Tag Archives: distribute

Aphria & Tilray Merger Creates World’s Largest Cannabis Company

By Cannabis Industry Journal Staff
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On December 16, 2020, Aphria Inc. (TSX: APHA and Nasdaq: APHA) announced a merger with Tilray, Inc. (Nasdaq: TLRY), creating the world’s largest cannabis company. The two Canadian companies combined have an equity value of $3.9 billion.

Following the news of the merger, Tilray’s stock rose more than 21% the same day. Once the reverse-merger is finalized, Aphria shareholders will own 62% of the outstanding Tilray shares. That is a premium of 23% based on share price at market close on the 15th. Based on the past twelve months of reports, the two companies’ revenue totals more than $685 million.

Both of the companies have had international expansion strategies in place well beyond the Canadian market, with an eye focused on the European and United States markets. In Germany, Aphria already has a well-established footprint for distribution and Tilray owns a production facility in Portugal.

tilray-logoAbout two weeks ago, Aphria closed on their $300 million acquisition of Sweetwater Brewing Company, one of the largest independent craft brewers in the United States. Sweetwater is well known for their 420 Extra Pale Ale, their cannabis-curious lifestyle brands and their music festivals.

Once the Aphria/Tilray merger is finalized, the company will have offices in New York, Seattle, Toronto, Leamington, Vancouver Island, Portugal and in Germany. The new combined company will do business under the Tilray name with shares trading on NASDAQ under ticker symbol “TLRY”.

Aphria’s current chairman and CEO, Irwin Simon, will be the chairman and CEO of the combined company, Tilray. “We are bringing together two world-class companies that share a culture of innovation, brand development and cultivation to enhance our Canadian, U.S., and international scale as we pursue opportunities for accelerated growth with the strength and flexibility of our balance sheet and access to capital,” says Simon. “Our highly complementary businesses create a combined company with a leading branded product portfolio, including the most comprehensive Cannabis 2.0 product offerings for patients and consumers, along with significant synergies across our operations in Canada, Europe and the United States. Our business combination with Tilray aligns with our strategic focus and emphasis on our highest return priorities as we strive to generate value for all stakeholders.”

WSLCB

Washington Suspends License for Shipping Out of State

By Cannabis Industry Journal Staff
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WSLCB

On October 7, 2020, the Washington State Liquor and Cannabis Board (WSLCB) issued an emergency suspension for El Rey De La Kush, based in Riverside, Washington, for allegedly distributing cannabis products across state lines. This information was found in an email sent out by the WSLCB late Wednesday night on October 7. El Rey De La Kush does not have a website, but it looks like they own this Facebook page.

This picture taken from their Facebook page, appears to show an El Rey De La Kush-branded package of cannabis

Back in September, the Wenatchee Police Department told the WSLCB that they were investigating 4.3 pounds of cannabis they found shipped from a residence in Wenatchee via UPS. When they served a search warrant, they found roughly 620 pounds of cannabis with traceability tags leading them back to El Rey De La Kush.

The suspect in the case is Brandi Clardy, who is affiliated with the company in question and listed on their license. The original licensee, Juan Penaloza, passed away in July this year and Clardy had been the chief operator following Penaloza’s death.

In an interview with the police, the WSLCB says that Clardy admitted to the crime of removing cannabis from the premises with the intent to distribute across state lines.

The WSLCB says cannabis products were actively being diverted to Texas, where adult use cannabis sales is still very illegal.

The license remains suspended for 180 days, after which point the WSLCB will “pursue permanent revocation.” This marks the first and only emergency suspension issued in 2020.

The Top 4 Things Cultivation Directors Should Discuss With Their Operations Manager Right Now

By Lucas Targos
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Communication is key for efficient interaction between cultivation and business functions at any cannabis operator. So, what are the top four things cultivation directors should be discussing with their operations manager right now, as we face an uncertain Summer 2020 and unique COVID-related challenges (product demand uncertainty, reduced workforce, and immediate response to problems and issues):

  • Labor requirements
    • Operators should be discussing “Who, and what, do I need to operate this facility and how do I make operations more streamlined without diminishing quality, consistency, and yield?”
    • Efficient operations should focus on labor workflow and circulation and document a clear understanding of how employees will move through the spaces while doing their jobs.
    • Having a “less labor” philosophy and understanding—a ‘first in and first out’ mentality—drives down cost of production.
    • By limiting employees’ need to cross paths and segregating processes (e.g. harvest, distro, packaging) in a facility, you can maintain biosecurity and limit the risks of cross-contamination
    • When working with fewer staff members, everyone should be trained to:
      A greenhouse facility that urban-gro helped bring to operation.
      • Operate all necessary equipment
      • Perform keys tasks like nutrient deliver or preventative maintenance
  • Supply chain
    • What sort of products do I use to cultivate, process, distribute and how will potential shortages affect my use/cost related to these?
      • Consider products and supplies that you can order in bulk
      • Examine and update your chemical regime to focus on products that are cheaper to freight ship, and located within the US or even your state
      • Mitigate the risk of availability by using products that are have no shelf-life or expiration issues, and those where the supply chain has not yet had disruptions
  • Automation and technology
    • What’s the availability to allow for remote monitoring and controls?
      • Cultivators can take some of the load off the reduced staff by automating critical tasks
      • Remote monitoring solutions will also allow for faster notification of crop issues
      • Integrating preventative maintenance tasks like equipment schedules and maintenance can increase efficiency
  • Yield expectations
    • Ensure that conversations on yield expectations are as transparent as possible and set realistic and achievable goals
    • Build business models based on the correct numbers that take into account productions numbers on ‘high yield’ genetics versus lower-yielding plants (yield versus price)
    • Ensure you have a detailed plan that combines both plant density and production goals

5 Factors to Keep in Mind When Entering the Regulated Market

By David Perkins
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It’s a different world growing cannabis in California- in fact, it’s a completely different experience than it was even four years ago. It can be overwhelming to begin the process, which is where an experienced cultivation consultant can help. This article will highlight 5 factors to keep in mind before you begin growing in California’s regulated recreational market.

Start Up – Costs, needs & endless variables

So you’ve decided to begin a recreational grow, here are the factors to consider before you get started.

Permitting, the necessary pre-cursor to cultivation, can be time- consuming, extremely expensive, and overwhelming. General experience dictates that any grow will take longer than planned and cost way more money than you ever expected or anticipated. Always account for more money and time than you think you need. Working with an experienced consultant can help you plan and account for all the costs and variables you may not have considered, prior to beginning cultivation, in order to ensure your success.

Understand that growing boutique style cannabis is very difficult on a large scale, consistently.

Equipment. When choosing what equipment to use, stick to reputable equipment manufacturers. Don’t just go with the latest high-tech gear because you see it on Instagram being advertised by a big, fancy grow operation. Stick to what you know best. Do your homework and research the equipment as much as possible, prior to purchase. Use equipment that has been tested and well documented with success. Some questions to ask yourself: is this necessary? Is it cost effective? Will it help me reach my goals?

Grow your business slowly and naturally. Getting too big too quick will most likely expose inefficiencies in your operating plan, which will be further compounded when production increases. Don’t sink before you can swim and start out on a massive scale before you have perfected your process.

Cultivation – It pays to design it right the first time

Success begins in the grow room. Never forget that. A properly engineered cultivation plan can be the difference between 3 and 6 harvests per year. Again, it is imperative here to do your homework. A well-thought-out plan can make or break you, and that is where an experienced cultivation consultant can help.

Set realistic expectations. Understand that growing boutique style cannabis is very difficult on a large scale, consistently. Don’t expect to grow perfect cannabis every time – it is unrealistic and can ultimately lead to failure if your financial model depends on it. Growing a plant, while mostly in your control, involves too many variables to rely on a perfect outcome round after round. You can do everything in your power, yet something unexpected can still happen and be detrimental to your yield, and therefore your profit. You must expect and plan for this.

Automating as much of your grow as possible is always a good idea. This will greatly reduce labor costs and more importantly, minimize human error. In some instances, it will even allow you to review data and information remotely, in real time, allowing you to ensure your cultivation site is always running as efficiently as possible, even when you aren’t there.

Processing – Don’t skimp on the process

If you are going to be harvesting cannabis for flower, it is imperative to have a properly built facility for drying, curing and storing your product. You must consider that this building will need to be large enough to house and properly store all of your harvest at once. This can make or break your crop at harvest time. If you don’t have the capacity to handle your harvest properly, it can lead to disastrous issues such as mold or too quick of a cure – conditions which make your cannabis unsellable in the regulated market.

dry cannabis plants
Rows of cannabis plants drying and curing following harvest

Although costly, if done correctly, you can also design this area to serve as your propagation, trimming, and breeding areas, which will ultimately save on costs in the long run.

Also keep in mind, hand trimmed cannabis will always look more appealing to the consumer than machine trimmed cannabis. However, hand trimming can be time-consuming, labor-intensive, and therefore far more costly than machine trimming. These are factors you will need to consider and budget for when deciding how to proceed. If you use a machine, you may save money up front, but will you be able to sell your cannabis at full price?

Distribution – Have a plan

It is a good idea to have a plan for distribution, prior to start up. If you have an agreement with a retail outlet (or contract with a distributor) in writing, you will protect yourself from financial failure. Cannabis will never grow more valuable over time, therefore, you want to have a plan in place for distribution, as soon as the cannabis is harvested and processed. Just as was the case in the black-market days, you never want to hold on to your cannabis for long periods of time.

Do not distribute without agreements in writing! While some oral agreements may be enforceable, it will be extremely costly to litigate. Therefore, you should plan to hire a lawyer beforehand to create fail-proof agreements that will hold up in court, should a distributor not pay you for your product.

Sales – Build your brand, but be realistic

Building your brand is important. And if you don’t produce your own high-quality flower you cannot expect to have a product up to your standards. Your brand will not be successful if you cannot consistently provide consumers with high quality cannabis. Relying on other growers to produce your cannabis for you is risky to your brand. Even if you are a manufacturer, you may not be able to rely on other suppliers to maintain the quality volume you need in order to manufacture your products consistently.

The regulated market in California is new. Therefore you must necessarily account for a great degree of price fluctuations in the market. When creating your budget at the outset, you must account for fluctuations in profit. Knowing when prices are going to be at their lowest can help you avoid having an oversupply of inventory. It can also help you avoid such situations by planning your cultivation/harvest accordingly.

There are both consumer and government influenced market trends that can affect your bottom line. These must be accounted for at the outset.

On the consumer level, you must know what people are buying and how they are consuming. And these factors can change quickly with the introduction of new technology, methods or new devices intended for cannabis consumption. You must stay on top of these trends.

The government regulations can also affect these trends. Products used for cultivation can become banned, i.e. products you once relied on in your cultivation can be found to have contaminants known to cause test failures, even in “approved products.”

Ultimately, all of these factors can make or break your success, and therefore, must be considered, researched and accounted for prior to beginning your cultivation in the regulated market. Working with a consultant with over 20 years of grow experience, and more importantly, extensive experience in large scale cultivation in the regulated market, can help you achieve the success you desire. Cultivation in the regulated market is costly, but working with a consultant can help you cut costs at the outset, and save you from unexpected expenses in the long run.

european union states

Safeguarding Your International Supply Chain: The Brave New World Of Cannabis Compliance

By Marguerite Arnold
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european union states

The CannTrust story may have shocked the uninitiated, but it hit almost every bogeyman the legitimizing industry has both feared and suffered from, particularly of late.

Here, generally, is the issue. Especially in Europe (even more especially in places like Germany, the UK and other emerging markets), budding cannapreneurs need each other. A distributor in Germany, for example, cannot get their final (federal) licenses allowing them to do business without establishing a relationship with an existing producer. That producer also needs relationships with established distributors to get their licenses.

In a fraught world, where all parties are evolving rapidly (and this also includes the “Big Boys” from Canada and several U.S. states including California), supply chain logistics, and even contract agreements if not licensing beyond that requires a level of honesty, integrity and transparency the industry, largely has not achieved yet.

That said, there are also parties, if not individuals and companies determined to set themselves on the straight and narrow – and play by the emerging “rules” – and then there are also clearly companies which, well, do not.

Being out of compliance, at any step of the chain, including when your product is sold via government agencies, is already a recipe for disaster.What this brave new world of cannabis requires, however, and from everyone – from grower, to manufacturer, packager, distributor and service delivery – is that all ecosystem partners must be in compliance.

Ensuring that can be a full time job. But what it also means is that to have a fully compliant product, every party in the chain bears responsibility for upholding standards that so far have proved hard to reach for many.

The time has come, in other words, where that is no longer an option.

The First Step Is Certification…

GMPIn a world where every member of the diverse cannabis ecosystem requires certification, determining what, and from whom is the first hurdle – both for buyer and seller. If one has GMP-certified product, that is awesome. But there are also treaties in the room that only allow some GMP certifications to be considered equal to others. If you are in Lesotho right now, for example, far from Europe, your biggest concern is not just looking to the EU but figuring out a way to export your crop into your neighbouring (and surrounding) country – namely South Africa.

This example, while seemingly far away, in fact, is the biggest bugbear in determining who can sell to whom even within Europe (let alone countries just outside and far beyond the region).

Determining cert presence, if not validity, however, is only the tip of the iceberg. And depending on who you are, that path alone is not a one time dalliance with authorities, but multiple certifications that must all also be kept current.

But It is Not The Only One…

The second hurdle, of course, is also checking the verity of everyone you do business with. For a producer, this includes making sure that processing, packaging, and even transportation are in compliance. In Canada, of course, this has been short circuited by the ability of producers to ship directly to patients.

In Europe, however, this is far from the case. And that is also why the entire conversation is also getting not only much more granular, but expensive. Pharmaceutical regulations are actually what guide the rules of the road here.

european union statesWalking floors, and checking, in person, may or not be mandated by international treaties at this point. However, most of the young producers on the ground here are implementing policies of personal visits to their vendors. In Massachusetts of late, this is also on the drawing board. Albeit on a “state” level, the reality is that both federal, state and more local training is a watchword, if not a must, now on the roadmap.

Being out of compliance, at any step of the chain, including when your product is sold via government agencies, is already a recipe for disaster.

And while that obviously is a challenge, companies must step up to the plate internally to commit to the same. It is too dangerous to ignore such steps. Including the easy to reach ones, like staff background checks and decent cybersecurity safeguards. The former has blown several enterprising cannadudes out of the driver’s seat already in Europe over the last few years. The latter is an emerging threat in a region that is also home to GDPR regulation (and growing fines).

For that very reason, certainly on the ground in Germany if not across Europe and in those countries and companies that wish to supply the same, supply chain verification, that is constant, consistent and verifiable, is the path for the industry both as of now and in the immediate future.

Gaps in Standard Property Insurance Can be an Unknown Hazard for Cannabis Businesses

By Susan Preston, T.J. Frost
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Basic business liability coverage is not enough for those cultivating, selling and distributing cannabis. General liability, property and even commercial renter’s insurance policies all exclude aspects of cannabis operations, leading to significant gaps in coverage.

Unfortunately, many cannabis operations purchase traditional property policies, assuming they’re insured. Then, when a claim comes to light, they find out they’re not covered.Consider the following common exclusions that could lead to a costly business interruption – or worse

Although the production, sales and distribution of cannabis is legal in many U.S. states, it is still illegal federally. This disparity can cause confusion when it comes to insurance compliance. Cannabis companies will want to secure industry specific coverage for risks associated with property, business interruption, and auto as well as general liability.

Consider the following common exclusions that could lead to a costly business interruption – or worse – a shutdown of operations when not properly insured:

  • Property coverage does not cover crops. Cannabis crops require specific coverage for different growth stages, including seedling, living plant and fully harvested. The insurance industry has designed policies specifically for indoor crop coverage for cannabis operations. There is some market availability for normal insured perils such as fire and theft, to name a few. Work with your broker to review your property policy and any potential exclusions related to cannabis operations. There is currently not much availability for insurance for outdoor crop.
  • Auto policies exclude cannabis transport. Some states require separate permits for transportation. Review coverage options with a knowledgeable broker before moving forward with driver hiring. Implement driver training sessions on a regular basis, conduct background checks and review MVRs prior to hiring company drivers. Teach drivers how to handle accidents on the scene, including informing law enforcement of the cannabis cargo. Remember that transporting cannabis across state lines (even when legal in both states) is still illegal due to federal law.
  • Equipment damage and/or breakdown coverage may be excluded from property policies. Consider the expenses and potential loss of revenue due to mechanical or electrical breakdown of any type of equipment due to power surges, burnout, malfunctions and user error. Having the right equipment breakdown insurance will help you quickly get back into full operation, with minimal costs. Conduct an onsite risk assessment of your equipment to get a comprehensive picture of your risk exposure, and review current insurance policies to identify key exclusions. 

Organizations looking for cannabis business insurance are best off working with a qualified broker who is knowledgeable in the cannabis space.As the cannabis industry continues to expand, more and more insurance options have become available. And yet as with any fast-paced industry, not every option that appears legitimate is a good risk for your cannabis business.

Be a contentious insurance consumer. Review the policy closely for exclusions and coverage features so you understand the premium rates and limits of the policy.  Discuss with your broker the history of the carrier as to paying claims in a timely fashion.

Organizations looking for cannabis business insurance are best off working with a qualified broker who is knowledgeable in the cannabis space.

The Fall of Farmako?

By Marguerite Arnold
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Chances are if you follow the European cannabis scene, particularly out of Germany, that you might have heard of a firm called Farmako. They have certainly, in the three quarters or so they have been in business, been given a lot of “good press.” They certainly worked hard to get into the headlines.

The problem is that no matter how scintillating initial claims were to many members of the media if not industry beyond, the bloom was quickly off the rose in the same circles. Since at least March, these grumbles have earned the company increasingly bad press. Industry insider complaints and background knowledge also began appearing in places like Manager (a top German business magazine), Vice and Business Insider Germany. Behind the headlines and insider quotes, however, quite a few people are admitting, even if off the record, that while initially impressive enough to be believed – at least on the surface – most of Farmako’s claims have panned out so far to be just hot air. And there have been a lot of them, not only from the sourcing perspective but also from the research, scientific development and certainly tech fronts.

The rebutting, editing and confronting of which has also set off a round of really bad press.

Live by the sword, die by the sword.

Further, apparently even the embarrassing fallout (and of course resulting reorganization) is not what it seems to be. Which of course has also been described so far publicly by the Frankfurt-based company itself, and Berlin-based tech funder, Heartbeat Labs. The former of which are so far unsuccessfully walking back just about every claim made over recent months. The latter of which has a great deal of embarrassing egg on its face on the compliance front.

When reached for comment by Cannabis Industry Journal, Heartbeat Labs responded via email that they had none.

While Farmako is struggling to regain the confidence of the industry if not regulators and appears to be trying to hang on to its distribution license, the story itself is also illustrative of many of the failings of the so-far establishing cannabis industry. In Germany and elsewhere. Coming as it does within the summer of scandal involving both larger companies and start-ups, bigger questions about industry practices, in general are in the room. If not the backgrounds of those boasting about “industry experience” (or even worse when caught, “oops I have none, really”). Highly stereotypical fixes so far have also not helped.

Everyone makes mistakes in a world where everything is new and one where the regulations are constantly changing. The problem with Farmako in particular, is that there were so many.All the bragging in the English and German language press had consequences.

The Story So Far

Farmako made headlines earlier this year when they issued a press release claiming that they had inked a deal to “import 50 tonnes of cannabis from Poland.” They further claimed, when contacted by CIJ that they stood by the story. At this point, their claims were clearly about a future delivery. However, Farmako CEO Niklas Kouparanis then embellished further on Bloomburg. Kouparanis claimed that they were already distributing product from Macedonia.

The reality of course was nothing of the sort. While Farmako was distributing product it had sourced from other places, no Macedonian product had ever crossed the border. But as May rolled into June, it was clear that there was something else afoot. All the bragging in the English and German language press had consequences. The German press had a field day with the storied and very colourful past of both Farmako founders. The regulatory agency, BfArM conducted an investigation. Kouparanis was out by the beginning of July.

Producers Do Not Trust Them

Cannabis industry insiders (both producers and distributors) who contacted CIJ about this story, but wished to remain off the record, confirmed that many producers who had initially heard of the firm in both Poland and Macedonia, in particular, were distancing themselves from Farmako. But the stories were not limited to Eastern Europe. In the UK, where Farmako had used a chunk of its investment from Heartbeat Labs to also open a London office, cannabis professionals expressed scepticism of almost all of the company’s claims including not just sourcing, but on the tech and R&D side. One senior executive in the Canadian industry said on deep background that he was tired of the lies from Diemer in particular, and never wanted to speak to anyone associated with the company ever again.

And clearly all was not well within Farmako itself, no matter the constant cheery optimism, if not “shucks we didn’t know” attitude of all involved when actually confronted or questioned about their behaviour – and or statements – particularly to the press.

What Has Been The Upshot To Date?

Kouparanis may be history but Diemer remains with the company. Although Heartbeat Labs claims this has nothing to do with the subsequent company re-org and Kouparanis’ departure, insiders in the industry claim otherwise. Further, several also suggested that any attempt on the part of Farmako to enter into contracts until July was fundamentally compromised by the actions of Farmako execs themselves.

Diemer certainly, has been remarkably candid at least in review about one aspect that most in the cannabis industry who have encountered him so far agree with. He has come clean in interviews that he knows very little about the legitimate cannabis industry. Perhaps that is also why he has continued to claim that there is no crisis at the company.

Both statements of course also raise questions about why he is still there.

The company is still in business although apparently finding it very difficult to source product.The appointment of a new CEO, Geschäftsfüherinen– a female and first head of any kind of cannaspecialist distribution company auf Deutsch, Katrin Eckmans is also interesting. Eckmans makes her apparent cannabis industry debute with a professional background that includes ex-im at Frankfurt airport, after the quick departure of Kouparanis. Particularly given that he co-founded the company with Diemer after leaving a year long stint at Cannamedical (the second indie cannabis specialty distributor in Germany, established in 2017 by David Henn). And she is apparently being hired for both complementary experience and her gender (which while refreshing in a still male dominated industry is widely also regarded as at this point fairly easy-to-spot window dressing conveniently proffered to regain confidence of investors if not customers in a gender-friendly twist when a company or organization hits an existential crisis).

Calling in even a highly competent if inexperienced in the cannabis niche woman, in other words, even in this industry, does not necessarily “fix” things. This goes from company culture to critical relationships within the industry (upon which distributors like Farmako depend on at this point).

For now, at least, Farmako, and its financier in Berlin appear to have deflected criticism of their efforts although those who have had interactions with the staff are placing bets on when the doors in both Germany and the UK will shutter.

Farmako’s detractors may yet also lose such wagers. The company is still in business although apparently finding it very difficult to source product. Not, in this case because they cannot find it – but rather because producers are flat out refusing to work with them.

In the meantime, particularly other German canna specialty distributors are taking a lesson from this story. If Farmako survives, in other words, it will do so by overtaking the competition that has sprung up all around them – which is not only unburdened by the baggage, but is also determined not to make the same mistakes.

european union states

Frontline Pharmacy: The Battle For The Footprint of Medical Cannabis Europe

By Marguerite Arnold
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european union states

This summer, as new distributors continue to get into the cannabis game (in Germany, the UK and beyond), and at least two countries (Greece and Macedonia get GMP-certified), the battle is now on not just for cultivation and distribution licenses, but the end point of sale, pharmacies.

Pharmacies were always going to play a large role in cannabis distribution in Europe, starting with the fact that there will not be a separate “dispensary” system (as there is in the United States and Canada). Further, in some jurisdictions, notably Germany, the idea of the “apotheker” is one that is not going to go away anytime soon. No matter how intriguing the concept of online pharmacies actually are to everyone else (see the British).

Further, the shift to what is widely being referred to as “tele” or “digital” health is only going to increase in prevalence as discussions continue. Cost and access (to all medications, not just cannabis) are an issue near and dear to the average European. So is the right and consumer safety issues of being able to consult with a local pharmacist, who might even know you personally, and can advise on the health effects of the medicines they pass over the counter.

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Photo: Ian McWilliams, Flickr

Jens Spahn, the current Health Minister of Germany, is touting a move to personal management of health records and digital prescriptions by next year. However, nobody knows exactly what that means, much less the functionality of the same.

Further, the German pharmacy situation in particular is one that has implications across Europe no matter how aggressively “digital health” solutions are implemented here. By law, no more than three (in some rare cases four) brick and mortar pharmacies can be owned by the same owner. There is no such thing as “Boots” (a British chain) or “Walgreens” (an American one).

Doc Morris, the Dutch online pharmacy, has always been an option for Germans just across the border. The problem of course is that insurers so far have been refusing to pay for critical parts of this idea. The company is currently experimenting with working with insurers- but do not expect the average chronically ill person in any country to suddenly get expedited access. So far, the only innovations in this market have hit as the privileges of the privately insured.

Second class status (and significantly lagging behind those with private healthcare) is also very much in the room as a political issue- and cannabis access has only sped this up.

If the scenario in the EU two years ago could be described as the race for import licenses and cultivation rights, this year, the focus of the big guys is very much trying to mainstream their product and get it on as many “shelves” as possible.

In Europe, however, since nobody can ship straight to the patient (as in Canada), the next most obvious step is securing access to pharmacies.

The Cannabis Industry Cometh

Even before Aphria announced its purchase of CC Pharma (one of Germany’s largest distributors)  in a deal that finally closed in January of this year, the larger companies have been looking for a more efficient supply chain situation. Owning a distributor is certainly one way to go about this.

Israeli Together bought into a large German distributor last summer.

As of May 2019, Aleafia Health and its wholly owned subsidiary, Emblem, entered a JV with Acnos Pharma GmbH – with access and reach to 20,000 German pharmacies. And Wayland announced its merger with ICC, with pharmacies across the world.

As early as October 2017, Tilray and Cronos together tried to storm the German market (by inking a deal to reach the 20k plus pharmacies in the German system). Two years later, and this still has not made a huge difference in access.

Regardless of these larger industry players, however, or perhaps so far because of their statements and the resulting continued lack of access for most patients, it is also fact, particularly in both Germany and the UK, that merely having relationships with pharmacies is not enough. This year, there is also a fairly major price drop in the cards for the cannabis industry. And while the larger players may blanket the market with relationships, actually providing access to GMP-certified medical cannabis at a decent if not competitive price, is going to continue to have an impact on every market, particularly in those situations where compliant online access can be connected to indie distribution.

It is also an environment where the advantage still does not necessarily go to the “big guys” – a strategy that Wayland, for one, has been playing strategically for the better part of the last two years better than any other Canadian in the market. Especially when supply chain issues, beyond price, are still in the room.

Right now, pharmacies are well aware of their growing influence in this space in Europe. How much of an influence they will continue to have however, also rests on how effectively they preserve their right to have such an influence on the end consumer (as in Germany) or not (see the many discussions about this issue in the UK right now).

Further, as many of these entities are also realizing, and this is true far beyond the cannabis discussion, pharmacies are increasingly caught in the middle between consumer, doctor and insurer (this is certainly the case both for cannabis and also for all expensive orphan drugs).

How the pharmacies, in other words, begin to solve other issues, beyond just having a contractual relationship with a cannabis distributor/producer, is very much a part of the conversation right now. Access to cannabis via distribution deals with a Canadian or even Israeli partner certainly helps sales but it does not guarantee them.

One thing is for certain. The impact of new privacy legislation is having an effect, so even in an environment where a distributor/producer buys a pharmacy, what they can then do with customer information they also might have been interested in purchasing, is not only highly limiting, but in the future it may be the best approach to handling liability, and from multiple directions that includes everything to access to affordable, certified product to cyber security issues.

Health Canada Issues Voluntary Cannabis Recall Guide

By Marguerite Arnold
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Last month, Health Canada published a Voluntary Recall Guide to help producers not only stay in compliance but run their operations better. While it will certainly prove to be a critically useful guide for Canadian LPs who are now subject to domestic regulations, it is also a highly useful document for others. Namely, newly legalizing U.S. states and even European countries now looking for guidance on how to shape, structure and regulate their own burgeoning domestic cultivation markets either underway now or about to start.

What Is Of Particular Interest?

While it may sound like a no-brainer, the guide lays out, albeit in very broad strokes, the kinds of procedures all licensed producers should be implementing anyway to efficiently run a compliant business.

It could be considered, on one level, a critical start-up business guide for those still looking for guidance in Canada (as well as elsewhere). Domestically, the document is clearly a handy template, if not something to create checklists from, in setting up a vital and at this point, mandatory part of a compliant cultivation facility in Canada.

The guide also covers not only domestically distributed product but that bound for export.

One of the more intriguing aspects of the guide is also how low tech it is. For example, the guide suggests that a license holder responsible for recall notices, plan on quick response methods that include everything from a self-addressed postcard to an email acknowledgement link.

That said, recalls must be reported to the government exclusively via an email address (no mail drop is listed). And suggestions about media outlets to which to submit recall notices are noticeably digitally heavy. Websites and social media platforms are suggested as the first two options of posting a recall. Posters at retailers is listed dead last.

What is also notable, not to mention commendable, is the inclusion of how to include supply chain partners in recall notices, as well as the mandate to do it in the first place.

Also Of Note

Also excellent is the attempt to begin to set a checklist and process about evaluating both the process of the recall itself and further identification of future best practices.Health Canada also expects companies to show proof of follow up efforts to reach non-responders all along the supply chain.

For example, the report suggests that LPs obtain not only feedback from both their supply chain and consumers involved, but elicit information on how such entities and individuals received the information in the first place. Further, the volume of responses (especially from end consumers) or lack thereof should be examined specifically to understand how effective the outreach effort actually was in reaching its target audience.

This is especially important because Health Canada also expects companies to show proof of follow up efforts to reach non-responders all along the supply chain.

Regulatory Reporting Guidelines

One of the reasons that this guide is so useful is that Health Canada also expects to receive full written reports touching upon all of the issues it lays out within 30 days of the recall announcement itself.

In turn, this is also a clear attempt to begin to start to document quality controls and attempts to correct the same quickly in an industry still plagued by product quality issues, particularly at home, but with an eye to overseas markets.

As such, it will also prove invaluable to other entities, far beyond Canadian LPs involved in the process this document lays out. Namely, it is a good comprehensive, but easy to follow and generally applicable guide for new states (in the case of the US) if not national governments in Europe and beyond who are now starting to look at regulating their own burgeoning industries from the ground up.