Decriminalization does nothing for legal cannabis industry in that state
It does nothing to put tax dollars into state coffers
Opposition to legalization is derived from anti-cannabis propaganda, not facts/science
This should have been the week that the U.S.’s fourth most populous state – New York – passed a cannabis legalization bill. If approved, it would have added another 20 million Americans as (potential) consumers of legalized pot.
It didn’t happen.
Cannabis investors looking for a villain here may want to finger the NY Times. Earlier this week, the Times posted a piece of irresponsible anti-cannabis propaganda that insinuated that (somehow) legalizing cannabis is worsening the Opioid Crisis.
The pseudo-science published by the NY Times (and elsewhere in the mainstream media) contains no real evidence, only a flimsy correlation that is backed by nothing.
The Times published this anti-cannabis propaganda at the worst possible time: as the vote to legalize cannabis in New York literally hung in the balance.
Cannabis investors will never know if this bill would have passed without the negative slant attached to cannabis usage by the NY Times. What we can see is that such propaganda has emboldened ignorant anti-cannabis zealots within the state government.
Sen. Andrew Lanza (R-Staten Island), however, said that while unequal enforcement is wrong and he doesn’t want to see anyone arrested for smoking marijuana, no one is talking about the health and public safety concerns of legalizing marijuana.
“Right now, the state is saying, ‘It’s OK to do it,’” Lanza said. “This is going to hurt people.”
As TSI noted earlier today, there is no substance at all to such anti-cannabis biases.
“No one is talking” about supposed “health and public safety concerns” regarding cannabis because there aren’t any.
Yes, NY State was trying to say “it’s OK to do it” – because it is. If consumers switch from the consumption of dangerous tobacco/alcohol products in favor of cannabis, this will save lives.
No, legalizing cannabis in NY state would not have hurt anyone, except New York’s cannabis black market.
It is in this context that we can view the State’s “Plan B”: voting to decriminalize cannabis usage within New York state. On a positive note, that bill also includes a provision to expunge criminal records for simple cannabis possession.
For cannabis companies and cannabis investors, however, this is a hollow victory. This won’t add a penny of revenues to the coffers of legal cannabis companies in New York. It won’t boost any share prices for the benefit of investors.
The State is also a big loser here.
Colorado has now reaped more than $1 billion in taxes/fees from the legalized cannabis industry in that state. There isn’t a state government within the U.S. that can afford to turn its back upon a revenue stream of that magnitude.
While decriminalization removes the criminal penalties associated with cannabis usage, it does nothing to eliminate the stigma of using cannabis – in the minds of a large minority in the U.S. that still regards cannabis with blind prejudice.
Americans want legal cannabis (by a large majority). Consumers want legal cannabis as a safe option to the increasing dangers of alcohol consumption.
New York will vote to fully legalize cannabis usage. It’s just not going to happen this year.
Jennifer Chapin, the cofounder of Kikoko, recently recalled how she was “laughed out of the dispensaries” when she tried to sell her low-dose cannabis-infused teas in her company’s early days. Three years later, Kikoko’s teas, which come in sachets and canisters wrapped with pink-and-purple stripes and cartoon flowers promising benefits such as “Sensuali-tea” and “Tranquili-tea,” are sold through over 300 storefronts and delivery services across California.
“We are a women-centric, women-owned, women-operated company,” Chapin declared to a room full of women at Arcview, a conference for cannabis investors, in Los Angeles in February. “By women, for women.”
Arcview welcomes investors irrespective of gender, but Kikoko had sponsored a women-only “tea party” (with unmedicated tea) to facilitate some female-friendly networking and announce that the company was seeking capital for expansion into new product categories, with minimum investments starting at $1 million.
Founders of female-focused cannabis startups like Kikoko may soon be laughing all the way to the bank—and they’re getting there by looking beyond millennials, and catering to women in their 40s, 50s, and beyond. Executives such as Chapin, who is 55, are listening to older women’s wishes for low-dose cannabis products that address concerns such as sleep, anxiety, and sexual pleasure, and positioning their companies at the very lucrative intersection of women, weed, and wellness.
Wellness, women, and weed
It’s a market that’s growing. Women control the majority of household purchases, and according to the US Consumer Expenditure Survey, single women over 45 spend about $640 per year on personal care items and $400 annually on drugs. As legalization takes hold, those products are increasingly likely to contain—or even be replaced by—cannabis. According to sales data and a survey of 4,000 cannabis consumers by the San Francisco-based delivery platform Eaze, the number of female cannabis consumers nearly doubled in 2018, and with their growth outpacing men, women are on track to be half of the cannabis market by 2022. Female baby boomers on the platform grew by nearly a quarter between 2017 and 2018.
Kimberly Kovacs, the cofounder and CEO of MyJane, which delivers “curated cannabis” boxes to women (think Birchbox-meets-Eaze), was also at Arcview. That same week, her company was acquired by the cannabis logistics conglomerate MJIC for an undisclosed sum, after completing just three weeks of deliveries. MJIC CEO Sturges Karban was unabashed about the acquisition’s main attraction.
“Women are the new targets of the adult-use cannabis wellness sector,” wrote Karban, in a press release. “Yet their needs are not being addressed by the cannabis industry.”
“We don’t call that micro-dosing. We just call that normal.”
Getting stoned is not chief among those needs, Kovacs found when MyJane conducted a survey of women in Orange County, CA. When I asked what was, she didn’t skip a beat: “Sleep,” she said. “100%.”
“I don’t want to take an Ambien,” said Kovacs, who is 52, with blonde hair and clear blue eyes. “I don’t even want to take Melatonin … half a cup of tea, I sleep through the night.” (MyJane includes Kikoko tea amongst its offerings in its boxes.)
In addition to better sleep, women told MyJane they were seeking relief from pain, anxiety, and stress. Many hadn’t used cannabis before and said they wanted their THC—the chemical compound that results in feeling high—in very low doses.
“By the way, we don’t call that micro-dosing,” said Kovacs. “We just call that normal.”
Ding-dong, Avon calling
Both Chapin and Kovacs referenced Avon—the 135-year-old cosmetics company known for its door-to-door saleswomen. “I don’t want to go to a dispensary,” said Kovacs. “I don’t even want to go to the grocery store anymore!”
“I don’t want to go to a dispensary. I don’t even want to go to the grocery store anymore!”
Instead, these companies strive to deliver both products and education in personal and familiar settings, outside dispensaries. Part of what they’re doing is teaching their customers how to use the range of new products available in the sector.
MyJane’s customers create online profiles answering questions about their symptoms, food allergies, preferences, and prior experience with cannabis. Then, a female “ambassador” from the company arrives at a customer’s doorstep on the agreed-upon date and time to deliver a box of selected products and walk the recipient through each one.
Kikoko’s teas are sold via dispensaries and delivery services, but the company also holds tea parties which include a “cannabis 101” slideshow about the plant’s history and benefits. Chapin estimates that in 2018, the company held over 100 of these events in private homes, country clubs, and retirement communities throughout California. (It was at a Kikiko tea party in Santa Monica that Chapin and Kovacs first met.)
Kikoko’s website has a page for people who want to host their own “High Tea Parties,” complete with downloadable images for invitations, tips (take public transit), and a Pinterest page of suggested menu items.
“We envision an army of women throughout the state of California,” said Chapin, of the consumers she hopes to recruit into hosting high teas.
Bridgett Davis, the founder of the Los Angeles-based cannabis topicals brand Big Momma’s Legacy, is also building a business based on older women customers—using a similar model of cohosting tea parties with local cannabis brands at private homes to slowly build her business from the ground up.
“It’s a group of maybe 10 to 15 of my golden girls,” she said of a typical event. “I have a variety of clients, from white ladies in Brentwood to old grandmas in Compton.”
Davis agreed that a familiar setting and privacy were crucial to her customers, who use her salve and roll-on oil to ease the pain of rheumatism and sciatica, and said she’s counting on her “golden girls” to help her grow her business.
“I cannot ask for better brand ambassadors, and they’re not paid,” she said. “It’s grass-roots, and I’m building it bit by bit. When one of my seniors talks to their friend, their friend is listening.”
Riding the wellness wave
With the global wellness industry now worth an estimated $4 trillion worldwide, it’s little wonder that cannabis companies such as MyJane, Kikoko, and countless others position themselves as purveyors of supplies for self-care rather than recreation. And women—especially those in middle-age—are frequently caring not only for themselves, but also for their friends, children, and aging parents. (Kovacs told me she supplies her father with topicals for his arthritis, and her mother with tea for sleeping.) No wonder they’re tired.
Both Kovacs and Chapin came to cannabis by way of a woman close to them suffering as a result of cancer. In Kovacs’ case, it was her mother-in-law, who eased her post-surgery pain and reduced her opioid use with cannabis. In Chapin’s, it was a dear friend who used edibles to aid her sleep and appetite, but was getting pummeled by high dosages. Both women saw the opportunity for products that spoke to women’s wellness.
Plus, noted MyJane cofounder Cara Raffele, “There’s a trust gap in healthcare for women.” Indeed, as Quartz’s Annaliese Griffin has written, that trust gap has made women particularly receptive to wellness brands that address their health concerns, respect their pain, and speak to them personally.
During her presentation at Arcview, Chapin said at one point, “we’re really tired of taking Ambien.” A women near me whispered under her breath: “That’s so me.”
Here are some notable stories and events to watch for in the coming days:
VERMONT HEMP HEARINGS: The Vermont Agency of Agriculture, Food and Markets (AAFM) will hold its first public hearings to discuss the rulemaking process for the state’s hemp program.
The hearings are scheduled for Thursday in Brandon and Friday in Newport.
According to the official state website, the AAFM must adopt rules establishing how the agency will conduct research within its hemp program and set requirements for the registration of growers of hemp crops and processors of hemp and hemp-infused products.
The AAFM submitted the proposed hemp rules to the secretary of state’s office on May 17. The last day for public comment is July 5.
MICHIGAN WEIGHS WARNINGS: Testimony is expected to continue this week in Michigan on legislation that would require putting health warning labels on marijuana products.
According to Kalamazoo TV station WWMT, the bill, sponsored by Republican Reps. Thomas Albert and Daire Rendon, calls for the state Department of Licensing and Regulatory Affairs to ensure the labeling is implemented.
The labels would carry this message:
“Warning: Use by pregnant or breastfeeding women, or by women planning to become pregnant, may result in fetal injury, preterm birth, low birth weight, or developmental problems for the child.”
MEDICINE MAN UPDATE: Medicine Man Technologies, the Denver-based vertically integrated cannabis operator, has scheduled a corporate update call for investors on Tuesday.
CEO Andy Williams, Chief Operating Officer Joe Puglise and board chair Justin Dye will be on the call to take queries from investors and to discuss the firm’s future and pending acquisitions.
Earlier this month, Medicine Man agreed to acquire Los Sueños Farms, Colorado’s largest cannabis grower, and MesaPur, a local manufacturing and dispensary company in the state.
CALIFORNIA COMMITTEE CONVENING: California’s Cannabis Advisory Committee will hold three subcommittee meetings on Thursday and a full committee meeting the next day in Los Angeles.
The Subcommittee on Equity will discuss topics including state and local definitions of a social equity applicant; business development and educational services for applicants; income limits for applicants; state equity programs versus local equity programs; and funding for social equity programs.
The Subcommittee on Delivery will examine recommendations related to cannabis delivery operations, including balancing local control and patient access; disclosure of premises address on delivery receipt; and operating hours for delivery services.
The Subcommittee on Testing Laboratories will look at topics such as CBD and industrial hemp safety standards, testing regulations and standardization; reference standards and stability testing; illicit market activity and enforcement; and taxation.
On Friday, the full committee hearing will review the issues discussed and actions taken by the three subcommittees the previous day.
After months of debate and negotiations, New York’s bill to legalize marijuana has reached a dead end for the time being. There had been increased pressure by lawmakers and marijuana advocates to pass the bill in this legislative session which came to an end on Wednesday.
There had been no consensus regarding the details of the bill, even though the broad aspect of legalized cannabis had gained quite a number of supporters. The lawmakers had a slightly different idea than that of Gov. Andrew Cuomo’s proposed regulatory framework. The decision was stalled on Sunday night due to stubborn negotiations. They reached an impasse on the distribution of marijuana generated tax revenue.
Wednesday Saw End Of Legislative Session As Well As Of The Bill’s Run
There was also a disagreement on the provision allowing retail sales. The lawmakers opted for a provision that would allow localities to opt for the retail selling of cannabis. If this provision is not added, the chamber might withdraw its support. However, Cuomo is firm on an opt-out provision allowing cannabis sales all over the state.
Even after being a priority for Cuomo and continuous pressure by lawmakers, the bill failed to get passed. New Jersey’s effort to pass the marijuana bill also faced a roadblock. After no mention of the bill in the budget presented in April, just last week, new bills were introduced. However, these cannabis bills have higher tax rates and a lower quantity amount that can be used by adults.
The legalization of the bill would have brought forward clear and definite regulations around the cannabis industry. Also, it would have brought in tax revenue for the state. Furthermore, it could have obliterated the criminal charges against those previously convicted for dealing marijuana. Even though this might be a victory for those opposing legalization, it is not permanent, as claimed by Sen. Liz Krueger. The opposition is equally resilient in not letting these policies and regulations through. They are claiming them to be hazardous to the health and safety of the public at large. The battle to legalize cannabis is on, and the road ahead is long.
state has granted provisional distribution license to the Sacramento facility
of Nutritional High International Inc
(OTCMKTS:SPLIF). The company will start the distribution
operations on getting the local permit.
Co-Chairman of Nutritional High, Adam
Szweras said the company framed distribution strategy in 2018. The license is a
step in this direction to become the biggest cannabis products distributor in
the state. Together with its hubs in Chatsworth, and Oakland, the new
Sacramento facility forms the backbone of the distribution architecture in the
state. It allows Nutritional High to expand the product reach in the state.
sales at $6.5 billion
The legalized sales of cannabis in
California are expected to reach $6.5 billion by the year 2022 from $2 billion
in 2018. Licensed dispensaries count increased to 650 in Q4 2018, an increase
of 200 from the previous quarter. However, the penetration is still on a lower
note when compared to 540 retail licensees in Colorado that have a population
of 5.6 million.
Calyx Brands is a wholly owned
distributor of cannabis products of Nutritional High. Chief Executive Officer
of Calyx Brands, Dakota Sullivan said the statewide facility is developed to
serve 2,000 or more dispensaries in the coming years in California and not just
the present 600 stores. He further said the warehouses located in key locations
like Sacramento and Chatsworth allows the company to ensure the availability of
products to the producers from growers in a cost-effective manner and in a
Shipping hubs, including Chatsworth
and Oakland facility, are strategically located in the center of fastest
growing markets in Southern and Northern California to deliver the products to
dispensaries quickly. It reduces the demand for more storage needs and
Nutritional High signed a non-binding
letter of intent with Hannah Ashby and Good Vybes LLC. As per the terms of the
deal, they provide a base for Calyx Brands operations in Southern California.
The accord allows the company to
double distribution capacity in the state. Nutritional High can now expand the
services to communities including Palm Desert, Palm Springs, Long Beach, Los
Angeles, San Diego County, and the Inland Empire.
Cardiol Therapeutics Inc. (TSX: CRDL) (OTCQX: CRTPF), a leader in the research and commercial development of pharmaceutical cannabidiol (CBD) and targeted therapies for heart disease, is pleased to announce that the Company is planning an international clinical trial in acute myocarditis utilizing its CardiolRx CBD formulation.
CardiolRx is Cardiol’s pure pharmaceutically-produced CBD. Designed to be the safest and most consistent formulation on the market, CardiolRx is cGMP certified and does not contain any THC. The Company plans to commercialize CardiolRx pharmaceutical CBD during 2019 in the billion-dollar market for medicinal cannabinoids in Canada and is pursuing market introduction opportunities in Europe and Latin America. Cardiol’s acute myocarditis program provides a unique opportunity to build brand awareness in support of this commercial launch and is being designed by an independent Steering Committee comprised of thought leaders in cardiology from North America and Europe.
Acute myocarditis is characterized by inflammation of the heart muscle (myocardium). The most common cause is viral infection of the heart tissue which is initially responsible for the inflammation. In most cases, the virus clears, and inflammation subsides, but in a significant number of cases the inflammation persists with ongoing myocardial damage and depressed heart function. Although the symptoms are often mild, myocarditis remains an important cause of acute and fulminant heart failure and is the most common cause of sudden cardiac death in people less than 35 years old. In addition, some patients proceed to develop chronic dilated cardiomyopathy which continues to be the leading indication for cardiac transplantation. Although viral causes of myocarditis are the most common, myocarditis can result from a broad range of infections and can be caused by drugs including chemo-therapeutic agents used to treat several common cancers. Symptoms include chest pain, fatigue, shortness of breath, and arrhythmias. Myocarditis damages heart cells, reducing overall heart function as measured by left ventricular ejection fraction such that the heart does not pump sufficient blood to meet the needs of the body.
Based on the large body of experimental evidence of the powerful anti-inflammatory activity of CBD in models of cardiovascular disease, Cardiol believes there is a significant opportunity to develop a potential breakthrough therapy for acute myocarditis that would be eligible for designation as an orphan drug. In the United States, an orphan drug designation is granted for pharmaceuticals being developed to treat medical conditions affecting fewer than 200,000 people. These conditions are referred to as orphan diseases. The assignment of orphan status to a disease and to drugs developed to treat it is a matter of public policy in many countries and has yielded medical breakthroughs that might not otherwise have been achieved. In the U.S. and the European Union, orphan drugs are eligible for accelerated marketing approvals and companies developing orphan drugs typically receive other incentives, including a prolonged period of market exclusivity that can extend over seven years, during which the drug developer has sole rights to market the drug.
“The U.S. orphan drug program was successfully utilized to accelerate the first FDA approval of CBD for the treatment of rare forms of pediatric epilepsy and significant shareholder value was created in the process,” stated David Elsley, President and CEO of Cardiol Therapeutics. “Given the mortality and the significant morbidity risk associated with acute myocarditis, we believe there is a similar opportunity in pursuing an expedited development program of our CardiolRx pharmaceutical CBD formulation for this serious orphan disease which has no accepted standard of care.”
About Cardiol Therapeutics
Cardiol Therapeutics Inc. (TSX: CRDL) (OTCQX: CRTPF)is a leader in producing 100% pure pharmaceutical CBD and developing groundbreaking therapies for heart disease. The Company is focused on commercially launching the safest and most consistent CBD products for consumers and healthcare providers in the multi-billion-dollar medicinal cannabinoid markets. Cardiol is utilizing nanotechnologies designed to deliver CBD and other anti-inflammatory drugs for the treatment of heart failure. Heart failure is a leading cause of death and hospitalization in North America, with associated healthcare costs exceeding US$30 billion annually in the U.S. alone. For further information about Cardiol, please visit the Company’s website at www.cardiolrx.com.
This news release contains “forward-looking information” within the meaning of applicable Canadian securities laws which may include, but is not limited to, statements with respect to: future events; the future performance or the intended business strategy of Cardiol Therapeutics Inc. (“Cardiol”); the potential for Cardiol’s licensed drug encapsulation and delivery technologies to enhance the bioavailability of pharmaceuticals; management’s expectations regarding estimated future pharmaceutical research and development opportunities, collaborations and prospects; the success and proposed timing of Cardiol’s product development activities, including, but not limited to, the proposed timeline of Cardiol’s product candidate pipeline for commercial introduction; the ability of Cardiol to develop its product candidates; Cardiol’s plans to research, discover, evaluate and develop additional products; Cardiol’s proposed future collaborations to advance Cardiol’s lead nanoformulations into clinical development; and the potential for Cardiol’s cannabinoid-based products to provide sources of future revenue. All statements, other than statements of historical fact, that address activities, events or developments that Cardiol believes, expects or anticipates will, may, could or might occur in the future are “forward-looking information”.
Forward-looking information is frequently identified by the use of words such as “plans”, “expects”, “projects”, “intends”, “believes”, “anticipates”, “forecasts”, and other similar words and phrases, including variations (and negative variations) of such words and phrases, or may be identified by statements to the effect that certain
actions, events or conditions “may”, “could”, “should”, “would”, or “will” be taken, occur or be achieved. Forward-looking information contained herein reflects the current expectations or beliefs of Cardiol based on information currently available to it and is subject to a variety of known and unknown risks and uncertainties and other factors that could cause the actual events or results to differ materially from any future results, performance or achievements expressed or implied by the forward-looking information. These risks and uncertainties and other factors include that the success of Cardiol’s product candidates will require significant capital resources and years of clinical development efforts; the results of clinical testing and trial activities of Cardiol’s products; Cardiol’s ability to obtain regulatory approval and market acceptance of its products; Cardiol’s ability to raise capital and the availability of future financing; Cardiol’s lack of operating history; unforeseeable deficiencies in the development of Cardiol’s product candidates; uncertainties relating to the availability and costs of financing needed in the future for Cardiol’s research and development initiatives;
Cardiol’s ability to manage its research, development, growth and operating expenses; the potential failure of clinical trials to demonstrate acceptable levels of safety and efficacy of Cardiol’s product candidates; Cardiol’s ability to retain key management and other personnel; risks related to fluctuations in medicinal cannabinoid markets
in Canada and worldwide; uncertainties regarding Cardiol’s ongoing collaborative and manufacturing partnerships; uncertainties regarding results of researching and developing products for human use; Cardiol competes in a highly competitive and evolving industry; Cardiol’s ability to obtain and maintain current and future intellectual property protection; and other risks and uncertainties and factors. These risks, uncertainties and other factors should be considered carefully, and investors should not place undue reliance on the forward-looking information. Any forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, Cardiol disclaims any intent or obligation to update or revise such forward-looking information, whether as a result of new information, future events or results or otherwise. Although Cardiol believes that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks, and uncertainties and are not (and should not be considered to be) guarantees of future performance. It is important that each person reviewing this news release understands the significant risks attendant to the operations of Cardiol.
Village Farms International Inc (NASDAQ:VFF) has started
converting 635,000 Sq. Ft. Growing area of the total 1.3 million Sq. Ft.
Permian Basin Greenhouse to cultivate high CBD hemp and for extraction of CBD.
This is on the backdrop of House of Representatives backing the House Bill 325
to become a law in Texas. It is subject to the deadline set on June 16, 2019
for the Governor to veto the bill. However, Governor vetoing the bill is
will put in place all the necessary systems for year-round production and
processing of hemp. The company expects to ready the facility for hemp
cultivation and processing in Q3 2019. It will also add the extraction to the
Requires licenses for hemp cultivation
will get the first mover advantage in the CBD cultivation in Texas with the
passage of House Bill 325. The company needs licenses for the cultivation and processing
of hemp. But, the state of Texas has set no deadline to apply for the license.
Village Farms will apply for the licenses.
Federal Farm Bill 2018
Village Farms has
started preparation of technical systems and site specific design and
development for growing with the passage of federal farm bill 2018. It is
gearing for the passage of Texas bill.
Officer of Village Farms, Michael DeGiglio said the company is readying a
portion of the Permian Basin Greenhouse for CBD hemp cultivation and extraction
with the expectation of hemp bill passage in Texas. It is taking the risk to
enjoy a first mover advantage in Texas. Village Farms has applauded the
supporters of this landmark bill including Rep. Tracy King, Sen, Charles Perry,
and Texas Farm Bureau.
The sales of CBD
are expected to reach over $16 billion by the year 2025 in the US. It is a
definitive opportunity for Village Farms and can aggressively prepare for
cultivation and extraction of hemp CBD.
On June 18, 2019,
CFO of Future Farms, Stephen Ruffini will take part in the panel to discuss CBD
trends in the 5th Annual Conference in London. Institutional
customers of ROTH can attend this conference on receipt of invitation.
During the days of full cannabis prohibition, there was essentially a free market at work. With a high-risk marketplace and an obscure market of producers and consumers, growers and breeders competed freely—resulting in the incredible variety of genetically diverse plants that a maturing marketplace now demands.
But because of the underground nature of it all, every business was run on unprotected trade secrets. Breeders were known by pseudonyms and the sometimes-ridiculous cultivar names used for marketing. As the industry emerged, websites like Leafly.com appeared to catalog them all. But as the industry matured, along came genetic sequencers to show that a lot of the plants were the same thing and the vast majority of the varieties on the market were neither new nor unique.
And, despite the newly emerging genomics and federal prohibition, the U.S. Patent and Trademark Office (USPTO) has been issuing both variety and utility patents for cannabis varieties, triggering industry groups and labs to begin open-sourcing genetic and chemical profiles of plants on legal markets in an attempt to prove prior art and prevent more broad utility patents on plants.
Variety patents, which are issued for all kinds of plants under the Plant Variety Protection Act of 1970 (PVPA), are issued only for plants that were asexually produced (clones) and are not found in nature, but rather the dedicated work of a breeder to create something new and unique. Variety patents last 25 years and allow breeders to have total control over their creation, including charging licensing fees and/or royalties if they enter into a contract with a producer.
Utility patents, on the other hand, usually apply to new methods of delivery (like vaporizers) or new processes (a new extraction device). But in 2015, a very controversial patent was issued to a biopharmaceutical firm, Biotech Institute LLC. The issued plant patent is so incredibly broad in scope that the vast majority of landrace varieties (or Type-II varieties) fit within their scope; plants that make both THC and CBD and are not dominant in the terpene myrcene.
The power of these patents lies in the cost of litigation. Oftentimes when a small company or similar-sized competitor infringes on the patent, whether knowingly or not, it is usually a lot cheaper to pay the patent holder a licensing fee than it is to go to court. If the patent is challenged and the defendant proves prior art, the patent could be invalidated.
Breeders derive all the value in their work from intellectual property (IP), so as the marketplace matures, investing in the appropriate protections is essential. Obtaining plant varieties and investing in an insurance plan that can cover costs of litigation— whether offensive of defensive— is key to protecting the core value of the business.
Protecting Genetic Assets
“The best way to protect your genetic assets is with plant patents, that is the safest thing to do, protect them strain by strain,” says Dale Hunt, a plant biologist and attorney specializing in cannabis patents.
According to Hunt, the standard that the USPTO applies to cannabis plant variety applications is no different than for any other plant; the cultivar must be new, useful and nonobvious, and the application must teach a person skilled in the art how to make the invention and how to use the invention. Plant patents are relatively inexpensive and easy to defend, and they are less likely to be invalidated by legal challenges—like a utility patent might.
Hunt says that the effects of utility patents like Biotech Institute’s remain to be seen because they have yet to be enforced or tested.
“With so little prior art there will always be a question mark over the utility patents. You will never know how valid they are until more literature is developed,” he says. “If you are worried about having people assert their broad utility patents against you, you need to be part of a coalition of people in the same boat who believe this and band together to defend yourself and each other against those patents.”
Hunt plans to release a new website, MJPatentsWeekly, that will be updated every Tuesday as the USPTO issues new patents. Visitors to the site can comment on patents and submit prior art, which he says is key to preventing more broad utility patents.
“The cannabis industry has been a pretty active industry with people doing a lot of innovative things, but have they created a body of literature?” he asks. “Of course not, they have hidden it pretty vigorously. There is a great void of any information that is printed that an examiner can look at. The examiner, their hands are kinda tied.”
Hunt says there are a lot of ways growers can protect their plants other than through patents. Growers can control their protections by only selling harvested material rather than clones or seeds. In countries with legalized cannabis but few legal IP protections, strong contracts are the best option for mitigating the risk.
Applying for a Patent
Hunt says the application process is relatively simple, although it is still standard for the patent examiner to reject the patent application on the first pass, particularly in the case of utility patents. He says the reason most applications are rejected on first submission is because it is important for the patent examiner to create a written record of the dialogue between the USPTO and the applicant in order to ensure the patent is valid. This creates a record that is open to the public over the review and analysis process.
He says for variety patents, the issue is usually because documentation provided to the USPTO examiner does not sufficiently describe the new variety.
Hunt details the other three primary reasons the application could be rejected at first submission in a post to his blog called “Three Rookie Mistakes Plant Patent Applicants Make,” (1) naming the variety in a way that is incompatible with trademark protection; (2) misunderstanding the flexibility of filing date and disclosure requirements and (3) incorrectly timing the filing of the application.
“What you don’t want to do is use your really cool, sexy trade name as your variety name when you apply for the patent, because you lose the ability to use that as a trademark,” he says. “You want a functional, non-appealing name, like an address or filing system kind of name. My clients have learned from making that mistake or others’ mistakes; they use some sort of code so they can track it, and an appealing name for the trademark.”
Enforcing a Patent
“It is one thing to get a patent, it is another thing to enforce one,” Hunt says.
With the average cost of litigation averaging $2.8 million for patent infringement lawsuits, according to Gil Shaheen with Intellectual Property Insurance Services Corporation (IPISC), a business could go bankrupt if its management tries to challenge the patent enforcer, even if they feel they have a case to challenge it. If a small business has an insurance policy that covers defensive and offensive litigation, they could potentially invalidate patents like Biotech’s.
“The interesting thing about cannabis patent landscape, and the utility patent, with so little printed prior art for the examiners to go on and so much black market prior art or hidden prior art that a defendant could use in their defense, when someone asserts the patent they are really risking having it invalidated,” Hunt says. “As soon as I sue someone for infringing a patent they get an army of lawyers, some experts and some patent searchers and they throw all kinds of resources at trying to prove my patent is invalid. They are going to do a more thorough search and any examiner would have ability to do.”
Hunt adds that everyone—whether longtime growers or experienced business professionals—is new to the legal industry, and, in many cases, there just isn’t precedent yet on cannabis industry intellectual property.
“Because everyone is new, be really careful in evaluating what qualifies the people you choose to work with—whether they are on the investment side or the business side or the lawyer’s side,” Hunt concludes.
Insurance policies that cover the cost of enforcing a company’s patent, or protecting them from an infringement suit, are the best defense of both the company and its most important assets.
Aurora Cannabis Inc. (“Aurora” or the “Company”) (NYSE: ACB) (TSX: ACB), the Canadian company defining the future of cannabis worldwide, today announced its plans for the highly-anticipated expansion of the consumer cannabis market into vapes, concentrates, and edibles. The Company is also preparing to launch a national public awareness campaign this fall, educating consumers, provinces and retailers about the safe usage and consumption of these new derivative products.
Through a combination of new and enhanced facilities, Aurora intends to produce new, high-quality products across the country in a variety of product categories. Aurora recently entered into a supply agreement with PAX Labs Inc., a leading consumer technology brand in cannabis. With the PAX partnership, the Company will have the market leading PAX Era device to compete in the Closed Loop category and will also launch a new range of vape products, at various price points, targeted to all major consumer markets through both 510 thread cartridges and disposable single-use units.
“Aurora is the world’s leading producer of high-quality cannabis and we’re ready to introduce high-value product additions to this improved, federally legal market,” said the Company’s CEO Terry Booth. “From the beginning, we’ve invested in industry-leading production and distribution technology, and in consumer research to drive products to market that consumers will desire. These things, together with the dynamic partnerships we’ve entered into on the accessory and technology fronts, position us well for this new market launch in December as per Health Canada’s recent regulatory amendments.”
On the issue of product education and awareness, Booth said: “We will show leadership when it comes to educating consumers on the safe, responsible consumption of cannabis edibles. Over the next few months we will be rolling out educational campaigns across Canada to help provide consumers with the information they need to make safe and sound decisions.”
To support the successful launch of vapes, concentrates, and edibles products, and to continue to ensure sufficient supply for domestic and international markets, Aurora has established production hubs in Western Canada, on the same federal property as Aurora Sky at the Edmonton International Airport, and in Eastern Canada at Aurora River, in Bradford, Ontario and at Aurora Vie in Pointe-Claire, Quebec near Montréal. These centres will provide centralized production, packaging, logistics and distribution capabilities. In total, they comprise more than 450,000 square feet and are strategically located to efficiently distribute our products to markets across the country.
Aurora Air, a 20,000 square foot manufacturing facility, is now in the final stages of receiving its Health Canada license. Located near the Edmonton International Airport and Aurora Sky, Air will be home to several of the new production lines for edible products. New industrial extraction systems have also been installed at Aurora Sky and Aurora River.
Headquartered in Edmonton, Alberta, Canada with funded capacity in excess of 625,000 kg per annum and sales and operations in 24 countries across five continents, Aurora is one of the world’s largest and leading cannabis companies. Aurora is vertically integrated and horizontally diversified across every key segment of the value chain, from facility engineering and design to cannabis breeding and genetics research, cannabis and hemp production, derivatives, high value-add product development, home cultivation, wholesale and retail distribution.
Highly differentiated from its peers, Aurora has established a uniquely advanced, consistent and efficient production strategy, based on purpose-built facilities that integrate leading-edge technologies across all processes, defined by extensive automation and customization, resulting in the massive scale production of high-quality consistent product. Intended to be replicable and scalable globally, our production facilities are designed to produce cannabis of significant scale, with high quality, industry-leading yields, and low per gram production costs. Each of Aurora’s facilities is built to meet European Union Good Manufacturing Practices (“EU GMP”) standards. Certification has been granted to Aurora’s first production facility in Mountain View County, the MedReleaf Markham facility, and its wholly owned European medical cannabis distributor Aurora Deutschland. All Aurora facilities are designed and built to the EU GMP standard.
In addition to the Company’s rapid organic growth and strong execution on strategic M&A, which to date includes 17 wholly owned subsidiary companies – MedReleaf, CanvasRX, Peloton Pharmaceutical, Aurora Deutschland, H2 Biopharma, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, Anandia, HotHouse Consulting, MED Colombia, Agropro, Borela, ICC Labs, Whistler, and Chemi Pharmaceutical – Aurora is distinguished by its reputation as a partner and employer of choice in the global cannabis sector, having invested in and established strategic partnerships with a range of leading innovators, including: Radient Technologies Inc. (TSXV: RTI), Hempco Food and Fiber Inc. (TSXV: HEMP), Cann Group Ltd. (ASX: CAN), Micron Waste Technologies Inc. (CSE: MWM), Choom Holdings Inc. (CSE: CHOO), CTT Pharmaceuticals (OTCC: CTTH), Alcanna Inc. (TSX: CLIQ), High Tide Inc. (CSE: HITI), EnWave Corporation (TSXV: ENW), Capcium Inc. (private), Evio Beauty Group (private), and Wagner Dimas (private).
Aurora’s Common Shares trade on the TSX and NYSE under the symbol “ACB”, and are a constituent of the S&P/TSX Composite Index.
This news release includes statements containing certain “forward-looking information” within the meaning of applicable securities law (“forward-looking statements”). Forward-looking statements are frequently characterized by words such as “plan”, “continue”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “potential”, “proposed” and other similar words, or statements that certain events or conditions “may” or “will” occur, and include, but are not limited to, the completion of the launch of the vape and edibles products, the successful launch of the public education campaign, and the completion of licensing for the Air facility. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release, including, but not limited to consumer demand for the new products. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law
Neither TSX, NYSE nor their applicable Regulation Services Providers (as that term is defined in the policies of the Toronto Stock Exchange and New York Stock Exchange) accept responsibility for the adequacy or accuracy of this release.
World’s 5th largest brewery has JV with Canada’s HEXO Corp to develop cannabis-infused beverages in Canada
Getting in early on expected $1.5B – $3B sector in Canada
Several other companies already targeting this beverage market in the US and Canada
CBD-infused beverages offer great potential in the US
What’s hot in cannabis today? Hint: according to Bloomberg, it’s…
The Next Big Thing
A recent article from International Cannabis Business Conference (ICBC) also seeks to provide investors with some guidance here.
The focus is on Molson Coors Brewing Co’s (NYSE: TAP) planned entry into the cannabis industry. But TAP isn’t the only player salivating at the prospect of entering this niche. More on that later.
The multinational beverage company has entered into a joint venture with Quebec cannabis giant, HEXO Corp. (US: HEXO / CAN: HEXO), via its Canadian unit, Molson Coors Canada.
The JV will be executed under the corporate label Truss. It is aimed at producing new products for the imminent market in Canada for cannabis-infused beverages.
These beverages will become legal in Canada when new regulations come into effect in October of this year.
Mark Hunter, President and CEO of Molson Coors is on the record for estimating the potential size of this new market at approximately CAD$3 billion.
“Clearly there are lots of numbers which are being bandied around with regard to the potential size of the cannabis market in Canada. I think if you take an average, then it suggests that this market may be somewhere between $7bn and $10bn in market value, with beverages somewhere between 20% and 30%. And that’s obviously non-alcoholic cannabis-infused beverages.”
Hunter added a caveat.
“Even if you take the low end of that estimate, then it suggests that the beverages segment could be circa $1.5 bn of value.”
The ICBC article also reports that Molson Coors is taking a hard look at the U.S. market for CBD-infused beverages. With the national legalization of hemp in the United States, this has paved the way for manufacturing/distribution of hemp-derived CBD beverages.
ICBC also makes an interesting observation.
While the entry of big alcohol companies into the industry is likely good for consumers who want a multitude of options to best suit their needs and lifestyle, it also provides an opportunity for smaller companies to find their niche. In many ways Molson Coors will serve as a research department for competitors as they put different types of beverages up for sale.
However, other companies pondering entry into this space won’t want to wait long. Already, a number of other players in the Canadian cannabis industry are actively positioning themselves for this market.
Companies that have announced plans to partially or exclusively focus on this segment include: Canopy Growth Corp (US: CGC, CAN: WEED), Sproutly Canada Inc. (CAN: SPR US: SRUTF), Hill Street Beverage Co (CAN: BEER, US: HSEEF), and Phivida Holdings Inc (CAN: VIDA, US: PHVAF).
Companies eying the U.S. market for CBD-infused beverages will also be looking at a number of competitors who aren’t waiting to target this opportunity. NASDAQ-listed heavyweight, Tilray Inc (US: TLRY) has a partnership with Anheuser-Busch InBev to develop cannabis-infused beverages. The Alkaline Water Company (US: WTER, CAN:WTER) is already rolling out its own hemp-infused product line.
New Age Beverages Corporation (US: NBEV), based in Colorado and Utah, has a stated goal of becoming the world’s “leading healthy beverages and lifestyle company”.
The emerging market for cannabis-infused and CBD-infused beverages is, at the least, an intriguing option for both cannabis companies and cannabis investors alike.
At this point, no one can attach firm numbers to this opportunity. But neither the companies nor the investors targeting this space can afford to sit on the sidelines for too long.