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.
About 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.”
In a press release published, last week, Perry Johnson Registrars Food Safety, Inc. (PJRFSI) announced they are now officially the first certification body to be granted accreditation for cannabis certification in the United States by ANAB.
PJRFSI has developed a cannabis certification standard that uses GMP- and GAP-based scheme to help growers, manufacturers and retailers meet a wide range of different state regulations. The goal of the standard, according to the press release, is to provide guidelines for cultivation, manufacturing and retail best practices across the country.
Because each state has very different rules and requirements for cannabis companies, the certification requirements can be confusing and vary widely from state to state. With the release of this new standard, PJRFSI wants to simplify cannabis markets in the United States and hopefully get various states on a same or similar page.
According to Terry Boboige and Lauren Maloney, president and accreditation manager at PJRFSI respectively, they have a lot of hope for what the future holds in terms of unifying cannabis rules and requirements. “The team at Perry Johnson Registrars Food Safety Inc. is incredibly excited to be the first company in the United States to achieve formal accreditation for our Cannabis and Hemp Certification Program,” says Boboige and Maloney. “We believe this nationally-recognized program will help the budding cannabis and hemp industries to strengthen, legitimize, and separate themselves from companies that do not have formal certification. Certification to this standard will forever help enhance companies’ image, credibility, and reliability. Accredited certification exemplifies to the public that certified organizations who supply cannabis and hemp products and services have internal safety systems that can inspire confidence.”
With the rapid expansion of the cannabis industry in North America, there are more questions than ever about the safety and integrity of the new products constantly flooding the market. It seems as if there’s something new hitting store shelves every day, and as legalization spreads across the United States, the market is widening to an increasing range of consumers. But just how safe are all these new products? With regulations and requirements varying state to state, how can new medical and recreational users be certain of a product’s potency, safety, or other qualities?
Certification of products is a likely answer. Much like how requirement of food safety standards has helped ensure produce and manufactured foods are safe to eat, a cannabis safety standard can help guarantee a safe, thriving industry. Perry Johnson Registrars Food Safety, Inc. (PJRFSI) now offers specialty certifications to cover all facets of the cannabis industry, based on successful food, agricultural and pharmaceutical safety certifications. From growing and harvesting to production or extraction, there are streamlined and effective resources available for everyone.
Since requirements vary so widely from coast to coast based on state mandates, PJRFSI cannabis certifications are custom-tailored state by state, and based on Good Manufacturing Practice (GMP) guidelines. In addition to this fully-customizable approach, PJRFSI is part of a family of companies that have worked with cannabis testing lab accreditation for years; numerous producers have already partnered with PJRFSI to develop their own custom cannabis quality audits. Not only have our specialists worked with producers and industry players, but with state regulators and lawmakers as well in providing input for cannabis program implementation. Download the PJRFSI standard for free today!
To learn more about designing your own customized cannabis quality and safety certification audit, or to hear more about just why PJRFSI certification may be the best option for your operation, give us a call at (248) 519-2523, or visit www.PJRFSI.com.
EVIO Labs Florida received their ISO 17025:2005 accreditation in February of 2018. Last week, EVIO Labs Florida announced via a press release that they completed their ISO 17025:2017 accreditation and received a certification from AOAC International. The accreditation helped them to further expand their testing scope to shelf life and stability testing, the ability to detect harmful bacteria and calculate degradation in samples.
The certification that they received from AOAC helps verify their ability to conduct accurate and fair 3rd party testing, meeting Florida’s requirements for the market. Back when the laboratory first started in 2017, there were no requirements for lab testing cannabis products under Florida’s regulations.
Upon expanding to their Gainesville location in November last year and getting accredited to ISO 17025:2017 last week, EVIO Labs Florida expects the new location to be compliant and operational by April 2019, in preparation for the state’s new regulations. “Our team has worked diligently to maintain our stance as the Gold Standard in Cannabis Testing,” says Chris Martinez, co-founder and president of EVIO Lab Florida. “The ability to obtain the recent ISO 17025:2017 and AOAC certification is a testament to our dedication in maintaining public safety and product integrity in an ever-growing industry.”
Martinez is also presenting during the 2ndAnnual Cannabis Labs Virtual Conference on April 2, where he will discuss how EVIO Labs Florida began as a laboratory and how they were able to expand to a second location and grow their market presence in Florida. Click here to register for his talk.
With the cannabis industry growing rapidly, laboratories are adapting to the new market demand for medical cannabis testing in accordance to ISO/IEC 17025. Third-party accreditation bodies, such as Perry Johnson Laboratory Accreditation, Inc. (PJLA), conduct these assessments to determine that laboratories are following relevant medical cannabis testing standard protocols in order to detect potency and contaminant levels in cannabis. Additionally, laboratories are required to implement and maintain a quality management system throughout their facility. Obtaining accreditation is a challenge for laboratories initially going through the process. There are many requirements outlined in the standard that laboratories must adhere to in order to obtain a final certificate of accreditation. Laboratories should evaluate the ISO 17025 standard thoroughly, receive adequate training, implement the standard within their facility and conduct an internal audit in order to prepare for a third-party assessment. Being prepared will ultimately reduce the number of findings detected during the on-site assessment. Listed below is research and evidence gathered by PJLA to determine the top ten findings by clause specifically in relation to cannabis testing laboratories.
4.2: Management System
Defined roles and responsibilities of management system and its quality policies, including a structured outline of supporting procedures, requirements of the policy statement and establishment of objectives.
Providing evidence of establishing the development, implementation and maintenance of the management system appropriate to the scope of activities and the continuous improvement of its effectiveness.
Ensuring the integrity of the management system during planned and implemented changes.
Communication from management of the importance of meeting customer, statutory and regulatory requirements
4.3: Document Control
Establishing and maintaining procedures to control all documents that form the management system.
The review of document approvals, issuance and changes.
4.6: Purchasing Services and Supplies
Policies and procedures for the selection and purchasing of services and supplies, inspection and verification of services and supplies
Review and approval of purchasing documents containing data describing the services and supplies ordered
Maintaining records for the evaluation of suppliers of critical consumables, supplies and services, which affect the quality of laboratory outputs.
4.13: Control of Records
Establishing and maintaining procedures for identification, collection, indexing, access, filing, storage and disposal of quality and technical records.
Providing procedures to protect and back-up records stored electronically and to prevent unauthorized access.
4.14: Internal Audits
Having a predetermined schedule and procedure for conducting internal audits of its activities and that addresses all elements that verify its compliance of its established management system and ISO/IEC 17025
Completing and recording corrective actions arising from internal audits in a timely manner, follow-up activities of implementation and verification of effectiveness of corrective actions taken.
Laboratory management not ensuring the competence and qualifications of all personnel who operate specific equipment, perform tests, evaluate test results and sign test reports. Lack of personnel undergoing training and providing appropriate supervision
Providing a training program policies and procedures for an effective training program that is appropriate; identification and review of training needs and the program’s effectiveness to demonstrate competence.
Lack of maintaining records of training actions taken, current job descriptions for managerial, technical and key support personnel involved in testing
5.4: Test and Calibration Methods and Method Validation
Utilization of appropriate laboratory methods and procedures for all testing within the labs scope; including sampling, handling, transport, storage and preparation of items being tested, and where appropriate, a procedure for an estimation of the measurement of uncertainty and statistical techniques for analysis
Up-to-date instructions on the use and operation of all relevant equipment, and on the handling and preparation of items for testing
Introduction laboratory-developed and non-standard methods and developing procedures prior to implementation.
Validating non-standard methods in accordance with the standard
Not completing appropriate checks in a systematic manner for calculations and data transfers
5.6: Measurement Traceability
Ensuring that equipment used has the associated measurement uncertainty needed for traceability of measurements to SI units or certified reference materials and completing intermediate checks needed according to a defined procedure and schedules.
Not having procedures for safe handling, transport, storage and use of reference standards and materials that prevent contamination or deterioration of its integrity.
5.10: Reporting the Results
Test reports not meeting the standard requirements, statements of compliance with accounting for uncertainty, not providing evidence for measurement traceability, inaccurately amending reports.
SOP-3: Use of the Logo
Inappropriate use of PJLA’s logo on the laboratories test reports and/or website.
Using the incorrect logo for the testing laboratory or using the logo without prior approval from PJLA.
On Election Day, voters in California passed Proposition 64, establishing a recreational cannabis market and regulatory environment. While the state won’t issue the first licenses under the new regulatory scheme until 2018, the medical cannabis industry is already well established.
Steep Hill Labs, Inc., based in Berkeley, California, found in October that 84.3% of samples submitted tested positive for pesticide residue, according to a press release. The announcement came before Election Day, but is particularly eye opening given the massive new market created overnight by Prop 64.
Particularly concerning is their detection of Myclobutanil, which was found in more than 65% of samples submitted to the lab. According to the press release, when Myclobutanil is heated (i.e. smoked or vaporized), it is converted to Hydrogen Cyanide, which is extraordinarily toxic to humans and can be fatal in higher doses.
According to Reggie Gaudino, Ph.D., vice president of science, genetics and intellectual property at Steep Hill, their more recent study shows they detected pesticides in roughly 70% of the samples they received and 50% of those contained Myclobutanil. Gaudino says that up to a third of those samples would have failed under Oregon’s regulatory standards.
If a lab test were failed, it would contain pesticides at or higher than the required action level. Oregon’s action level, or the measured amount of pesticides in a product that the OHA deems potentially dangerous, for Myclobutanil is 0.2 parts-per-million (PPM). Steep Hill’s instrumentation has a method detection limit down to the parts-per-trillion (PPT) level, which is a more precise and smaller amount than Oregon’s action level.
“Those in the cannabis community who feel that all cannabis is safe are not correct given this data – smoking a joint of pesticide-contaminated cannabis could potentially expose the body to lethal chemicals,” says Jmichaele Keller, president and chief executive officer of Steep Hill. “As a community, we need to address this issue immediately and not wait until 2018.”
Potentially harmful pesticides, and specifically Myclobutanil, have been detected in Colorado and Washington’s recreational markets on a number of occasions, proving this is a widespread issue. Steep Hill’s release suggests that California regulators take a look at Oregon’s pesticide regulations for guidance when developing the regulatory framework.
What’s even more troubling is that not all laboratories have or had the capability of detecting pesticides at sufficiently low levels and because of this, other labs had significantly lower rates of pesticide detection, suggesting possible inconsistencies in testing methods, instrumentation, sample preparation or other variations. During a 30-day period in late September and early October, Steep Hill found, using publicly available data, or data from contracted testing, that other labs were only reporting between 3% and 21% pesticide detection.
It is important to note that those samples were not identical and there could be a great degree in variation on the quality of samples sent to different laboratories, so it is not an entirely accurate comparison. Steep Hill does however detect pesticides down to the parts-per-trillion level, whereas many common methods for detecting pesticides look at the parts-per-billion level.
Reggie Gaudino says the Association of Commercial Cannabis Laboratories (ACCL) is using this data to work with Steep Hill and a number of other labs to address these issues. “As a member of the ACCL, and after discussion with ACCL, we have agreed that all future discussion of this issue should not include laboratory names, as this is about educating the industry in general, and making sure all members of the ACCL are developing the best possible methods for detecting pesticides,” says Gaudino. “The ACCL has responded to this data, by inquiring on a larger, industry-wide basis, which represents a better picture of the issue, rather than only in California’s still-technically unregulated market.” The important message is this is a major issue that needs addressing urgently. “As such, the troubling issue remains, across the larger ACCL membership, there is still detection of pesticides in at least 50% of the cannabis being tested.”
According to Jeffrey Raber, Ph.D., president of the ACCL, the industry is experiencing a pesticide problem, but it is very difficult to quantify. “It is fair to say that around 50% of the cannabis being tested contains pesticides, but we really don’t know that exact number until a much more comprehensive statistical analysis is performed,” says Raber. “We agree this is a big problem and that it needs to be addressed, but we are not sure just how big of a problem it really is.” With so much variation in labs in a state where not everyone is required to test products, it is very difficult to pin down how consistent lab results are and how contaminated the cannabis really is. “If all of the labs had the same methodology, samples and shared statistical analyses for a real study then we can look at it closely but it seems we are a ways off from that. I can say confidently however that this is a pretty significant problem that needs addressing.”
Still, Steep Hill detecting pesticides in a majority of their samples and some labs finding as little as 3% should raise some eyebrows. “Unfortunately, our recent study discovered that 84.3% of the samples assessed by our triple quadrupole mass spectrometer contained pesticides,” says Keller. “As of today, this tainted product could be sold in most dispensaries throughout the state of California without any way of informing the patients about the risks of pesticide exposure.”
These findings could mean potentially enormous health risks for medical and recreational cannabis consumers alike, unless regulators, labs and growers take quick action to address the problem.
Last week, Steep Hill Labs, Inc. announced plans to expand on the East Coast, including licensing for laboratories in Washington, D.C. and Pennsylvania. The cannabis testing company now is operating or developing in seven states, the District of Columbia along with an official arrangement with a research university in Jamaica, according to Cathie Bennett Warner, director of public relations at Steep Hill.
The same team of physicians that oversees the Steep Hill laboratory in Maryland will operate the Pennsylvania and D.C. labs. Heading that team is chief executive officer Dr. Andrew Rosenstein, chief of the division of Gastroenterology at University of Maryland Saint Joseph Medical Center and assistant clinical professor of Gastroenterology and Hepatology at the University of Maryland Medical Center. Dr. Rosenstein has been recognized by Baltimore Magazine as a top doctor in the Baltimore area, according to a press release.
According to Dr. Rosenstein, they want to provide accurate clinical results for trials with patients using cannabis. “All clinical trials will require a competent, credible and reliable lab partner and that is what we are bringing to the field- and that is why we are working with Steep Hill,” says Dr. Rosenstein. With team members having backgrounds in pathology, molecular diagnostics, clinical chemistry, microbiology and genetics, it should come as no surprise that they plan to participate in clinical research.
Dr. Rosenstein’s vested interest in cannabis safety stems from prior experience with his patients using cannabis. “Over the past five years, we have seen an increased number of patients using cannabis, particularly for managing the side effects of Crohn’s disease and cancer treatment,” says Dr. Rosenstein. “They would bring it up to us and at the time I didn’t know much about it, but anecdotally it’s really clear that a lot of patients have great responses to it.” Not knowing much about the preparation or safety of cannabis at the time led Dr. Rosenstein to advise patients to be very careful if they are immunocompromised.
“When a patient is immunocompromised, a bacterial or fungal infection can be lethal, so because we had patients using cannabis, we wanted to make sure it was safe,” says Dr. Rosenstein. So when Maryland legalized medical cannabis, Dr. Rosenstein and his team saw the need to protect patient safety and Steep Hill was a perfect fit. “We really didn’t want to reinvent the wheel so we looked for someone to partner with,” says Dr. Rosenstein. “Steep Hill has the best technology and the best credibility and we didn’t want to compromise on quality and safety issues. They felt the same way so we partnered with them and culturally it has been a great fit.”
The new laboratories plan to offer a similar range of services that are offered at other Steep Hill labs, such as rapid potency testing for THC-A, ∆-9-THC, CBD, CBD-A and moisture. But Dr. Rosenstein sees clinical opportunities in the East Coast medical hubs. “We want to provide the testing component for studies, providing clinical reproducibility and consistency, and those are the things as a top-notch lab that we are interested in doing.”
With a physician-led group that has experience in molecular diagnostics, partnering with Steep Hill is about being medically focused, according to Dr. Rosenstein. “First and foremost, this is about patient safety.” Because of that, he emphasizes the need for required microbiological contaminant testing, particularly because of his experience with patients. “If you’re a cancer patient and you get a toxic dose of salmonella or E. coli, that can kill you, so testing for microbiologic contamination is of the highest priority.”
According to Warner, bridging the medical cannabis science gap with Steep Hill’s professionalism and experienced doctors practicing medicine is a big deal. “We are working very closely with their medical team to make sure these standards are medically superior,” says Warner. “To have these doctors with such a high level of knowledge in medicine working with us in cannabis analytics is a breakthrough.”
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