadly as “harmonization.”

When it comes to the cannabis industry in particular, this is also very much in the room thanks to two large treaties with North America of late. Namely CETA, the broad trade agreement between Canada and the EU, which, among other things replaces the old MRA pharmaceutical agreement that existed previously. And of course, the EU-US MRA agreement, which came into full force this July.

As the discussion between Poland and Holland this year demonstrates clearly, one country’s definition of GMP even within the EU can differ.

Product grown and processed in a foreign third-party country, no matter the designation of the actual facility itself in this environment, is bound to get a review. Especially cannabis from Canada.

Put in context of the market itself, this is even more significant, especially given Aurora’s presence in the German market not only as provider as the holder of most of the licenses (5) awarded to three cultivators – a title won with lots of blood on the ground. Not to mention many casualties – including of course the first tender bid itself.

Will This Impact The German Cultivation Bid?

In the current environment, with Aurora announcing retreats on construction in progress just about everywhere, both in Europe and at home, this could easily also be a warning shot across the bow by German authorities.

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Photo: Ian McWilliams, Flickr

While the hijinks of the cannabis industry seem to get a wink and a nod just about everywhere else cannabis reform has come, that is not true on the ground here. Further, Germany very much is a land of laws and regulations. And the average German, no matter how much they kvetch about the same, has by now more or less accepted that medical cannabis that can help very sick people get better is ok. The issue of who should pay for it is another question. Regardless, none of the cannabis in the market here is what could be termed as “cheap.” The idea that such medicine might be of less than required medical quality is one that is, as a result, indefensible.

While nobody (so far) has come forward to the press from the patient side with proof that can be validated, there have been distributors and pharmacies discussing issues surrounding the quality of product for some time now too. None want to be quoted for this story, but the noted focus on seed to sale quality issues by all of the big producers (see Aphria of late as just one example), are clearly a response to the same.

It is also unlikely that Aurora will lose its cultivation licenses in Germany – although again, this review by the German government also may be a second look into the company’s finances and ability to build a high-class facility in the country capable of producing the five lots now required.

Their inability to service this contract seems unlikely on financial grounds, no matter how retrenched Aurora has been of late.

Given the current environment, however, the events of the last six months, and the reality on the ground, this latest inspection seems to be an almost inevitable warning shot across the bow to not only Aurora but all cannabis producers at a time when the first German cultivated medical cannabis (see ICC) is now in pharmacies.

Not to mention high quality product from other parts of the world. If the Canadians can’t cut it, the message seems to be, there are others who are now stepping into the ring who can.

Khiron Life Sciences Makes Strategic Moves In South America

By Marguerite Arnold
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Khiron Life Sciences Corp. has played an interesting game globally for some time now. Far from a “high flier” in the first tiers of Canadian cannabis companies to watch, that may be changing. Not to mention, this fall, what exactly do these labels mean right now as almost all the first movers retrench and reconsider?

How and where Khiron’s influence will be felt however, is still very much a question in the air.

The big news? The company has obtained authorization from the Colombian government to commercialize high-THC cannabis, and further, for both domestic and international consumption.

There are several interesting things about this announcement.

The first is that Khiron inevitably got its domestic license to supply a 15,000-patient trial “at home” in Columbia (and for the prestigious Latin American Institute of Neurology and the Nervous System).

The second is that the company will also be exporting – and to where.

Uruguay is at the top of that list – starting with the fact that the country has had a “recreational market” that actually predates Canada’s. To import medical cannabis here in other words, is also an interesting statement in and of itself. Namely, what is wrong with domestically produced Uruguayan product? Even and especially in this case, for the medical market? (The answer of course has more to do with U.S. banking law than product quality).

The second is the UK where the company will also supply the patient trial there – Project Twenty21. This is even more intriguing considering that the NHS has just denied the efficacy of cannabis for treating neurological conditions and pain and only recently agreed that Sativex was “cost effective” after negotiating a lower bulk price with GW Pharmaceuticals made possible by the new NICE guidelines.

The third is Brazil – a growingly valuable market now firmly on the radar of those watching all things cannabis-related in the hemisphere.

Regardless, it shows that the lights are on in the executive suite at Khiron. The question is, will this early mover advantage pay off – and more interestingly, where?

A Hemispheric Play – But In Which Long Term Direction?

While the UK at least seems to be Brexiting itself off a cliff of free trade agreements with the world (and expect cannabis to be in the early room of conversation about commodities in this regard), is Latin American cannabis really price impactful in low price per gram Europe long term? Especially given the inclinations of a company whose CEO admits in press statements that he wants to be a “Starbucks of Cannabis” – selling not coffee beans at “80 cents a pound…” but rather a cup of coffee “for four dollars.”

That is a still-to-be answered question. Especially in an environment where the German government has announced its essential reference wholesale price for floss at €2.30 per gram (around four dollars American). Not to mention what is going on domestically in countries across the continent from Denmark and Portugal to Poland.

However, what all this positioning also does of course, is pose questions for Khiron’s intentions throughout the American hemispheres, both more locally and of course north of the Rio Grande (in the U.S. market) not to mention Canada.

This is the kind of reverse hemisphere play of course that everyone in North America has been expecting since Uruguay’s early market movement earlier in the decade. The great South American fruit and veg market is finally allowed to turn to legal production in the form of cannabis.

Is the “Drug War” finally in its last, dying days? The answer appears to be yes. Trade wars, inevitably, however, are looming. Protectionism in the cannabis industry may be a new flavour of the day but not in any other agricultural or indeed any other kind of commodity. And on this front, things are also likely to be fierce.

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Portrait Israel: Exports Over Domestic Cannabis A Priority?

By Marguerite Arnold
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israel flag

With all the fits and starts involved with getting the Startup Nation out of the box on cannabis exports, every new twist and turn of the story is intriguing. There are indeed reports that officials have suggested that the Israeli export market might finally, formally open for business as of early next year. However, and this is a big caveat, such exports can only occur if the domestic supply has been met.

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The Tikun Olam strain Avidekel being grown in Israel.

And herein lies the rub. According to the Times of Israel, Israeli patients face a huge shortage of access to product, and in a story that is still universal at this juncture, turning again to the “black market.” Even though in the case of Israel, what constitutes really “black” if not “grey” is still as much in flux here as anywhere else.

Tikkun Olam, the first company to obtain a license from the Health Ministry, also reportedly lost the permit based on a police recommendation.

Who is black, grey and allowed to become legitimate appears to be on the same slippery, often fraught path here as it has been this summer in places like Canada. Or even the United States at a state level. See California.

In truth, this may signal a readiness to license more firms in Israel for both domestic consumption and export. The timing suggests that both are in the offing as the world enters not only the third decade of this century, at what is not quite yet, unbelievably the second of the legal cannabis industry everywhere outside Israel.

Not A New Problem

In truth, the dilemma facing Israel is one that has plagued governments since the beginning of not only cannabis reform on a widespread level at the earlier this decade, but market economics beyond that.

Tel Aviv, Israel

In the world of cannabis, this discussion is actually turning up in several places. It was present in Canada – indeed the biggest Canadian companies began to look to Europe as Canadian patients continued to successfully defend their right to grow in court circa the summer of 2017. It is also in the room across Europe as price economics clash with early reformers. Denmark, for example, might have welcomed outside money to kick-start their medical trial, but nobody seriously thought (at least on the Danish side) that their home-grown product would be able compete on price with say Portugal, Spain or Greece.

In a world where cannabis pricing in even Europe is starting to normalize, and higher prices and profits can be found abroad, what indeed, should cash-strapped governments do?

The answer is actually very easy as much as most governments still do not want to admit the same in most of Europe at least. Do what the Israelis appear in fact to be finally doing, which is democratizing the cultivation market. Once that occurs, the incentives for “black” market will disappear here as in other places.

The Bottom Line- Good News?

Israel has never intended to sit this issue out. The spoils on both the tech and IP fronts are just too great beyond the plant itself. The Israeli government, even with American and other foreign money, has also supported the industry for the last twenty years certainly in a way unseen anywhere else. And the modern “industry” itself, even at the small R&D end, is over fifty years old here.

The backlog of research and knowledge, beyond any individual strain or plant, in other words, is about to be let loose on the world as of next spring. And there will be no turning back.

Second Canadian Cannabis Company Admits To Illegal Grows

By Marguerite Arnold
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For the second time this year, a Canadian public cannabis company with interests far outside the country, has fessed up to unlicensed growing.

This time it is Hexo, a company with many issues floating since this summer’s bombshell disclosures about CannTrust.

Interestingly, of course, the company claims that it also only discovered the area on July 30 – after the acquisition of Newstrike Brands closed. And while cultivation was also immediately stopped in so-called “Block B”, this also raises many other questions – including about the level of due diligence – no matter the cannabis – in the room leading up to the purchase in the first place. That includes not just both companies on each side of the deal, but, as the Canadian press has also been quick to point out – the regulators themselves.

Beyond a similar window of timing with the sorry events of the summer on the CannTrust front, this decision also comes at a time when the beleaguered Hexo is closing the facility in question in an effort to contain costs. Nonetheless, the convenient timing and slap-on-the-wrist attitude from the regulators for this kind of “self-reporting,” is one thing. That this lenient response from regulators (CA$77 million in destroyed CannTrust product notwithstanding) has now happened twice in a row since summer, has led many to wonder what the regulators are doing when not being tipped off by whistle-blowers and company accountants about the inevitable.

In truth, coming as it does more or less on the anniversary of the first year of recreational reform and massive changes afoot in Europe, such realities should not be surprising.

Planes that are built as they are hurtling down the runway, to paraphrase a frustrated Canadian regulator last summer, tend to have a few bits that clank down to the tarmac upon wheels up. Assuming of course, that things do not just come completely unbolted at point of airborne lift.

There is no chance that this craft however, will be allowed to return to the barn, let alone land. There is too much at stake – economically, politically and medically, truth be told.

This cannabis horse has now left this territory.

And in its wake? The inevitable aftermath of a market that, while certainly deserving kudos in managing to create itself in the first place, needs time to iron out the kinks.

What Does This Mean For The Canadian Market Going Global?

With higher standards in Europe, none of this news about Hexo flies particularly well abroad. Why fight for the market entry rights of foreigners, in other words, who don’t even seem to care, much less respect domestic regulations in their own country?

So in truth, even though it is far too early to count some of the largest companies in the room out (see Canopy’s recent canna coups in Luxembourg), many of “The Canadians” – as Hexo is of course inevitably also tagged, who made the first enters since 2017, and “have all the money,” may in truth be struggling to maintain market share, if not control of their brands.

As many on the ground in Europe are indeed asking now, if large Canadian companies who are also public, cannot even meet Canadian standards, and lightly slapped on the wrist when caught, why trust the product?

The good news? The cannabis industry has proved it is resilient, if not exactly made of Teflon.

Hexo has gotten its issues out of the way for now – escaping censure apparently on a technicality and self-reporting.

However, as Canada now enters its second year of the recreational market and the seeds of not only deeper medical reform but recreational too are playing increasingly loudly in Europe, there are clearly new “shoots” in the room. And as the world prepares to say good bye to 2019, it is also clear that, especially given recent rumbles about the readiness of the Canadian market for international prime time, the dawning of 2020 will certainly begin to answer the many questions now certainly on the cannabis table abroad.

There may be heads who roll, in other words, but the show is rolling on.