The Supreme Court of Canada today decided medical marijuana patients are not breaking the law when they process their medicine into oils, extracts, edibles, salves, tinctures and creams (and toothpastes and generic Rub-A535 and giant kitty litter-style weed beanbags that they can roll around in and anything else that floats your boat, medically).
For a half second, there was much rejoicing in the weedco community, because that side of the medicinal cannabis business is big stuff. Much bigger than selling jars of dried leaf.
But the devil is in the details – rather, the lack of detail, when it comes to actually producing and/or selling such products.
The courts, including the Supreme Court’s affirmation have said it’s fine for a patient to ingest their medicine as they please. Which is smart, because smoking is horrible. But it’s also counter to the Harper government’s stance that, just because the courts say patients should have access to weed, that such access should be simple, fast and patient-focused.
The courts have not directed Health Canada to open their licensing program to edibles. Thus, edibles remain illegal to produce for sale.
This won’t change the existing landscape one iota. Illegal dispensaries already sell edibles by the truckload, and those who have used them widely report their lack of reliability in delivering proper dosage.
A patient in Burnaby I spoke to just last night told me she has a bad back and buys edibles from Weeds dispensary, “But when I use them, I have to clear my schedule for the next day because there’s just no telling whether it’ll have no effect at all, or I’ll be completely useless the next morning. You can’t tell. I take a half dose just to be sure but sometimes nothing happens. Sometimes that’s too much and I’m stoned out of my gourd.”
For edibles and extracts to be reliable, they have to be properly regulated. And to be properly regulated, you need an organization likes (sadly) Health Canada to establish standards and rules and processes for proper licensing.
And Health Canada couldn’t give a shit.
So the new ruling is great for patients buying weed who can then take the time and effort to go home and do their own extractions and bake their own brownies, but licensed producers will still not be allowed to produce and/or sell them, dispensaries will still sell hand-made illegal products produced with illegally-sourced weed, and consumers will still be getting sometimes relief, and sometimes totally hosed.
But which companies are poised to jump in when Health Canada does (perhaps forced by more lawsuits) get its act together?
Licensed producers. All of them. They’ve all had one eye on the edibles and extracts space for a long time, and they all have plans to be first to market.
I spoke to Peace Naturals last week, and CEO Mark Gobuty told me the margins in extracts are so extreme as to make the existing business of growing and patient sourcing almost negligible by comparison. Tweed boss Bruce Linton made a plea during a Vegas weed convention earlier this year for ‘anyone’ who might be able to partner up on the value-add front to come find him.
Nutritional High (CSE:NHL, Forum) is the only Canadian company actively working in the edibles space, as it builds out a multi-US state strategy to do business in that much larger market. CEO David Posner told me this week that the company had no plans to do business in Canada while Health Canada was gumming up the works bureaucratically but that “once edibles open up, we’d be ready to get involved, either as a producer or as a partner for companies looking to produce.”
I tried to reach Posner again this morning for comment, but he’s buried in meetings, presumably about this very issue.
No public company has released any news relating to edibles and extracts at the time of writing, even to say they’d be totes into it. True Leaf released news to say they’re going to a weed convention. Lexaria put out news about a patent filing for some of their tech. Enertopia slung out a note yesterday about its ‘V-Love’ product that is a “sexual desire gel and personal lubricant for women.” But that’s it.
UPDATE: Sure enough, Posner just spoke to a Forbes contributor about edibles in Canada, saying, “This is monumental […] Another market the size of California just opened up for our products.”
UPDATE II: The news is out.
David Posner, CEO of Nutritional High commented – “We are very pleased with the Supreme Court’s decision to expand the definition of cannabis to include derivative products. Being a Canadian company, this inclusion presents new opportunities to Nutritional High at home, as marijuana-infused products and oil extracts are our core specialty. We will evaluate potential ways to leverage our expertise that we’ve developed in the United States in Canada, as the regulators implement additional licensing measures.”
NHL also announced a new inclusion on their board, with Bill Morrison coming aboard. His bona fides are substantial, especially in the growing, vaping and extracts businesses. Go see the news release for details; it’s worth it.
NHL has been busy, signing a licensing deal that gives them access to Jimi Hendrix branding, which the market basically ignored but has real potential to make a dent in the US market, and publishing a deep detailed update on their plans the day after. Clearly Nutritional High is sick of being ignored, and rightly so.
So with that, we switch to our fallback position here at the Medical Marijuana Update: rumor and innuendo.
Rumor has it, Golden Leaf is (finally) nearing their listing date. I hear maybe mid-month. But I’ve heard that a few times before. I’m eager to hear if their hockey stick earnings have continued in the last month or two since I first started talking about them.
Rumor has it, Tweed (TSXV:TWD, Forum) made a ‘low to mid’ 8-figure offer for another LP last month, but the offer was refused because it predominantly consisted of Tweed stock. The big boys are still looking to exploit their financial advantage, clearly.
Rumor has it, Naturally Splendid (TSXV:NSP, Forum) is talking to a big name about their pet products which, according to CEO Craig Simpson, have been “through the roof” in their early reception. The company has extended a pair of LOIs as they continue to do deals, and just raised $1.6m in the first tranche of their latest raise. A new ‘bulk ingredient’ arm will make great use of the POS Bio-Sciences facility they’re buying.
Rumor has it, another company met with NSP to talk about working together on the pet product front, but was politely refused when they suggested to NSP ‘just give us your brand, we’ll make it work and we’ll sling you a licensing fee.’
Rumor has it, Laguna Blends (CSE:GAD, Forum) is full steam ahead on its NSP-produced hemp coffee and hemp protein products. MLM big shots are all over the product, tapping into an existing sales network of thousands, globally. I’ve talked to some of them and they’re guys with serious track records. NSP is very happy with the deal.
Rumor has it, Cannigistics (TSXV:CYX, Forum), developers of software that ties weed grower/retailer/regulator software together to aid in compliance and tracking, is working with a significant weedco to pilot the software and ramp things up. They’ve finally cast asunder their Calyx Agri-Sciences past and remain an attractive market cap/share structure considering the work done.
Rumor has it, Pharmacan (TSXV:MJN, Forum) is looking to sell something in its portfolio, to show a significant return to investors and future targets. Not the worst strategy, if they can find a taker. They put out a corporate update last week with more detail on their activities. Share price and volume are looooooow.
Rumor has it, Richmond BC-based Medijean is being shopped. Well, that’s no rumor, it’s been shopped about for a long time. But it appears there may be a deal close to being done.
Rumor has it, three more licenses will be handed out this year, according to an in-the-know consultant I spoke to last week. He points to Supreme (CSE:SL, Forum) as being the most obvious candidate. Total speculation, but that’s the only name he’d give me and he has no association with the company I’m aware of..
Rumor has it, Lifestyle Delivery Systems (CSE:LDS, Forum) is insisting they’re walking right into revs on the CannaStrips front. I really like the product but I wanted to see some evidence of that, and quickly, because the public markets launch was disappointing in the extreme.
Well, their first MOU just landed in a licensing deal with Healthy Asylum, a Southern California outfit with the unfortunate initials of HA. (Shout out to the secret providers of most of Vancouver’s dispensary marijuana and ‘respectable club of motorcycle enthusiasts’)
Rumor has it, Peace Naturals backed out of their MedCannAccess patient network deal when Health Canada called and asked, “would you like to clarify your plans?” and followed that clarification with a “you might want to think carefully about those plans…” Which just goes to show there’s no good plan Health Canada can’t unravel.
Nearly two weeks back, at the Canvest2015 Cambridge House show weed panel, I was asked what I thought of the Cannabix Technologies (CSE:BLO, Forum) breathalyzer device. I said they don’t have a device, “they have a picture of what a device might one day look like.” That day, the company put out an update explaining that they were using a “methodical iterative product development process” and “moving to the alpha prototype stage.” Which, translated, means ‘yes, we have a picture of a device.’
There was a massive promo campaign on Cannabix in February which drove the stock up to stupid levels – levels that it hasn’t been able to maintain since and which, to me, will dog the company for some time as it tries to prove itself out as a legitimate outfit.
For the record, I like the business concept. Someone will have to solve stoned drivers eventually. But it will take – minimum – two years to get to anything close to a working model, assuming the tech really does work, so their stock chart is going to look like a downward slide for a long time.
This was – really – not the time to pump.
A company that could use a dose of Cannabix’s marketing budget is InMed Pharmaceuticals (CSE:IN, Forum), which has just been blitzing the market with positive news on new therapies in their pipeline, but hasn’t been able to inspire anywhere near the buying it deserves.
I took a bunch of it at near $0.30 and have watched it march back to as low as $0.16, a point where I tweeted last week that it was a silly buy at that price. It jumped back up to $0.20 shortly after, but has drifted again.
I can’t even begin to imagine how a company driving fast pharma development with next to no burn, with so much good news in a slow news cycle, with some of the smartest scientific minds in the country in the mix, can see that much market cap drift away.
There are some warrants making things difficult, but no stock in the space, for mine, is more undervalued.
Invictus MD Strategies (CSE:IMH, Forum) is starting to make a move. Volume building, price inching up regularly. Insider Brayden Sutton tells me he’s been eating any stock he can find under $0.15 and I’ve done likewise. The company brought on Neil Patel, a rock god in the online marketing world, to help ramp up traffic to the company’s Smokazon e-commerce portal. They also added some patents to their Future Harvest brand. Serious business.
Also at the Canvest2015 conference mentioned above, I told the audience The Hydropothecary (CSE:THC, Forum) had been told they had their full MMPR right to produce AND sell, finally. Beat the official news release by a few days, because that’s how I roll. THC is now offering non-rockstar pricing on some of its product, but maintains they’re looking to be the Greygoose of Canadian weed, and they’re reaching out to some very wealthy demographics in doing so.
Modern Mobility Aids (OTO:MDRM, Forum) has changed name to Galileo Life Sciences and locked in LOIs back in December of last year to acquire two MMPR applicants in Ontario, one at 15k sq. ft capacity, another at 4k. Yesterday, they announced one of those deals went definitive. It didn’t note which of those deals went green, but company share price has bounced like a superball the last week, from 3c to 8c and back to 5c in a few days.
Kaneh Bosm (CSE:KBB, Forum) execs told me, in a meeting that contained a significant amount of blown smoke, they expected a sea of media coverage of them in the weeks ahead after they signed a deal with MedSmart Dispensaries to put their vending machines out for pilot testing. Only VanCityBuzz has been taken in to date. The Vancouver Sun reported on their plans but noted that they’re illegal plans. A paid-for Financial Press article was not widely picked up.
Here’s the thing: If you can find a MedSmart Dispensary out there in the wild, let me know, because I can’t find any evidence they exist in real world form. And, as the BC corporate record for the company was only registered in April, I’m betting there isn’t one. Imagine the shitstorm that would come if the KBB boys, or someone they know, actually registered MedSmart themselves for the purposes of putting out a positive news release… I mean, I’m not saying they did, but just imagine…
The Bullboard for the company consists of two users telling each other how the stock will run to $1-2, so my spidey sense is fricking raging on this one. Show me something real, KBB, and I’ll apologize and do laps of the boardroom table in nothing but a KBB t-shirt and a backwards g-string.
That’s it. Go eat a brownie and see you next week.
FULL DISCLOSURE: I’ve consulted for GeoNovus and Invictus in the past, and own stock in Supreme, Invictus, Naturally Splendid, Lifestyle Delivery Systems, InMed and Nutritional High. I do not own stock in Creative Edge Nutrition because it’s a straight up pump-and-dump and anyone who owns it is a damn dirty Communist.
Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.