The rise in the number of optimistic regulatory frameworks instigated by various regional governments will positively anchor the forecast for the cannabidiol (CBD) market. The growing awareness regarding the benefits and effects of the product as an alternative treatment method has accelerated its preference among consumers and suppliers. Moreover, the continued advancements in the approval processes by various authorities worldwide have also made way for numerous opportunities supporting CBD market growth.
According to a report by Global Market Insights, Inc, the global CBD market size could exceed $108.8 billion by 2027.
Growing presence in cosmetics
The overall industry share from creams and roll-on products is poised to hit a 35.8% CAGR up to 2027. This is owing to the increasing scope of CBD in cosmetic applications as it is highly effective in treating skin conditions. This, as well as its anti-inflammatory characteristics from a medicinal perspective, are leading to increased demand for CBD products like creams and roll-ons.
Scope in the treatment of mental health
Some of the many infused products on the market today.
CBD market value from anxiety/stress applications exceeded USD 1.5 billion in 2020 due to the growing need for helping mental health. The World Health Organization reported that over 4.5% of the total population in Europe suffers from depression. This escalating anxiety and stress rate has encouraged healthcare practitioners to increasingly make use of CBD-based medications.
Higher demand for oral administration
Demand for oral cannabidiol administration held nearly 45% of the industry proportion in 2020 due to its growing preference considering the gradual relief of pain compared to other disorders. The increasing dependency on the oral administration route for product development by several manufacturers will add positive impetus to market growth.
Medical benefits of cannabis
Annual revenue of the CBD market from the segment of the market dealing with THC (and CBD) products is expected to cross USD 30.1 billion by 2027. This is largely due to its increasing penetration across various countries and regions on account of its legal status. Furthermore, the relatively higher THC content of the compound has led to its growing usage to combat medical conditions, including Alzheimer’s and Parkinson’s disease, among others.
Online distribution to see a considerable footprint
Ads for CBD products online regularly perform very well
The online CBD industry was responsible for more than 46% of the market in 2020. This is mainly due to the numerous advantages of online channels, like on-time delivery and adequate inventory, compared to their offline counterparts. Besides, this distribution platform minimizes the operational costs related to the maintenance of brick and mortar retail.
Australia to lead the regional landscape
Australia dominated the Asia Pacific CBD market by holding over 25% of the market share owing to the expanding geriatric population and the liberal stance of the regulating bodies in the region. The permittance to the medicinal and cosmetic use of CBD products is likely to spur regional adoption. The rising amendments in regulatory scenarios have also triggered awareness regarding the potential benefits of the product in the country. For instance, in April 2020, the Australian government released a new proposal for over-the-counter CBD in a bid to relax its narcotic scheduling whilst making it a Schedule 3 substance.
Providers of various CBD products are actively indulging in numerous growth strategies, like acquisitions and partnerships, to reinforce their market presence. For example, Mota Ventures Corp., in January 2020, acquired Spanish producer and online retailer, Sativida OU in a USD 2.2 million deal. The acquisition expanded the company’s presence in Europe and Latin America.
Although the demand for CBD is likely to experience certain hesitation from consumers in the short term, the market will witness lucrative growth in the long run. However, counterfeit and substandard quality products may potentially restrain industry expansion to some extent.
Cannabis infused products manufacturing is quickly becoming a massive new market. With companies producing everything from gummies to lotions, there is a lot of room for growth as consumer data is showing a larger shift away from smokable products to ingestible or infused products.
This is the third article in a series where we interview leaders in the national infused products market. In this third piece, we talk with Liz Conway, Regional President of Florida at Parallel. Liz started with Parallel in 2019 after transitioning from her healthcare IT consulting practice. She now heads up Florida operations for Parallel which runs the Surterra Wellness brand.
Next week, we’ll sit down with Stephanie Gorecki, vice president of product development at Cresco Labs. Stay tuned for more!
Aaron Green: Liz, very nice to meet you. Can you tell me how did you get involved at Parallel?
Liz Conway: Well, I’ll give a little bit of background. Previously, I was working in healthcare technology and in that field, really coming out of health care reform. I was also living in Northern California and so was conscious of a bunch of startups that needed help with highly regulated spaces and policy and how to navigate both the today and the tomorrow of “Hey, we’re trying to build something super fast, but we’re not interfacing with government well enough to know how to build what we’re building and not be set back again.”
And so cannabis actually came to me. I started working with some early stage cannabis IT companies and I was the principal where I founded a firm to do this very thing, which was to help highly regulated companies get through what is today, what is tomorrow, and what can we change. I was really fortunate to be living in Northern California, and I started to help them navigate the California rules.
Then in 2016, when California went adult use, that was just a major time to turn everything on its head and see what we could get. From there, it was history. I started to work with companies, both nationally and in Canada, and met some of the folks with Parallel and was a consultant with them for a while and then joined the team.
Liz Conway, Regional President of Florida at Parallel
Aaron: So, are you in Florida now?
Liz: I relocated to Florida in January 2019.
Aaron: At Parallel, how do you think about differentiating in the market?
Liz: I think that we differentiate in terms of the quality of our product, of course, and I will speak specifically to Florida where our focus is still a medical market. Every day we are trying to manage the vertical from end-to-end so that we can get the products that our people want as quickly as possible over a vast territory. Well-being is such a critical ethos that everything we do comes down to, “alright, what does this mean for well-being and how are we delivering that both in the customer experience as well as in the product?”
Aaron: With regards to differentiation, can you speak to any products in particular that you feel are differentiated in the Florida market?
Liz: In the Florida market, I think that we were the first to launch thera-gels, and the thera-gels really are medicated jelly. You can use it sublingually, or take it as an oral to swallow. From that we developed thera-chews. That line, it’s really great tasting, it’s long lasting, and the effects are getting great reviews from the patients. So that’s one area that I think we distinguish ourselves and we’re a forerunner in the Florida market.
Aaron: So, if you take one of those products as an example, can you walk us through your process for creating a new product like that?
Liz: Well, so remembering that we’re part of companies in other states, because Parallel operates in Nevada, Massachusetts and in Texas. So, we’re not developing products on our own, but we certainly are doing Florida market analysis to say, what should come next, we are listening to our customers, we listen to our people, we’ve got 39 stores across the state. We have a number of employees who are always listening. We also have employees who are part of the medical program who are using the products to address different needs and they are looking at our competitors.
So, we’re doing some competitive analysis. We’re also knowing what it is that we’re really good at, and we take it through a product development lifecycle that involves testing because we are fully vertical. In Florida, we have to always ask ourselves are we able to do this end-to-end and thus far, we’ve been fortunate enough to either build or buy that capability.
Aaron: You mentioned there’s 39 stores in Florida? Are those dispensaries?
Liz: Yeah, they are our stores. There are other stores that other companies have, but we’re the second largest footprint in the state and all over from the very edges of Pensacola down to the Florida Keys, and then over to Miami and up through Tallahassee. So, covering really all corners in the state.
Aaron: Now, with those stores do you also market your products in other people’s stores?
Liz: No. The vertical really means that our stores only carry our own products. We’re marketed in Florida as Surterra Wellness and that’s the name of our stores. Anywhere you go that there’s a Surterra Wellness, you have the same product sets and we’re not allowed to sell other folks’ products. It’s a big difference between Florida and other states.
I’ll tell you one of the nice things is, when I have a product, I know that we grew it. I know every single quality step along the way. I don’t have to go and then look at other vendors and constantly monitor their quality. Everything that we do, we touched it from the very first moment hitting the ground. So it’s nice.
Aaron: Can you walk me through one of your most recent product launches? And if you can, the full lifecycle from the initial marketing briefing up to commercialization?
Liz: Well, I can do some of that. Speaking specifically about those thera-chews – that oral dosing mechanism – we’ve got it in a couple of different flavors. We said to ourselves, “hey, there’s a real need in this market for people to experience something that was like an edible, because Florida just launched edibles.” But we didn’t consider this as an edible because they weren’t allowed at that point. We knew from other states that particularly patients like to dose, you know, with something that is long lasting and flavorful. And so we said, “how can we bring this to market as an oral-dosing product?” And so we conceived the machinery that was able to do it. We had to do quite a bit of tooling.
Prior to that, we did some market testing from our customers and our associates as well as our brand team to say “is this going to be right? Can we bring it to market?” We did the projections around anticipated demand and program growth as well as the cost. We had to figure out what it would it take to adjust the machinery. Will it work? We did some pretty significant testing on that machinery and a lot of flavor testing.
We’re fortunate enough to have one of only four licensed kitchens that can do this kind of R&D in Florida. We’re licensed by the Department of Health for cannabis R&D on an edibles-type kitchen. So we were really fortunate to be able to do that to bring it to market. And from there, it really took on a life of its own. The flavors were tested across all of us (non-dosed flavors, obviously) and we voted on the best products to hit the shelves.
Aaron: When you’re making that decision, how much of the decision was weighted by market demand from your existing customers, and just observing other markets and seeing how products perform in other markets?
Liz: Data is not as prolific as I’d like it to be in cannabis. When you hit the edge of that state line, your consumer is very different, your stores are very different, your marketing capability is very different. So we really had to look across the US and say, “how are products like this performing? Is that how Florida is going to perform?” We did use that state-by-state evidence as well as our own evidence — the response to therapy gels — if we have thera-gels, what type are we selling in terms of dosage and flavors. There are slight differences there in effect-states. And so it was a little bit of both.
Aaron: Next question gets more into like the supply chain. How do you go about sourcing ingredients for your products?
Liz: So again, in a fully verticalized state, we have to source 100% of the active cannabinoid ingredients. Then we have an authorized vendor list that we’ve worked with for other things in terms of flavors and terpenes. Then we have to go back to the DoH to make sure that the other ingredients, whether that be sweeteners, or the kind of wrapping on those thera-gels are okay — the gelatin elements in particular.
“The Florida environment all day long is the biggest hurdle that I think we face.”We use an authorized vendor list. One of the great things that we’ve done recently is to focus our vendor list on minority women and veteran-owned businesses, and so really looking deep in the supply chain to source whatever we can from a diversity of suppliers. I love that original ethos of cannabis to be of the people, by the people and for the people, as well homegrown.
Aaron: Can you give me an example of a challenge that you run into frequently?
Liz: Well, I’ll say in Florida, if you’re growing your own cannabis, it’s way different than if you’re growing it in Colorado or California. So, I’m going to start there. The great news is that after Florida allowed us to start selling smokable flower last fall, we’ve come such a long way. We’ve got new indoor grow facilities. It’s making the environmental issues much, much lower.
“I think that the best thing that we can do is try to look five years ahead and ask what could this look like?”Bringing those on-line is going to bring a much more consistent consumer experience because while I know consumers have a lot of tolerance for variations in their cannabis, but as the industry matures, they’re going to treat us much more like other CPG companies. They’re not going to want that variation. Between that and then Florida’s new testing regulations which also are making sure that the product that’s delivered only meets what’s on the label.
The Florida environment all day long is the biggest hurdle that I think we face. The humidity is much higher here than in other states.
We’re also looking at live resin. What I am watching is the next generation. A lot of live products get us really close to the plant. We’ve done so much to pull out of the plant but where are we going to preserve that original plant in all of its most original formats without having to necessarily smoke the flower itself. We’re working with the Florida Department of Health to help them understand live resin products from a health standpoint.
Aaron: What trends are you following in the industry?
Liz: As you can imagine, as the regional president of a division that goes really end-to-end on monitoring trends in edibles and infused products, medical and recreational, I’m watching the election pretty closely. It will impact banking. It could potentially impact interstate commerce and it could potentially impact research.
I’m also watching things like HR trends, what’s happening in who we employ, our leadership, and how we deal with some of the emerging union issues around the country. I think that the best thing that we can do is try to look five years ahead and ask what could this look like? Where do we put our investment dollars now to meet the future, as well as where do we put our regulatory efforts for the best public policy to have the outcomes that we want consumers to trust us with? I know that’s a really broad answer, but from where I sit, it really is what I’m looking at, across a universe of excitement, but it includes challenges also.
Aaron: The last question is, what would you like to learn more about in the cannabis industry?
Liz: Well, of course, if I had a crystal ball, that would be great. I think the data is always missing. The more data that we could get, there’s so much out there that people are using cannabis for and we just don’t understand the impacts on how is this wonderful well-being product helping so many people because a lot of people don’t like to talk about it. So the more data about our consumers and what they like and what they don’t like, even across state lines, as we could aggregate that in a uniform way. I think it would help a lot of the people who are fearful of cannabis and it would help a lot of us who are in the business, get the consumers exactly spot on what they want, which at the end of the day is why we’re all here.
Aaron: Thank you Liz, that’s the end of the interview.
Dr. Linda Klumpers has a Ph.D. in clinical pharmacology of cannabinoids. Originally from the Netherlands, she began much of her career in studying cannabis there. She now lives and works in the United States, where she has worked on a number of projects, started her own company and is continuing her research on cannabis as an effective medicine.
After studying neuroscience at the University of Amsterdam, she went on to train at the Centre for Human Drug Research and Leiden University Medical Center, where Dr. Klumpers obtained a clinical pharmacology degree and a Ph.D. in clinical pharmacology of cannabinoids. She has been researching cannabinoids in humans since 2006. Dr. Klumpers co-authored a number of peer-reviewed cannabinoid publications and she has received five honors and awards for her work, including the BJCP Prize from the British Journal of Clinical Pharmacology.
Dr. Linda Klumpers
In 2016, she moved to the United States and founded Cannify, an online tool that helps patients and clinicians with product matching and providing legitimate cannabis education based in sound science. In 2018, Dr. Klumpers joined forces with Dr. Michael Tagen, another clinical pharmacologist, to launch Verdient Science, a consulting partnership. Their work at Verdient Science includes helping clients set up human studies, advise on FDA submissions, creating course materials, adjusting product pipelines and product development strategies, among other areas of focus.
Right now, Dr. Klumpers is waiting to hear back from a grant application they submitted to study THC and CBD ratios for medical efficacy in chronic pain patients. We sat down with Dr. Klumpers to hear her story, what she is working on now and how she hopes to continue researching cannabis as an effective medicine.
Cannabis Industry Journal: Tell us about your background as a research scientist. How did you get involved in cannabis?
Dr. Linda Klumpers: During my Ph.D. work, we studied the effects of so-called cannabinoid receptor antagonists that block the effects of THC – I prefer to say “we”, as research is always done by multiple people. The problem with studying these compounds in healthy volunteers is that you can’t observe acute effects, which means that you won’t measure any effect after a single dose. To circumvent this issue, we applied a trick and developed a ‘challenge test’: after you give the ‘invisible’ blocking compound, you stimulate the cannabinoid system by giving people THC. If the subjects don’t feel the effects of THC, you know that the blocker worked. One thing lead to another and we ended up studying various administration methods, such as intrapulmonal (via the lungs) with vaporization, oral and sublingual. We studied the behavior of cannabinoids in the body and how the body responded to them.
CIJ: Can you share some information on the projects you are working on? What is Cannify and what is Verdient Science?
Dr. Klumpers:Cannify was founded in 2016 after I saw that too many people had opinions about cannabis that were more based on emotion than fact. Besides, I noticed that a majority of the scientific literature on cannabis pharmacology was left unnoticed and unapplied to the people getting exposed to cannabis, such as patients, the cannabis industry – that was in a very different stage at that time – healthcare providers and regulators. With my Ph.D. in cannabis pharmacology, I wanted to add a level of objectivity to cannabis education and research. Cannify’s goals are to understand the science of cannabis, and share this with others.
The way we do this is multi-fold:
Cannify Quiz: Patients with an interest in cannabis often want to know the science about cannabis and their condition. Our quiz helps these people by asking in-depth questions and showing them relevant scientific literature in a personalized report. After that, an overview is given with products and product matching scores. Our account system allows users to track their progress over time. Product manufacturers, dispensaries and other companies can use the quiz for their websites and their stores to help out retail employees and save them time, and to receive insight with our analytics on customer desires and behavior. Needless to say, an educated customer is a better customer. It is important that customers come and leave stores well-informed.
Education: Speaking of education, our website contains educational articles about everything cannabis: from plant to patient and from product to mechanism of action. We regularly publish educational quizzes for people to test their knowledge level. With a free Cannify account, you can find all of our educational quizzes and save your results. We also provide customized courses, and have educated a wide audience varying from industry professionals to CME-accredited courses for healthcare providers. On top of that, our educational videos in dispensaries (in collaboration with our partner, Enlighten) reach customers and retail employees.
One of Cannify’s educational graphics, showing the difference between topical and transdermal product administration
Research: To expand the knowledge on cannabis, performing and especially sharing research is essential. We have already performed and published some of Cannify’s results on descriptive statistics and effect prediction during conferences, as well as a review paper on cannabis therapeutics in a peer-reviewed journal and a book chapter. This year, we expect to co-publish the results of a survey in different sleep patient groups. We collaborated with the Centre of Excellence for Epilepsy and Sleep Medicine in the Netherlands on a peer-reviewed paper from which we expect new research to follow to benefit these patients. We have also co-submitted a grant to study THC and CBD ratios in chronic pain patients: fingers crossed! Another important next step is to test a healthcare provider-specific version of Cannify’s quiz in the clinic once COVID dies down. I want to add that after working in a clinical lab for many years, it is important to combine the results of clinical trials to what people do in real life, which is what we do with Cannify.
And here’s some information on Verdient Science:
Verdient Science is a consulting partnership I have with clinical pharmacologist Dr. Michael Tagen. We provide clinical and translational pharmacology expertise to improve the quality of product development & clinical testing. While both working as independent consultants, we decided from 2018 to start working together to offer better services. Since then, our work has been very variable and includes helping clients set up human studies, advise on FDA submissions, creating course materials, adjusting product pipelines and product development strategies to make them more efficient and cheaper, performed scientific due diligence and much more. When clients want additional services that are beyond our expertise, we are typically able to introduce them to various people per expertise area, or refer them to our partner companies, Complex Biotech Discovery Ventures (CBDV) with Dr. Markus Roggen, and Via Innovations with Dr. Monica Vialpando. A benefit of working with the same partners includes smooth handovers and the feeling of a one stop shop.
CIJ: How does Cannify match available products to consumer needs? Is there an algorithm you developed that matches moods or feelings to cannabinoids or chemical profiles?
Dr. Klumpers: That is a great question and the core of what we do! So back to the Cannify quiz: there are three steps:
Users fill in questions;
A personalized report is generated with the relevant science;
The user gets a product overview with product matching scores.
Another Cannify educational graphic, showing THC distribution throughout the body over time
The report and the matching scores are generated using algorithms that are regularly updated. These algorithms are based on various data sources:
Literature: There is a lot of available literature, and we make sure to select the most relevant and reliable studies;
Raw data: There is only so much one can find in the literature, and lots is hidden in the raw data. Therefore, we piled up data from studies done at various research institutions, including the University of Kentucky and Johns Hopkins University, and used them in our algorithms;
Internal studies: From the thousands of users filling in their results, there is a lot of information that we should learn from. This feedback loop helps us to better understand how the lab relates to real life situations.
CIJ: The world of cannabis research has been historically stymied by red tape, DEA interference and a host of federal regulations. How have you managed to work through all that? Do you have a DEA license? What did it take to get it?
Dr. Klumpers: Luckily, a majority of our research was and is done outside of the US. You still need to obtain the appropriate licenses, but I was perhaps lucky to have filled in every form very thoroughly and we got the licenses within months. The process is quite meticulous, as you need separate licenses for almost every step from manufacturing to administration. An additional complication is that our cannabis is not stored in our own building, but in the hospital pharmacy across the street, involving transport via the public road. Despite the roadblocks, including a legal procedure about this matter that was going on in parallel, I had no major issues getting our work done. For our research in the US, we were lucky to have been working with partners that already have the required license.
Also with publishing, I have never had an issue with the cannabis stigma. Generally, in my field of science, good quality science is very much welcomed and appreciated, and this was even before the time that there were four different cannabis-related journals, as is the case nowadays.
CIJ: Looking to the future, where do you hope to focus your research efforts? Where do you think the cannabis community should be focusing their efforts in the next 5-10 years?
Dr. Klumpers: Besides continuing to analyze the data generated from Cannify, I keep my fingers crossed for the grant application I mentioned earlier on THC and CBD ratios in chronic pain patients. Although we know that CBD is able to influence THC-induced effects, it is not known at what dosages, which ratios and how the effects are related to each other. For example: is CBD able to decrease certain side-effects of THC without decreasing pain-relieving effects?
Whatever is done, wherever in the community: good quality data are keyNext to that, I am also interested in other neurological and psychiatric disorders, and, of course, my Ph.D. love: the cannabinoid antagonists. Sadly, all the research efforts on this compound group were halted more than a decade ago. However, there is a renewed interest. I would love to help turn these compounds into effective and safe medicines.
Regarding the cannabis community: 5-10 years sounds really far away for an industry that is relatively new to many, but a lot has already changed since I started cannabis research more than 14 years ago and time has flown by. Some changes have been positive and others less so. Whatever is done, wherever in the community: good quality data are key. Many companies gather data and even publish them in peer-reviewed journals, but that does not always mean that the data are useful or that the studies were done well. Only a few minor changes to how and which data are gathered, and so much more can be done. What can help with achieving this is to let the right people do the right thing: many call themselves a ‘cannabis scientist’ or ‘cannabis expert’, but that does not mean anything. What has someone truly achieved and what is their exact expertise? A Ph.D. in chemistry is not going to help you in setting up effect studies, neither will I be able to improve your product’s shelf life or extraction yield. Getting the right people in the right place is key. Lastly: the cannabis community should stay critical. The length of one article in Cannabis Industry Journal wouldn’t be enough to lay out all the misconceptions that people have about cannabis. Make sure that those misconceptions do not live on and do not be afraid to admit you don’t know something, irrespective of the branch you work in: only then, can the cannabis community progress to the benefit of all.
The news is intriguing in a world overwhelmed with pandemic news. THC Global, a Canadian-Aussie company now raising money and signing global deals, has just bought a “clinic network” of 30 prescribing physicians that will be able to supply up to 6,000 Australian patients this year.
In doing so, this entity is clearly beginning to establish a pattern of expansion in a new medical market not seen so far outside of Canada. Namely being able to obtain the all-important prescription for one’s brand at the doctor or prescriber’s office which is affiliated with a certain producer. Pharmacies and dispensaries downstream have no discretion for any other product to sell if the brand is written right on the prescription itself.
And this marks a new step in an industry frustrated with the high prices and high levels of red tape in other international environments where more widespread medical cannabis reform has come.
The Situation in Germany Germany represents, so far at least, the destination market of choice for Canadian cannabis firms (for the last several years at least). This is for several very sound business reasons (at least in theory).
Photo: Ian McWilliams, Flickr
The German medical market is the largest in Europe. Health reforms which swept the country at the time of reunification also created a system that is in its own way a hybrid of the more European (and British) NHS and American healthcare. Namely, 90% of the German population is on the system, but it is tied to employment and income. Freelancers, even of the German kind, must use private healthcare as must all non-passport foreigners. If you make over a certain amount of money (about $65,000), you must also pay for private healthcare. As the cannabis revolution rolls forward, many cannabis patients are caught in changing rules and a great reluctance by public health insurers to allow fast entry of any new drug, including this one. This is based on “science” but also cost.
Bottom line? Yes, the market is lucrative and growing, and yes, cannabis is covered under public health insurance, but the ability of any producers to be able to maintain a reliable, steady market of “prescribers” is highly limited. Furthermore, unlike anywhere else in the world, pharmacists play an outsized role in the process – namely because there are no chains (more than four brick and mortar outlets are verboten). Prices and availability vary widely across the country.
There are also no “online” drug stores where patients can send prescriptions in the sense that this vertical has developed in other countries.
Hospital dispensation is, for all the obvious reasons, highly expensive and generally prohibitive for the long term, if not serving much larger numbers of patients.
The Problem in the UK Like Germany, the UK decided to launch medical “cannabis” – or at least cannabinoid-related drugs under the purview of the NHS, but there are several issues with this.
The problems start with the fact that the system remains a monopoly for one British company, GW Pharmaceuticals. The medication produced by them, including Sativex and Epidiolex is expensive and does not work for many patients that it is produced “on label” for (such as MS or childhood epilepsy).
And then of course, the largest group of cannabis patients anywhere (chronic pain) have been explicitly excluded from the list of conditions cannabis can be prescribed for under public health guidelines in the UK. This, like Germany, has created a highly expensive system where those patients who obtain the drug on a regular (and legal basis) have to have both private healthcare and obtain help through private clinics. While there are several chain clinics now forming in the UK, this is not the same thing as “buying” patients in the thousands – the model seen in Canada from the beginning of 2014.
The market has a lot of potential, in other words, but like Germany, via very different paths to market than seen in Canada, in particular.
Why Is Canada Different? The development of the medical market came through federal change in the law around the turn of the century. Namely, after patients won the right to grow for themselves, via Supreme Court legal challenge, patient collectives gradually formed to grow and sell cannabis that was more “professionally” cultivated. This, in turn, became the right of private companies and indeed household names in the Canadian market saw buying patient pools as their path to financing on the equity markets as of 2014.
This is not widely popular within the industry. Indeed, the last legal challenge mounted by the industry to ban non-profit patient collectives fell apart in 2016 – the year that the larger Canadian companies began to look abroad to Europe.
It is also undoubtedly why, beyond the red tape they face in Germany and the UK if not across Europe, Canadian firms are looking to hybridize a model which worked well for them at least in the early days of capitalization of the private industry. And maybe Australia will be “it.” Stay tuned.
Project Yosemite, a cannabis product innovation and brand development company, announced earlier this month the appointment of Jennifer Raeder-Devens as their new Chief Scientific Officer. Raeder-Devens is a veteran of the MedTech industry, working for companies like Becton Dickinson, Cardinal Health, Medtronic and 3M.
Prior to joining Yosemite, she was the Vice President of Research & Development at Becton, Dickinson, where she oversaw product development and technology strategies to launch infection prevention products including the ChloraPrep first-in-the-US sterile solution patient preoperative topical antiseptic. She was previously the Vice President of R&D, Strategy and Innovation at Cardinal Health. She’s also held roles at Medtronic, 3M Drug Delivery Systems and 3M Skin Health Division and she has a number of patents in drug delivery and medical devices.
Jennifer Raeder-Devens, Chief Scientific Officer at Project Yosemite
In November of 2018, Project Yosemite launched their first product, OLO, which is an infused, controlled-release sublingual strip. Part of Raeder-Devens’ new role at the company is the continued development and expansion of the OLO sublingual strip technology platform. Andrew Mack, CEO and founder of Project Yosemite, says he’s thrilled to have Raeder-Devens on the team. “Jennifer is an extremely accomplished scientist and engineer with extensive experience driving innovation and R&D in the pharmaceutical and medical device industries,” says Mack.
We caught up with Jennifer over the phone to talk about her background in the MedTech space, why she decided to jump ship to join the cannabis industry and what she’s excited to work on now.
Cannabis Industry Journal: Can you tell us about your background, including your work with 3M and Medtronic?
Jennifer Raeder-Devens: I’m coming directly from Becton Dickinson, a global med tech company, where I supervised the development of drug-device combination products for topical antiseptics. I spent about 10 years there, mostly in topical drug and combination product development. Prior to that, I was at 3M and Medtronic working in drug-device combination products. At 3M, I was supervising a team of technology developers for the 3M Drug Delivery Systems business. I had experience working with designing and manufacturing transdermal, nasal, buccal and inhalation drug delivery mechanisms for pharmaceutical partners.
I worked on implantable drug delivery systems at Medtronic, which included working on the biocompatibility of things like pacemakers and drug infusion pumps and optimizing them to reduce infection and enhance healing after the implantation procedure.
CIJ: What made you consider joining the cannabis industry?
Jennifer: With my work in topicals, transdermal and inhalation drug delivery, I had an easy understanding of the different routes of administration we see today in the cannabis industry. And so, from the technology standpoint, I thought this was a place I could contribute to immediately. And then what got me really excited about it was thinking about cannabis, and just like any other drug, with oral drug delivery, you’ve got first class metabolism and side effects from the 11-Hydroxy-THC that are undesirable and you’d rather not have delivered through the gut.
OLO sublingual strips have a 10-minute onset time
I got excited when I saw the development of things like sublingual strips that were focusing on alternatives to smoking that would preserve that relatively fast onset and mitigate some of the side effects of edibles.
The other thing I really like about the cannabis industry: Previously I have been very focused on known drugs that are already approved and repurposing them into a new delivery system. What really interests me about the cannabis industry is the active cannabinoids and terpenes are somewhat known and somewhat unknown, so there is this really interesting challenge there of trying to separate the wheat from the chaff in terms of producing therapeutic effects.
It is a really interesting space where the indications of certain molecules are evolving along with the delivery technology. So, it is a really exciting and eye-opening way to take the next step in my career and have this wide-open space in front of me, both in terms of the different cannabinoids, their effects and the delivery systems we can use.
CIJ: How might you be prepared, given your background, for some of the challenges in the cannabis space?
Jennifer: I think the challenges in cannabis delivery are not different from the challenges in pharmaceutical drug delivery. It’s just that we have this additional complexity of the entourage effect. We can be engineering not just the main ingredient of THC, but also all the other cannabinoids and terpenes. So, for example, with my background in infection prevention, we build a product that we know reduces the risk of infection, but we are really challenged to actually prove it reduces the risk of infection. We have a similar situation in the cannabis industry, where we can get the THC, or CBG or CBN where we want it to go, but then we are really challenged to figure out how we can find, what we call in the pharmaceutical industry, a surrogate end point for efficacy, so that we can test that product and really believe that when we put the product on the market, even though we haven’t tested thousands of users or conducted large randomized clinical trials, that the effect will be shown. We are networking and partnering with a good scientific community to build the right product and do some testing at a small scale that really demonstrates the product achieves the effect that we are really looking for.
CIJ: Can you tell us a little about your new role with Project Yosemite?
Jennifer: My job description falls into three buckets: The first part is that we are forming a scientific advisory board and we are working with some of the leading cannabinoid researchers around the country and around the world. These are the people identifying whether or not certain cannabinoids could reduce cancer cell metabolism or whether cannabinoids contribute to weight loss or diabetes control and other things of that nature. We are trying to reach as far upstream as we can to grasp the emerging understanding of the performance of cannabinoids and terpenes in the endocannabinoid system. So, part of my job is to chair that scientific advisory board, get the thought leaders together in the room and have them bring their knowledge and explore with our own knowledge what cannabis can really do.
The OLO sublingual strips
I have worked in topical, transdermal, buccal, nasal, inhalation drug delivery. In the second bucket of my job, we are trying to understand a given indication or experience that our users want to have, what would be the right route for them. We are challenging our sublingual delivery mechanism to see how fast of an onset we can really get. Right now, we are at 10 minutes for drug delivery in sublingual and we are still trying to get an even faster onset time for the sublingual strip.
For other indications, like chronic pain, we may want to think about a sustained release, so sort of aligning the different indications with which different cannabinoids and terpenes will work for it and see which delivery platform will work for what we are trying to accomplish in each indication. So, we do not plan to remain solely a sublingual strip company, but will build out additional delivery platforms as we develop new indications.
Right now, we are working upstream with the growers and the processors to get cannabis oil and extracts. Some of the growers are working on different genetics in their cultivars to grow plants that have different ratios of different cannabinoids that we know from the emerging research will have an impact on people’s experience. Now we are working with growers to really get ahead of the curve on how to formulate products with various cannabinoids.
We have an R&D team in house that I supervise. We are always working with our production team to make small improvements such as the faster onset and the dissolution rate and things like flavors, which covers a downstream focus as well.
For those in the cannabis industry who have missed the latest “Trump Trade Deal“- this time with the UK, don’t slumber too long before at least getting a summary update soon.
The implications of the agreement, which U.S. President Donald Trump sees as great for business (namely increasing access to the UK market for pricey U.S. pharmaceuticals) are not uniformly welcomed everywhere, and for various reasons.
President Donald J. Trump Image: Michael Vadon, Flickr
The impact, however, on the U.S. cannabis industry, and beyond that, both the Canadian and burgeoning European one, will be significant, no matter what happens with the details of Brexit. There are a number of scenarios that might play out at this point. And how they do will certainly direct the future of the cannabis industry as it develops in the UK.
The one piece of good news out of all of this is that the industry will also certainly continue to flourish no matter what- and no matter where the product comes from. Even a hard Brexit will not roll the prohibition clock back.
Brexit Might Not Happen
There is this recurrent fantasy still in the room that the status quo will be retained just because (fill in the blank), but generally motivated by facing realities caused by basic survival. Let’s indulge it for a moment, presuming that British Prime Minister Theresa May does not survive her leadership post and Parliament comes to its collective senses. All of the splits right now in both the Labour and Conservative parties over the looming disaster continue to complicate things. Failing a hard Brexit disaster, however, look for things like “customs unions” and all sorts of “exemptions” to make the entrance into the UK for European food and medicine a permanent backstop. See the just announced Belgian-based emergency supply drop and alt import routes into the UK as just one example of what is likely to develop no matter what. This will also conveniently prevent the UK from starving and running out of medicine.
The Brexit Referendum Image: Mick Baker, Flickr
In other words, the trade deal will not do much to those cannabis firms who get into the market and reach end users with highly competitive pricing and smart entry strategies. U.S. producers and Canadians importing product across the Atlantic will lose on price to both homegrown British, Irish and EU produced crop. European producers will be far more competitive than U.S. firms just because pre-negotiated drug prices are not going anywhere anytime soon in the rest of Europe.
March Madness On the EU side of things, countries are prepping for worst case Brexit. It is, after all, just next month. Which is now less than a week away from starting. This means that anything related to ex-im, no matter the “trade deals” in place, is going to face delays, problems and paperwork of the additional kind. Inevitably. Even if it is just confused customs personnel uncertain of the new rules. Whatever those are. Or even if there are new rules and routes. Borders, even without walls, are respected at least in Europe.
Short of dedicating the new runway at Heathrow exclusively to food and drug imports of the emergency kind, however there is no way to avoid a few predictable and looming shortage crises. There is friction in other words, in every direction. Cannabis producers will not get a pass.
The Deal Is Aimed At Destroying The NHS On the British side of the discussion, the new UK-US trade deal has not been popular since it surfaced last summer. Why? The government would either significantly water down or lose entirely the ability to pre-negotiate drug prices in bulk (and thus hold drug company profits down). That means no more “public” health care. That alone may cause social unrest. Particularly given the shrewd marketing of the Leave Campaign that promised to “save” the NHS. Perhaps the criminal inquiries into the politically dodgy social media campaigning and fundraising techniques used to trigger the entire mess will manage to do in the courts what Parliament so far refuses to face. Then again, maybe not. American cannabis producers in particular face no particular “wins” here in the current regulatory environment. Cost is still going to be an issue.
The Business Bottom Line Beyond the morality of this (let alone Trump or Brexit beyond that) there is the business analysis of the deal. It could well be good for some American pharmaceutical companies, although that is still a big if along the other ones. People have to be able to afford their meds, particularly if the NHS (or private insurers) do not pay.
That does not count out the cannabis industry at this point. See Tilray, for starters. Also remember that the first details of this deal began to be discussed last summer – right before GW Pharmaceuticals began exporting Epidiolex into the U.S.
Cannabinoids, in other words are already in the room, and might in fact have been a figleaf gesture, President to Prime Minister, where at least in the latter case, May has now personally benefitted financially, all along. No matter what happens with Brexit. Or even if there is one. This is not the first time Trump has used the cannabis card to further political means. See the delay of Israeli cannabis to the global market for two years in exchange for moving the Israeli capital from Tel Aviv to Jerusalem just one year ago.
The U.S. and Canada Still Face Stiff EU Cannabis Competition How well will American (or only Canadian based producers) compete with EU-produced medical cannabis? That is now a very interesting question, not only for the European-based cannabis market but that based in the UK. It is hard to imagine pharmaceutical cannabis produced in either the U.S. or Canada right now competing with that which is more locally grown. Even the big Canadian LPs have conceded to that. Canopy, let’s not forget, is growing in Spain. Tilray is in Portugal. And that by now, is just the tip of the iceberg. Not to mention, of course, that the UK just saw its first bulk import from Holland.
Bottom line, no matter how proud President Trump and the PM are over their “deal” and indeed, whether the larger disaster will actually occur to trigger it, end users also known as patients are going to look for options based on price and accessibility. And the companies who succeed here are going to have to look for ways to address that.
On December 28, 2018, Canopy made the unsurprising announcement that it would begin exporting medical cannabis to the UK. The move comes shortly after the formation of Beckley Canopy, the research effort founded in partnership with the Beckley Foundation and Amanda Fielding, the woman who has continued to pioneer the field of cannabinoid research, and the announcement that Canopy will jumpstart medical trials here.
The two events are also connected, as the company will most likely start its export direct to the trials now planned and in general for research purposes as well as pharmacies, based on doctor’s orders.
Impact On The UK Market
Canopy of course, is now in a race with several other Canadian firms to establish market presence both on the trial and patient front. Tilray, Namaste and Wayland Group have all lined up to enter the market, if not having secured first patient orders. That said, entry will be slow for all, namely because of import regulations that may well still go off the cliff because of Brexit.
Intriguingly, however, the Canadians are not the only ones now in the ring. And the “Irish Question” is becoming even more of a potential source of cannabis. That became obvious in the aftermath of an announcement for additional funding and a 25% equity stake in Dublin-based Greenlight Medicines by SOL Global, a Canadian-listed company. Greenlight has already established an extensive network of not only researchers but has a reach at this point to over 1,000 pharmacies across the UK and Ireland.
Bottom line? Look for discussions on access to be fundamentally caught up in the impending, larger political discussions that are still deadlocked, with no certainty in site.And while so far at least, Scotland has remained quiet on the discussion, along with Wales and Cornwall, these are also places domestically in the UK where there could be new cultivation operations coming shortly.
Why? Wales is the “duchy” of none other than the Prince of Wales, Charles, the man who will be the next king of England. For most of his life, he has been pilloried for his ideas about alternative healthcare and organic farming. However, he also owns vast lands in Wales that support him, supported by rents, that are likely, in the near future, to switch to cannabis farming. Whatever reluctance he might have had to take the plunge, this is likely to change course with the next generation when he becomes king. Oversight of the management of all of this bounty will switch to his son, William. And this is a no-brainer, beyond of course, the fact that his sister-in-law, the Duchess of Sussex (Meghan Markle) already has a cannabis brand named after her.
Apart from this political and Royal twist, look for cannabis farming to occur in places like Cornwall, which has temperate weather brought by the Gulf Stream, a tourist economy and a desperate need, like many parts of the UK, for urban renewal. A high tech, high worth agricultural injection, in other words, is just what these parts of the country need.
Scotland, still, is an unanswered question mark, but it is unlikely that much growing will occur in the northern climes. That said, with cannabis production (of all sorts) beginning to wake up, there is no reason that the processing question will escape this part of the British Isles.That also means that calls for domestic cannabis to be grown in the UK itself could become much louder.
What Impact Will Brexit Really Have On Cannabis?
There is no way to really understand this question until the dust settles with negotiations that now have the potential to disrupt all trade between the UK and the rest of the world, including the Republic of Ireland. Ports and transportation through them are facing major disruption. Preparations for an off the cliff exit far beyond cannabis, have also been repeatedly criticized as being far too little, too late.
Bottom line? Look for discussions on access to be fundamentally caught up in the impending, larger political discussions that are still deadlocked, with no certainty in site.
That also means that calls for domestic cannabis to be grown in the UK itself could become much louder. Along with an impetus for greater reform.
Regardless, this drug, so often just below the surface of international affairs for so long, is clearly going to be in the room in larger political discussions now unfolding in the UK.
Impact On National Healthcare
British people, since the end of WWII, have had access to free healthcare thanks to the NHS. That said, after a decade of austerity, the system is now facing crisis unseen since the war. There are 100,000 doctor vacancies at the so-called “Trusts” across the UK which manage regional healthcare. Waiting times even for lifesaving operations are at an all-time high. And approvals for drugs, especially like cannabis, which fall into the territory of “special approval” across Europe are also caught in the mix.
As in other countries, in other words, while the news of exports beginning to enter the market is good for patients and the industry beyond that, it is just a start to a longer battle that is still playing out across Europe.
That said, there is another issue in the room that is also absolutely on the table and will be part of the medical cannabis conversation going forward. Digital healthcare–and of all kinds–is being touted as the solution to doctor and service shortages. Look for innovative cannatech solutions in particular that target this market in particular, in the near future.
In the meantime, the green trickle has begun. That said, given all that is at stake and on the table, there are many questions in the room about when the flood will actually take off.
Two reports published by short selling stock firm Quintessential Capital Management and forensic investor research firm Hindenburg Research on December 3, charges that Canadian LP Aphria, has bought overinflated assets in Latin America and in Florida from shell companies owned by company insiders. Added to the lingering controversy is the purchase of the German Nuuvera this spring (a company also partly owned by Aphria brass), and the reports went over like a bombshell. Globally.
However, the story has already spread far beyond one company. And the response in the market has rocked the industry for most of December.
The response by the firm? A promise of an immediate line-by-line rebuttal, due out in the second week of December. So far, however, despite news of an additional Aphria purchase in Paraguay, the rebuttal report has not been issued.
Why Is This So Damaging? Or Is It?
Aphria’s stocks promptly took a dive that halved their value although they began to recover after Aphria management appointed an independent third party firm to review the claims.
Worse, however, the entire industry saw a hit too. This report affected investor confidence across the industry. And although the hit appears to be temporary, the unfolding scenario is a perfect example of why volatility in the market is scaring away not only more conservative female retail investors but larger institutional ones that the industry is now courting assiduously as medical cannabis begins to be integrated into health systems particularly in Europe.
Why?
Bottom line? As the big cannabis companies are listing on the larger, foreign exchanges, including the NYSE and Deutsche Börse, the scrutiny is getting more direct and granular.Despite the stratospheric market caps of all the major Canadian LPs in particular, not to mention enormous expenditures for the last several years (on property and other acquisitions), the revenue picture, as other stock analysts and publications such as the normally neutral Motley Fool recently pointed out, at least so far does not justify the same. Bulk sales to a hospital, establishing a cultivation or processing facility or even getting import licenses may set one up to do business however, but it is not an automatic route to ongoing and expanding sales. And that is the key to high valuations that are rock solid and beyond the scope of such allegations.
For the moment, that pressure, particularly in global medical markets, is falling first on patients if not doctors. Not the industry.
That said, this has been a major building year. Recreational cannabis has just become legal in Canada. And in Europe, reform is still in the process of happening.
It is also a charge if not frustration that has been growing, however, against all the public cannabis companies as valuations shoot into the stratosphere. Forensic and investigative firms, particularly in Europe and the United States have been focusing on the industry for close to a year now. As a result even when firms successfully rebut charges of fraud, they are looking at different valuations from analysts at least in the short term.
Bottom line? As the big cannabis companies are listing on the larger, foreign exchanges, including the NYSE and Deutsche Börse, the scrutiny is getting more direct and granular.
Are “Short Seller” Reports Unbiased?
For all of the focus on short seller reports in this industry, however, no matter the accuracy of some of their claims, here is the next issue:
Short sellers make money by betting against not only individual firms but the industry itself. They benefit financially in other words, from volatility in the market and arbitraging even small changes in price. Even if their reports cause the same.
Such reports as a result are also not “unbiased” as industry coverage in the press is supposed to be, no matter how much more time sometimes goes into the reporting and preparation of the same.
And no matter that this industry is now going into its fifth year, there is still lingering scepticism that, in the case of Aphria, has so far not only fallen on the individual firm in question, but then rebounds across the industry, unfairly hurting all firms in this space.
It is official. British doctors as of November 1, 2018, can now write prescriptions for medical cannabis. But what does that really mean? And is this truly a victory or merely an opening in the fierce resistance to and outright battle against cannabinoids as medicine?
A Real Victory Or Another Stall?
Many in the advocacy community in Europe are profoundly split. On one hand, yes, the British decision, like other sovereign medical cannabis reforms in Europe over the last two years, is a victory. The British government, like many before it, has thrown in the towel on denying basic access to medical cannabis. But what does this mean, especially in a country which may well be facing shortages of basic food products and other kinds of medications in under half a year if things continue to blow up on Brexit and there is no “people’s vote” to save the day?
Cultivated product would, normally, be slated to come from Portugal and Spain where Tilray and Canopy in particular have set up cultivation centers. If things continue to head to a negotiated Brexit, it is inevitable that imported cannabis would fall into the same category of everything else set to come into England by boat or lorry. It is highly unlikely that the NHS would authorize full payment for cannabis flown in from Canada. Especially with British Sugar’s existing cannabis plantations in Norfolk as well as the budding cultivation deals now finally flowering all over the country if not in Ireland.There are many who expect that medical cannabis will actually save public healthcare systems a great deal of money.
Brexit Is The Bigger Worry, So What About Cannabis?
It may also seem to some that access to cannabis is the least of the country’s worries. Actually this is a discussion deeply embedded in the politics and drama in London and Brussels right now. It is also at the heart of Brexit itself. Namely the propaganda associated with European divorce that ran along the lines of “saving the NHS.”
In fact, the legalization of medical use in the UK, just as it is in countries across Europe (Germany being the best and most current ongoing example) will do much to shine a light on how creaky and outdated the medical provision system really is here. Especially when it comes to approving new drugs for large numbers of people quickly. This was, ultimately the goal of public healthcare. See penicillin, not to mention most inoculation drugs or vaccines for childhood diseases (like Polio).
One of the great ironies of cannabis legalization in Europe of course is that it is also often shining a light on how far this concept, not to mention funds for proper delivery, has been allowed to lapse. There are many who expect that medical cannabis will actually save public healthcare systems a great deal of money. That is if it can finally make its way into widespread medical distribution.
And cannabis is a drug like no other. Why? Despite all the pharmacization of the plant that is going on right now as producers are being forced to produce pills and oils for the medical market, cannabinoid treatments will not be pushed so easily into “orphan” status – since whole plant products can treat a range of diseases. This is important in terms of supply and negotiated prices down the road. But in the short term, cannabis is falling into a couple of strange categories created by organized public healthcare, insurance mandates (both public and private), the demands being placed on producers in this space to act more like pharmaceutical companies, limited public spending budgets, and a changing demographic where chronic conditions treated by cannabis are a whole new ballgame. Namely patients are living longer, and not necessarily old.
So while it is all very well and good for British doctors to begin to write prescriptions for cannabis, merely having one does little good for most patients. In fact, this usually means the battle is only half won.
Why?
National Healthcare Is Still Functional In Europe
As foreign as it is to most Americans, most European countries operate more or less the same way when it comes to healthcare. First of all, all of the national systems in operation in Europe today, including the UK, were set up in the aftermath of WWII to recover from devastation most Americans, especially today, never experienced personally.
These healthcare systems were set up to first and foremost be inclusive. In other words, the default is that you are covered. 90% of populations across Europe in fact, including the UK, are covered by their national healthcare systems. “Private” health insurance actually only covers about 10% of the population and in some countries, like Germany, is mandatory once annual income rises above a certain level.
However this system is also based on a very old fashioned notion of not only medical care, but treatment of chronic conditions. Namely, that most people (the mostly well) face low prices for most drugs. Further, the people first in line to get “experimental” or “last use” drugs (as cannabis is currently categorized in Europe no matter its rescheduling in the UK), are patients in hospitals. With the exception of terminal patients, of course, that is no longer the case.
Patients in the UK can expect to face the same kinds of access problems in the UK as in Germany.That is why, for example, so many disabled people began to sue the German government last year. They could not afford treatment until their insurer approved it. Monthly supplies in legal pharmacies are running around $3,000 per month for flower. Or about 8 times the total cash budget such people have to live on (in total) on a monthly basis.
In fact, because of this huge cost, approvals for drugs like cannabis do not actually happen at the front line of the insurance approving process, but are rather kicked back to regional (often state) approvals boards. As a result, approval for the right to take the drug with some or all of the cost covered by insurance, is actually limited to a much smaller pool of people right now – namely the terminally ill in hospital care. In Germany, the only people who are automatically approved for medical cannabis once a doctor writes the prescription, are the terminally ill. For everyone else it is a crapshoot. Between 35-40% of all applications in Germany are being turned down a year and a half into medical legalization. Some patients are being told they will have to wait until next year or even 2020.
And once that prescription is actually approved? Patients in the UK can expect to face the same kinds of access problems in the UK as in Germany. Namely pharmacies do not readily stock the drug in any form.
In the meantime, patients are turning back to the black market. While the online pharmacy discussion is different in the UK than Germany, which might in fact make a huge difference for the right approvals system, most patients in the UK still face a long fight for easy and affordable access covered by public healthcare.
Disclaimer: Marguerite Arnold is now in negotiations for a pilot of her digital prescription and insurance pre-approvals and automization platform called MedPayRx in several European countries including the UK, Germany, and a few others.
In a move that seems to shed more doubt than certainty on domestic cannabis cultivation and the date that it will start auf Deutschland, the Higher Regional Court (or OLG) in Dusseldorf formally stopped the pending bid procedure for the first crop on March 28th. BfArM, the federal agency in charge of regulating all narcotic drugs, initiated that procurement bid. The tender bid was launched after the German Parliament and federal legislators changed the law last year to mandate that cannabis be available via prescription, and further that public health insurers were required to cover it.
That bid announcement was supposed to come as early as last September. Criticisms about the process and requirements began immediately thereafter. For starters, the bid’s requirements excluded all German-only respondents to the bid and left both Canadian and Israeli firms in the front positions to obtain these valuable licenses. However, there were other gripes, including the fact that the amount of cannabis requested (about 6.6 tonnes) was far too low to even begin to meet real demand. Namely, there are easily 1 million German patients who could qualify for the drug.
In the space of the last year, in fact, the number of “official” German cannabinoid patients has shot up from 1,000 to about 15,000. That said, the top three covering insurers also report a mere 64% approval rate. This means that there are more doctors writing prescriptions than insurers are covering.
That, at least for patients and their advocates is a bit of good news despite the blow that any delay in domestic production has created. Doctor resistance to prescribing cannabinoids even when there are no other alternatives has been used as an excuse in many media reports for the speed of market development. That clearly is not true. The attitude on the ground in Deutschland is rapidly changing.
That bid announcement was supposed to come as early as last September. At that point, however,the agency was then forced to extend the response date, which it did, but apparently not for long enough.
Throughout the fall, it was impossible to understand, from any direction, what was going on. Four lawsuits against the bid were launched around September, each with differing complaints that ranged from criticizing the agency for the lack of extension and response time to monopolistic business practices.
The OLG dismissed all but the criticism about the extension.what this decision has done most clearly is slowed down the production of domestically grown medical cannabinoids
The one clear thing to come out of Düsseldorf? BfArM has been banned from awarding its contract to anyone to produce medical cannabis in Germany starting in 2019. The first letters to bid finalists announcing the bid had been canceledbegan arriving the day after the court’s decision.
Reading Between the Lines
There have been rumors since last fall that the bid would end up in such waters. However,all the major producers widely suspected to have applied for the bid also began announcing themselves as finalists in press releases. For this reason, the official line from everyone that the bid was still, in fact, on track.
Nobody could understand why anyone would want or even be able to halt the production of direly needed, locally sourced, high-gradecannabis. That includes BfArM, which made an impassioned response, via their attorney to the OLG in Dusseldorf. Attorney Heike Dahs warned the court that any interruption of the bid was “very bad for the care of patients.” He was similarly pessimistic about the ability to begin production domestically by the previously set 2019 deadline.
In fact, what this decision has done most clearly is slowed down the production of domestically grown medical cannabinoids (although potentially not by much) while giving officials at BfArM a rather nasty black eye that might yet lead to further legal action.
It also means that there will be another bid process. In the meantime, the ex-im market is, if anything, taking off.
This is a Shock And Opportunity – but not a Surprise
No matter the opinionated emails and IM’ing going on in several languages all over the world right now about the implications legally in the future, the major producers are all taking this in stride. And appear to be well positioned to respond.
According to Dr. Pierre Debs, the managing director of Spektrum Cannabis (the global medical brand of Canopy and based just south of Frankfurt), who responded to CannabisIndustryJournal a day after the court decision, the company is not affected by this development. “Spektrum has a steady and constant supply and we do not anticipate any problems supplying patients through their pharmacies,” he says. Debs received the first German medical import license to bring Canadian cannabis into the country a mere two years ago and has continued to carve a leading path in the discussion across Europe. “In addition to our supply from Canopy Growth Corp, our partnership supply agreement with Alcaliber in Spain will see Spektrum importing sun-grown medical cannabis products starting towards the end of the summer,” says Debs.
Dr. Pierre Debs, managing director of Spektrum Cannabis Photo: ICBC, Berlin
But it is not just the big guys in the mix anymore. And there are many who see opportunityto a situation, which is frustrating.“As the second-largest country by population in Europe and a leader within the EU, the German market represents a new frontier for the cannabis industry in general in the region,” says Zlatko Keskovski, chief executive officer of NYSK Holdings, a Macedonian firm now in its second harvest of GMP-certified cannabis and holding EU export rights.
For such firms, even though NYSK is a surprise entrant to the conversation this year and outside the EU, the current situation represents an unbelievable chance to enter a market literally starving for qualifiedproduct. The firm is currently looking for German distributors who cannot access medical grade cannabinoids via other routes including attending the ICBC in Berlin in April. “This year’s ICBC looks to be a seminal moment for NYSK,” says Keskovski. “We have taken the appropriate steps to ensure our high-quality standards have led to products that our customers, and eventually patients, can rely on. We look forward to the chance to showcase our achievements that we’ve worked so hard for. The ICBC will also present us with the opportunity to meet with potential distributors and future partners.”
German Patients are Going to be on the Front Lines of This Discussion
The difficulties that German patients have already faced in obtaining a drug that is now legal in their own country for medical use (and even for recreational purposes across an open border in Holland) are legion. While to a certain extent, German patients are in the same boat as patients elsewhere and their problems, in fact, there are still huge access issues that remain. For starters, the drug is much more expensive here, so those without health insurance approval face bills of about $3,000 per month. Why the eye-watering price? All medical grade cannabis is still imported, although increasingly this is now just via other EU countries, not just from Canada.
“One of the reasons we organized the national German Patient Roundtable is to give patients a voice in all of this supply and demand discussion and to help BfArM and others formulate workable solutions for all,” responded Philip Cenedella IV when reached for a response by CIJ. Cenedella, an American expat and the organizer of the Roundtable, a nationally focussed, umbrella group that is kicking off its campaign this year, spoke for many who are far from court and boardrooms where the decisions are being made.
Philip Cenedella, pictured left, at the Deutsche Hanfverband (DHV) conference in Berlin last November. Photo: @MedPayRx, Instagram
“While there are very talented firms who will now take up this discussion with the government and reissue a response for the tender, what we continue to see on the ground is that patients simply do not have the access granted them in the law which was passed over a year ago,” Cenedella says, with more than a note of frustration. “We again are calling on all government officials, industry executives and patient advocates to band together to immediately establish workable protocols that directly help the patients.”
Indeed, despite the frustration and delay, if not new costs and opportunities that this decision creates, one thing is very clear on the ground here. The current status quo is unacceptable. That alone should also put pressure on the powers that be to remedy the situation as quickly as possible. And via several routes, including widening import quotas or even issuing new licenses as a new solution to domestic cultivation is implemented.
“Patients are not being served and do not have access to a medicine that has been proven to improve lives,” says Cenedella. “Our simple request is for BfArM to finally invite patients into their discussions, to work with patients to formulate workable cultivation and distribution solutions, and we humbly request that this happen now before they go down another dead-end road, ending in another court defeat, and resulting in even more delays to the patients that are still lacking the care afforded them by the German Federal Court’s decision of 2017.”
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And cannabis is a drug like no other. Why? Despite all the pharmacization of the plant that is going on right now as producers are being forced to produce pills and oils for the medical market, cannabinoid treatments will not be pushed so easily into “orphan” status – since whole plant products can treat a range of diseases. This is important in terms of supply and negotiated prices down the road. But in the short term, cannabis is falling into a couple of strange categories created by organized public healthcare, insurance mandates (both public and private), the demands being placed on producers in this space to act more like pharmaceutical companies, limited public spending budgets, and a changing demographic where chronic conditions treated by cannabis are a whole new ballgame. Namely patients are living longer, and not necessarily old.
