One-third of cannabis buyers still using illicit dealers, according to IPSOS poll

One month into pot legalization, an IPSOS poll looks at what has changed for Canadians including consumption levels and the legal marijuana shopping experience.

One of the Canadian government’s chief aims in legalizing marijuana was to eliminate the black market.

And yet, one month after legalization came into effect on Oct. 17, a new Ipsos poll conducted on behalf of Global News reveals that of those who have purchased cannabis in the last month, 35 per cent went back to their pre-legalization sources. In other words, they skipped legal avenues in favour of their old dealer.

Whether that’s the beginning of a good or bad news trend depends on who you ask. At this early stage it’s “much ado about nothing,” says Jennifer McLeod Macey, vice-president with Ipsos.

“It’s kind of like Y2K where we’re expecting this big change overnight and we haven’t seen it.”

So what can you expect to see moving forward? Legalization hasn’t exactly been a smooth road, from legal retailers turning away would-be buyers on Day 2 after running out of stock to delivery mishaps and critiques over pricing to concerns about Quebec’s plan to raise the legal age for smoking pot to 21, and medical marijuana shortages.

WATCH: Cannabis supply shortage predict to improve by the new year


Legalization is a process not an act, says Allan Rewak, executive director with the Cannabis Council of Canada.

“We are competing against very well established, very robust and very wealthy illicit market places serving Canadians for almost a hundred years.”

Rewak is heartened by the Ipsos figures. Nearly three-quarters of the 2,402 Canadians surveyed said they had tried to purchase or did purchase cannabis after legalization. However, where they got it varied:

  • 28 per cent used online, government-run websites
  • 28 per cent used government-run stores
  • 22 per cent visited licensed privately run stores
  • 16 per cent shopped at a licensed privately run website
  • 35 per cent just stuck with their old, non-government approved dealers

That it’s only a third of Canadians sticking to the black market is actually lower than Rewak thought it would be one month in — a good news story.

“We thought this process would take more time,” he says.

WATCH: Canada’s cannabis companies are gambling the world will want our weed


But while Rewak expects more Canadians will abandon the black market as regulatory kinks get worked out, Ian Dawkins, co-founder and principal at Althing Consultancy, is not convinced.

“It’s indicative of a much broader set of problems,” he says.

A slim majority of Canadians surveyed by Ipsos, 54 per cent, believe legalized cannabis costs too much money. To Rewak, that’s expected.

“I think you’ll always get a response that says it’s too expensive,” he says, noting people are always inclined to say products they use recreationally, like cannabis and alcohol, are too expensive.

“I don’t think you’ll ever see a poll that says, I think beers are too cheap.”

To Dawkins, price concerns are a harbinger of problems to come.

Look at Alberta, he says, where fights over tight cannabis supplies prompted Alberta regulators to change the rules. Then, think about January and February when the crop supply is lower.

“It’s just going to get worse,” he says.

Indeed, while the Ipsos poll indicates the legal cannabis market in Canada could possibly double, it lists concerns over price as a mitigating growth factor.

“Only time will tell,” Macey says. “I don’t think the black market is totally going to disappear but it’s still early days.”

WATCH: Alberta changes way it divvies up tight cannabis supply


Macey says she suspects that part of the reason a substantial number of Canadians haven’t switched over to the legal market is the difficulty in accessing the products legally that they’ve long been able to access illegally with little discomfort. Edibles, for instance, are not yet legal.

“Those people are absolutely going to go back to the black market because they’re not going to sit around waiting,” she says.

Other people are probably sticking with their dealers because they like the product they were getting and aren’t yet able to get that particular product legally, Macey says. The Ipsos poll found that while 58 per cent of people found legal cannabis easy to purchase, the rest disagree: 16 per cent said shortages meant they couldn’t purchase it legally at all.

Product issues and supply shortages are a problem Dawkins lays firmly at the federal government’s door. Producers could only apply for micro-licenses the same day legalization became official, he says, meaning they won’t necessarily be able to put product to market any time soon.

“Customer satisfaction will go down as product shortages stretch out into the next year,” Dawkins says.

It’s worth focusing on the appetite for legal cannabis, says Jenna Valleriani, a postdoctoral fellow in medicine at the University of British Columbia.

“I see where those disheartening thoughts or experiences really come from,” she says, but Valleriani notes that even the transition to a medical cannabis market was quite “turbulent.”

“Trying to undo purchasing patterns that people have had for decades, I think that takes time.”

Frankly, Valleriani says she’s surprised the number of people who say they’ve stuck with their old weed avenues isn’t higher given the issues that have dogged the newly-legal industry.

“There has been a lot of problems with supply and access,” she says.

Think of people on fixed or limited incomes who can’t afford to cover the cost of packages and shipping or don’t have a permanent address or credit card that sites like the Ontario Cannabis Store demand, Valleriani says.

“What do you do?”

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Weed woes: Canada struggles to meet huge demand for legal cannabis

Numerous stores dealing with empty shelves and disgruntled customers, with fears many consumers will turn to black market

When Trevor Tobin opened one of Canada’s first legal cannabis stores last month, he had high hopes of playing a small part in a historic national experiment – and of making a tidy profit.

Brimming with optimism, he and his mother Brenda pooled $100,000 in savings to create High North, one of the few private retailers in Newfoundland and Labrador.

But the pair quickly found themselves staring at empty shelves – and watching the money they had invested slip away. Day after day, staff at Labrador City’s only cannabis shop have had to turn away customers due to scarce inventory and have even gone as far as temporarily shutting down the store.

“After a week of 100 apologies [to customers] each day, we’re tired of just saying sorry,” said Tobin. “We were told there would be bumps in the road. This isn’t a bump in the road. This is a pothole.”

Two weeks after Canada became the first G20 country to legalize cannabis amid much fanfare and celebration, numerous stores – both physical and digital – are struggling to meet unexpectedly high demand and in much of the country, the legal supply of marijuana has dried up.

“There is not enough legal marijuana to supply all of recreational demand in Canada,” said Rosalie Wyonch, a policy analyst at the CD Howe Institute. “The shortages are happening faster than I would have expected, but our research suggested quite strongly that there would be shortages in the first year of legalization.”

A mix of regulatory frameworks, retail chain distribution and logistical kinks – including rolling postal strikes across the country – have created fertile ground for the shortages.

When Colorado legalized recreational cannabis, it took three years for supply to finally catch up to demand, and Canada could expect a similar delay, said Wyonch.

In Quebec, the Société Québécoise du Cannabis – a government entity overseeing sales – has opted to close three days per week in order to better ration its limited supply.

Online sales make up a large component of the recreational cannabis market. In Ontario, where there are no physical retailers, residents are required to purchase products through a government-run web site.

Within the first 24 hours of legalization, the Ontario Cannabis Store website processed 100,000 orders – but few of them have been shipped to customers.

Because Ontario only allows online sales of cannabis, many residents have been left waiting two weeks for orders to arrive – and some report random cancellations of their orders.

University student Curtis Baller found out that his order had been cancelled after seeing a charge disappear from his credit card – not a notification from the OCS.

“The most frustrating part to me is that the government forced a monopoly on both the supply and delivery on cannabis products, then failed to deliver,” Baller told the Guardian. Ontario’s ombudsmen has received more than 1,000 complaints about the site since it launched on 17 October.

Supply for retailers, either private or government, is dictated by contracts between the government and licensed suppliers, making shifting to new sources of cannabis to fill supply gaps a lengthy process.

“Health Canada is still licensing producers, existing producers are expanding facilities and at the end of the day, marijuana is a plant. It takes a certain amount of time to grow, process and package, ship and get tested,” said Wyonch.

The shortages are also likely to be costly for provincial and federal governments. In a policy paper developed with colleague Anindya Sen, Wyonch argues that the government could lose $800m in revenues to the black market – far outpacing the anticipated tax revenues of $300m-$600m in the first year of legalization.

For Tobin and his mother, one of the few private retailers with a retail licence, the shortage has turned what seemed like a lucrative business into a temporarily losing venture.

“I’m paying staff members to sit around with fingers crossed that we’ll receive [new stock]. We never do,” said Tobin. “I can’t keep operating the shop, losing money everyday paying staff with no product.”

Some see a potential silver lining to the shortage: the bottlenecks likely mean a large number of people have tried to shift from the black market to the legal space at a faster rate than anticipated.

But the risk remains that the move may be reversed if supply problems are not resolved.

“The government will likely be successful in eliminating the black market, as long as the legal supply comes online quickly. Otherwise, we risk potentially entrenching a black market,” said Wyonch.

But Tobin fears that the recent shortages have already pushed consumers away from the legal markets. Both new and prior cannabis users have expressed frustration that they can’t buy from his store, or any other retailer in the region.

“Now that we can’t supply them, they’re still going to find it,” he said. “There’s no shortage of weed in Labrador City. Just the legal stuff.”

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What Legal Cannabis Means For Canada’s Economy

Canada is buzzing after the legalization of recreational cannabis, with long lines at the few retailers already open, a supply shortage, impaired driving fears, people taking to the streets in joy …

But what does legalization mean for the Canadian economy? How much is the market potentially worth?

“The federal legalization of both medical and recreational cannabis has positioned Canada to be the global leader of this new emerging industry on both fronts and provides significant economic opportunity, as Canadian firms are leading funding of this industry worldwide,” said Aras Azadian, CEO of the Canadian cannabidiol biotech Avicanna.

Canadian biotechs and medical institutions are poised to lead medical and intellectual property development for cannabinoids, which represents a long-term economic development opportunity, Azadian said.

The Numbers

Estimates from the Canadian Imperial Bank of Commerce indicate the legal cannabis market will be worth $6.5 billion by 2020.

On a longer time horizon, New Frontier Data projects the domestic legal cannabis market will reach $6 billion by 2025, up from $1.3 billion in 2018.

“Legalization will result in a boost to local economies and instigate job creation,” said Jeff Siegel, managing editor of Green Chip Stocks. “There’s no doubt about this. We’ve already seen evidence of this in the medicinal cannabis space in Canada as well as over the past year or so as the country has been gearing up for legalization.”

If the legal cannabis indeed reaches $6.5 billion by 2020, it would outpace Canadian spending on alcohol, Siegel said.

Beth Stavola, COO and president of U.S. Operations at MPX Bioceutical Corp MPXEF 2.63%, seems to agree.

“With 43 percent of the Canadian population having tried cannabis and with it becoming more mainstream, it could be a big windfall for Canadian economy. But some products will be phased in over time, so the revenue stream will be gradual. Its potential is in the tens of billions of dollars.”

Canada’s Significance ‘Difficult To Overstate’

Green Chip Stocks’ Siegel expects countries such as the U.S. and Mexico to follow suit with legalization in the next 10 years.

“The value of the Canadian market is likely going to be much higher today than it will be in 10 years, when exports won’t be paramount to the viability of non-Canadian markets and capital will be able to flow into markets outside of Canada. At some point, the Canadian cannabis market will reach a plateau and level out. But in the meantime, the value of the Canadian cannabis market today should not be trivialized. This is an incredibly lucrative market,” he said.

Arcview Market Research and BDS Analytics are optimistic as well. In their latest “State of Legal Marijuana Markets” report, the firms estimate sales of $5.4 billion by 2022, with Canada capturing 17 percent of total global legal consumption.

“The significance of Canada paving the way for major western economies is difficult to overstate,” said Tom Adams, BDS Analytics’ managing director of industry intelligence.

The six U.S. states with functional adult-use cannabis markets point to shrinking illicit sales and teenage use, he said.

“A legal market will also generate a tax windfall with few negative effects on public health and safety. This impact is likely to encourage other countries to move toward legalization at a more rapid pace.”

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Trump is setting the stage for cannabis legalization after midterms

Reports that President Trump is planning to push for legalized marijuana are becoming more often as we approach the midterm elections.

President of the United States Donald Trump hasn’t been very popular so far, even though he ran on a populist platform.

That platform was based on feelings of fear, anger, uncertainty and most of all—hatred. Hatred towards Muslims, Mexicans and immigrants.

It is sufficient to say that he isn’t the most beloved president ever, but there’s a chance he could sneak his way in the top 10 list.

Trump’s plan for the second half of his presidency may revolve around getting cannabis federally legalized by the end of his first term.

Reports of President Trump planning to legalize recreational marijuana have been circling the news.

Many Americans thought that the legalization would have to wait for Democrats to have the full control of the Congress.

However, so far we’ve noticed that Trump isn’t a classic partisan president. Going for cannabis legalization seems like a total Trump move.

So, let’s take a look at the few important things that happened in the last couple days.

DEA releases 2018 National Drug Threat Assessment

The Drug Enforcement Agency released a new assessment on drugs, in which it called for an immediate and undivided offensive against opioids and prescription medicine.

Opioid prescriptions in the United States have been on a steady rise for years, and president Trump declared it a national crisis earlier in the year.

The DEA reports that heroin-related deaths almost doubled between 2013 and 2016.

DEA also noted that the increase in opioid abuse led to a direct increase in heroin abuse and heroin-related deaths.


After almost a century of prohibition, Canada has become the second country in the world, after Uruguay, to fully legalize the use of cannabis.

Accounting firm Deloitte estimates legal marijuana is expected to become more than a $6bn business in Canada in 2019, with up to $4.34bn coming from the legal recreational market and as much as $1.79bn from medical sales.

The global legal medical cannabis market alone could be worth more than $50bn by 2025.

The dizzying numbers surrounding Canada’s ‘green rush’ has triggered interest across Asia as hardliners soften their attitudes towards cannabis use, incentivized by the potential economic impact of legalizing the weed in their countries.

Here is some of what’s happening in Asia;


Sri Lanka will begin cultivating cannabis for medical purposes later this year.

Health minister Rajitha Senaratne said he plans for cultivation to take place across 100 acres of designated cannabis plantation land in the north-central Anuradhapura and Polonnaruwa districts. This is estimated to produce 25,000kg of the drug annually, which will be used for domestic Ayurveda – a South Asian system of medicine – and for export to North America.

Farmers will be hired by the state to cultivate the cannabis, and production will be overseen by the military. Cannabis prohibition was initiated by British colonizers in Sri Lanka (then called Ceylon) in the late nineteenth and earlier twentieth century.


Thailand’s National Legislative Assembly (NLA) is currently drafting a new bill to remove marijuana from the Category 5 Narcotics list. But it will only apply use for medical purposes.

The law is expected to be passed as law in April 2019, making Thailand the first Asian country to legalize medical cannabis and they will be competing in the market led by the US and Canada.

The country’s Governmental Pharmaceutical Organisation (GPO) has also begun researching mass-producing medicines from the drug. While 72% of Thais support the move to legalize weed for medical purposes, a Nida poll found half said it should be restricted to hospital use. Back in the 1980s, Thailand used to be the world’s top exporter of illegal cannabis.


The challenge for Malaysia, which still imposes strict punishment for some drug trafficking offenses, is how to draft new laws that are specific enough to differentiate marijuana for medical as opposed to recreational and other uses. The Ministry of Health, which has the final say, remains skeptical about the medicinal value of cannabis. The country’s cabinet was reported to have “very briefly” discussed its medical value last month. Land and Natural Resources Xavier Jayakumar described getting cabinet support for medical marijuana use as an uphill battle. “My own personal view is that if it’s got medicinal value, then it can be a controlled item that can be used by Ministry of Health for prescription purposes,” he said.


Despite President Rodrigo Duterte’s bloody war on drugs that claimed the lives of thousands since mid-2016, the Philippines committee on Health in March last year endorsed the use of medical marijuana. House Bill 180 prescribes the rules for the proper use of medical marijuana, including the designation of a qualified medical cannabis physician, a medical cannabis patient who shall be issued an identification card, a qualified medical cannabis caregiver and a qualified medical cannabis compassionate centre. Lawmaker Rep. Seth Jalosjos believes legalizing marijuana for medical use, has the backing of the Philippine Cancer Society, “will benefit thousands of patients suffering from serious and debilitating diseases”. Medical marijuana has been frowned upon by Filipino leaders in the past, but Albano feels confident that his Bill will pass with Duterte in power.


The usage of marijuana is rooted in ancient literature and Hindu mythology.  Despite its illegality, it is well documented that marijuana is grown in many parts of the country, especially in villages in Himachal Pradesh and in the Indian Himalayas. Cannabis cultivation and trade are partially restricted in India. While its cultivation for industrial purposes (i.e. obtaining fibre such as industrial hemp or for horticultural use) is allowed, consuming it could lead to a jail term of six months or a hefty fine. Earlier this year Uttarakhand became the first State in the country to allow commercial cultivation of hemp crop. Yoga guru Baba Ramdev, whose Patanjali company, has already made a fortune selling ayurveda-based face cleansers, toothpaste, and detergents is now looking to cannabis as a growth avenue. “There exists a huge market for cannabis in India. A lot of scientific research needs to be done, especially for those who are framing the laws,” said Yash Kotak, founder and director of Mumbai-based startup, The Bombay Hemp Company, which is backed by industrialist Ratan Tata.


While cannabis remains illegal in the People’s Republic of China, the country itself produces 50% of the world’s supply. China’s crops are largely hemp, and thus the non-psychotropic and fiber-rich variety of cannabis. As of 2017, Chinese companies have 309 out of the 606 patents filed around the world that relate to cannabis. So while cannabis remains illegal in the People’s Republic of China, its massive economic potential poses a threat to cannabis interests around the world. In Hong Kong, manufacturing cannabis or any other drug included in the city’s Dangerous Drugs Ordinance is deemed the most serious of all drug-related offenses. Any person who cultivates any plant of the genus cannabis faces an HK$100,000 fine and 15 years in prison. For China’s pot to make a significant impression on the Western canna-economy, there must be state-approved logistics for global distribution and permissive banking regulations, experts say.

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Cannabis in Canada: Big banks are missing a boom

KushCo Holdings, a company that sells packaging and supplies to the cannabis industry, would love to borrow money from a real bank.

CEO Nick Kovacevich wants to secure up to $30 million in revolving credit, so he can hire more employees and build new warehouses.
But a line of credit or loan of that size isn’t an option because traditional banks are not willing to lend to marijuana businesses.
Even though Canada legalized recreational marijuana and opened the door to a flurry of business activity, big banks in the United States and Canada are keeping the industry at arm’s length because of pot’s muddy legal picture in the United States.
“Nothing [has] changed,” said Mark Zekulin, president and co-CEO of Canopy Growth (CGC), a cannabis company based in Toronto. “It takes time and dialogue for banks to see this as a legitimate sector.”
Cannabis, while legal for recreational use in nine US states, and Washington D.C., remains illegal under US federal law. American banks have largely stayed away from providing services to the industry because federal regulations prohibit lenders from working with any business that deals in illegal drugs. Lenders could face money laundering charges in the United States if they do.


Big money. Big opportunity

But banks could be missing out on a bonanza. The marijuana industry is expected to grow substantially in the next five years, with sales in the United States expected to hit $23.4 billion by 2022, according to cannabis market research group Arcview. Canadian sales are expected to hit $5.5 billion.
The size of the sector could eventually entice major banks to get in the game for fear of missing out on lucrative fees or lending agreements, or cash from deposits.
“It’s not a question of ‘if,’ but a question of ‘when,'” said Daniel Yi, a spokesman at MedMen (MMNFF), a chain of marijuana dispensaries based in Los Angeles.
Still, most of the largest banks remain on the sidelines for now — even in Canada, where banks have to worry about potential compliance issues abroad. TD Bank (TD), the Royal Bank of Canada (RY) and Bank of Montreal (BMO), all of which have an international presence, declined to comment for this story.
“It hasn’t, at this point, seemed to create a change in practice,” said Seth Goldberg, an attorney at Duane Morris who advises clients in the cannabis industry.
The American Bankers Association, the US industry’s powerful lobby, has said it wants Congress to resolve the conflict between federal and state laws so banks aren’t stuck in the middle, though it doesn’t have a position on legalization itself. Right now, banks that do decide to take a chance and quietly work with marijuana businesses are expected to file suspicious activity reports for every transaction related to those accounts — a huge and potentially expensive logistical headache.


How pot companies do business

The stasis has been disappointing for cannabis companies, many of which have to develop special, under-the-radar relationships with banks or credit unions so they can have somewhere to park their money. Borrowing is effectively off the table.
Canopy Growth uses the credit union Alterna for deposits. Bank of Montreal, a larger player, helped the company issue$500 million in convertible debt in June. Constellation Brands, the maker of Corona beer, took a large stake in Canopy Growth over the summer.
KushCo has a line of credit worth $4 million from New York lender Gerber Finance, according toKovacevich, but would like to borrow a more substantial amount at a more affordable interest rate.
KushCo, which sells cannabis products such as child resistant bottles and vaporizers, but not the drug itself, had a relationship with Wells Fargo starting in 2015, according to Kovacevich. The bank cut ties in 2017, he said.
“It only takes one person in compliance to say, ‘No, you’re not fine,’ for you to lose your account,” Kovacevich said.
A spokesperson for Wells Fargo (WFC) said the bank doesn’t comment on situations related to specific customers.
“As a national bank that is federally regulated, Wells Fargo must comply with federal law on the topic of marijuana, even in instances where state laws may differ,” the bank said in a statement in August. “Since federal law prohibits the sale and use of marijuana, national banks like Wells Fargo may not knowingly bank or provide services to marijuana businesses or for related activities.”
KushCo has since set up checking and savings accounts with a different “large national bank,” Kovacevich said. He declined to identify the bank out of concern that publicity would cause the institution to terminate the relationship.
MedMen’s Yi said that the company works with a collection of regional banks and credit unions that did not want to be identified at this time.
Zekulin of Canopy Growth said that while legalization in Canada hasn’t immediately changed the state of affairs when it comes to marijuana banking, he expects that conversations with banks will continue to get easier.
“This has been a process,” he said.
For now, it’s business as usual — or, for most major banks, no business at all.



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Despite Legalization, Canada’s Pot Black Market Continues To Thrive

Officials are hoping that dealers on the illegal market will be priced out.

Last week Canada became only the second country in the world to legalize recreational marijuana, but the black market for pot is continuing to thrive as customers seek out products that they can’t buy legally, including edibles, and sellers push back on government intervention in their industry.

“We’ll keep selling what we are selling,” Don Briere, the owner of an illegal Vancouver pot shop, told The New York Times. Briere sells edibles and other products that are currently illegal under the national law, which only allows for the sale of fresh or dried cannabis, seeds, plants and oil.

Canada—especially Vancouver—has long had a thriving illicit marijuana industry, worth an estimated 5.3 billion Canadian dollars each year.

One of the aims of legalization was to close the illegal shops that are common in cities like Vancouver.

However, Briere and other industry insiders object on principle. “The government taking over the cannabis trade is like asking a farmer to build airplanes,” he said. He’s not alone. In Vancouver, hundreds of illegal shops remain open.

At a lower level, street dealers try to entice customers by offering services like delivery and selling joints at a two-for-one price. Some customers who were frustrated that legal stores ran out of product went back to their illicit contacts.

“Definitely going to use my dealer from now on his business is going way up because of your crappy service,” one frustrated customer wrote on Twitter.

Despite the disregard for the law, Canadian law enforcement isn’t likely to step up consequences for people who are selling illegally. They have their hands full dealing with more pressing issues, including fentanyl overdoses, said Chief Constable Del Manak, police chief of Victoria and president of the British Columbia Association of Chiefs of Police.

However, this doesn’t mean that authorities are oblivious to the fact that the illegal market still exists. “It is naïve to think that just because cannabis is legalized, the criminal will walk away from a highly lucrative industry,” said Del Manak.

Mike Farnworth, British Columbia’s minister of public safety, said that the government is hoping that over time the legal market will undermine the demand for illegal sales. “It’s a very Canadian way of doing things,” he said. “It won’t happen overnight.”

Farnworth added that there won’t be any police raids with “guns and head-bashing.”

However, in Toronto, police raided five illegal pot shops after the legalization law was passed. Others have voluntarily closed, showing that the government’s approach might be working. Even Briere has shuttered some of his stores across the country and is applying for licenses for the remaining stores.

Officials are also hoping that dealers on the illegal market will be priced out. Today, marijuana on the street costs about one-third of what it did five years ago, making it less lucrative for dealers.

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Cross-border buying binge as Canadian cannabis companies make U.S. acquisitions

  • The Canadian cannabis experience gives Canada-based investment companies an edge in picking likely winners south of the border
  • Tidal Royalty uses Canadian experience to aid U.S. cannabis firms to build capital and expand
  • Tidal Royalty’s royalty financing model works well for cannabis companies

With a fully mature cannabis regime that includes both recreational and medical marijuana at home, Canadian investment firms are looking south for greener pastures in the United States. Their analysis is that most Canadian cannabis companies are fully valued, and while there may still be money to be made by backing the winners, the real opportunity is south of the 49th parallel.

The experience of having spent years building the Canadian financing cannabis landscape gives homegrown investment firms an edge in picking likely winners south of the line. With the U.S. cannabis market worth an estimated US$6.75 billion to US$10 billion, the potential rewards are enormous. California, Nevada, Maine, Massachusetts, Washington, Colorado, Oregon, Alaska, Vermont, and the District of Columbia have all legalized recreational marijuana, and other states are poised to follow suit. In all, 30 states and the District of Columbia have legalized either medical or recreational use or both.

Little wonder that a cross-border buying binge has begun with Canadians acquiring dozens of U.S. cannabis companies. According to data from New York-based Viridian Capital Advisors, at least 40 U.S. cannabis firms have been acquired by Canadian companies during the first three quarters of this year — over double the number during the same period last year.


“They call it the Green Rush and it’s not without good reason. This is a generational opportunity to say the least.”
— Terry Taouss, President, Tidal Royalty Corp.

Tidal Royalty Team Sets Sights on U.S. Cannabis Market

Tidal Royalty Corp. (CSE: RLTY) was built specifically to get in on the “Green Rush” into the U.S. cannabis market. A leading provider of royalty financing to the legal cannabis industry, the company’s team has built, led, and advised some of the best-known cannabis businesses in Canada.

CEO and Chairman, Paul Rosen, was a Co-Founder of PharmaCan Capital, now operating as the Cronos Group, the first cannabis stock to be listed on the NASDAQ exchange. President Terry Taouss has an extensive legal background and was part of the founding management team at SiteScout, a successful advertising technology company.

“Tidal Royalty was created as a vehicle for investors to get access to the U.S. market,” says Taouss.

“There have been incredible investment opportunities in the Canadian cannabis market over the past 5 years, but those are now becoming harder to find. We think the U.S. will develop along similar lines — but in a market 10 times the size — and we are looking to place our bets early. The U.S. is our sole focus right now.”

Mining Royalty Financing Model Works Well for Cannabis Companies

Taouss says the U.S. market is in a place where the Canadian market was about five years ago. Bringing Canadian experience to bear has helped the company build a financing model to assist U.S. cannabis firms to get the capital they need to expand. Tidal Royalty uses a financing model adapted from the mining industry. In return for capital, cannabis companies give a percentage of future revenues to the financing company.

“It’s a suitable structure because like mining, cannabis has a lot of upfront costs,” says Taouss.

“The royalty model is the go-to model for financing mining businesses in Canada, so we just took that model and modified it for the cannabis industry.”

Tidal Royalty has raised over $40 million to finance U.S.-based cannabis cultivation, manufacturing, and retail operations. The company recently announced financing of up to $12.5 million in Oregon-based cannabis cultivator Diem Cannabis.

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Tidal Royalty’s team understands the need for flexibility and support to build an enduring company.


Complex U.S. is Really “50 Different Markets”

Cutting your corporate teeth in Canada helps, but the complex U.S. market poses unique challenges. Each state has its own set of rules. Taouss describes it as “dealing with 50 different markets.” Add to that the fact that the U.S. federal government still treats cannabis as illegal pursuant to the Controlled Substances Act. That means investment firms and investors alike have to do extra due diligence, especially around the myriad of regulations.

“There’s a lot of operational challenges with investing in the U.S. cannabis market. There are tax issues, there are banking issues. There are diligence issues around security, operators, and regulations. So, there’s a lot of homework that needs to be done before investing in a U.S. licensed cannabis company,” says Taouss.

The Tidal Royalty team has done that research and is now working with a growing portfolio of U.S. cannabis companies to help them expand their operations. One of the biggest challenges those companies face is a lack of investment capital. Because cannabis still federally illegal, many institutional investors that would normally be financing the industry are sitting on the sidelines.

That opens the door to a company like Tidal Royalty to finance firms they’ve identified as well-established and poised not just to expand into multiple states, but to be players in the global cannabis market.

“We’re not an early stage investor. We don’t finance ideas. We work with companies that are already established and we provide them with the capital that they need to really expand their business and take it to the next level,” says Taouss.

U.S. Cannabis Companies Get Value Chain as Well as Capital

In addition to providing companies with much-needed capital, Tidal Royalty provides an extensive value chain to the firms they invest in. They help companies network, identify opportunities for acquisitions, and expand partnerships. From Taouss’s perspective, this kind of business development is good for both Tidal Royalty and the companies it has financed.

“We take a portfolio approach to our financings. Because we diversify across operators, states, and industry verticals, we can create opportunities that help both our portfolio companies and Tidal Royalty,” he says.

“We’re constantly thinking about ways that we can help them to grow, because at the end of the day, their success means our success. If they are able to generate additional revenue — the royalties are attached, so it’s definitely in our interest to see them grow their revenue and become successful.”

Getting in on the “Green Rush”

There are risks associated with the U.S. market, not the least of which is that regulated and comprehensive Canadian market to the north. Factor in the U.S. federal government’s position on cannabis and you have uncertainty that may cause some investors to think twice.

But Taouss says the smart money is on the U.S. cannabis market becoming a fully transparent, fully regulated, and legal industry in the near future. That is what makes navigating the complexities of the U.S. cannabis landscape worthwhile.

“They call it the Green Rush and it’s not without good reason. This is a generational opportunity to say the least,” he says.

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Vancouver, Canada’s Marijuana Capital, Struggles to Tame the Black Market

VANCOUVER — In the pot-friendly city of Vancouver, illegal marijuana dispensaries outnumber Starbucks outlets, and among the most popular is Weeds, Glass and Gifts. There, in a relaxed space reminiscent of the coffee chain, jovial “budtenders” sell coconut chocolate bars infused with marijuana and customers smoke powerful pot concentrates at a sleek dab bar.

When Canada legalized recreational marijuana, on Oct. 17, one of the central aims was to shut down the thousands of illegal dispensaries and black market growers dotting the country. But taming an illegal trade estimated at 5.3 billion Canadian dollars is proving to be daunting.

Many of the products sold at Weeds, Glass and Gifts are banned under the new law, which restricts licensed retailers to selling fresh or dried cannabis, seeds, plants and oil. Yet the retailer’s owner, Don Briere, an ebullient 67-year-old and self-styled pot crusader, has no intention of shutting down his four Vancouver stores or changing his product lineup.

He even has plans for expansion with a new line of outlawed canine marijuana treats, which purport to reduce pet anxiety.

“We’ll keep selling what we are selling,” said Mr. Briere, who in 2001 was sentenced to four years in prison for being one of British Columbia’s most prolific pot producers.


The Canadian government faces many challenges in stamping out the illegal marijuana industry. For one, there are too many black market shops like Mr. Briere’s for the government to keep track of.

And as sluggish provincial bureaucracies struggle to manage a new regulatory system, licenses to operate legally are hard to come by, giving illegal sellers added impetus to defy the law.

At the same time, the police and the public have little appetite for a national crackdown.

“The government taking over the cannabis trade is like asking a farmer to build airplanes,” Mr. Briere added.

Canadian policymakers say legalization is a giant national undertaking that will take years to be enforced. Mike Farnworth, British Columbia’s minister of public safety, argued that civic pressure and market forces would help gradually diminish the illegal trade.

“It’s a very Canadian way of doing things,” he said. “It won’t happen overnight.” There will, he added, be no mass raids, “guns and head-bashing.”

Nevertheless, he noted, newly created “community safety units” in British Columbia, staffed by 44 unarmed inspectors, have been given the power to raid dispensaries without a search warrant, seize illegal products and shut them down.

In the week since legalization took effect, there are signs of a chill, if a modest one.


In Toronto, police raided five illegal pot retailers, two days after the law went into effect. Dozens of others in Toronto, Vancouver and Ottawa have voluntarily closed their doors to avoid being shut out of the legal market.

Even Mr. Briere, who once owned 36 shops across Canada, is applying for government licenses for his stores, and has shuttered nine shops, including in Ottawa, Alberta and Saskatchewan. He is steering those customers to his illegal online shop instead.

Yet hundreds of black market pot outlets remain defiantly open, abetted by provincial governments slow to implement the new law.

On Oct. 17, only one legal government pot retailer opened in British Columbia, in the city of Kamloops, nearly a four-hour drive from Vancouver. That assured that Vancouver’s illicit trade would continue to thrive.

And that day, none of the roughly 100 illegal pot dispensaries in the city had the provincial licenses they needed to operate legally, even those that had applied for one.

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In Ontario, where the government’s online Ontario Cannabis Store has been overwhelmed with soaring demand, some pot smokers unwilling to wait five days for delivery are reverting to their illegal dealers instead.

“Definitely going to use my dealer from now on his business is going way up because of your crappy service,” one frustrated customer wrote on Twitter.

In Montreal, some underground dealers, who do home delivery, are challenging the new legal market by offering two-joints-for-the-price-of-one deals.

As cities across the country grapple with a new national experiment, Vancouver offers a striking cautionary tale about the challenges of policing the illegal trade.

In this picturesque multicultural port city less than a three-hour drive from Seattle, marijuana is as much a recreational drug as a state of mind. Young professionals toke before work, take pot-fueled hikes and chat about strains of vaunted “BC bud” — grown illegally near snow-covered mountains in the southeast of the province — as if discussing fine wine.


For decades, cannabis has been so deeply embedded in the social fabric of the city that illegal pot shops operated with impunity as so-called compassion clubs for those seeking medical marijuana, with the police largely turning a blind eye.

But in 2015, City Hall officials, fed up with the proliferation of black market dispensaries, including some selling to minors, passed tough regulations stipulating, among other things, that shops must be about 1,000 feet from schools, community centers or other outlets.

After dozens of dispensaries brazenly flouted the new rules, the city in 2016 began fining transgressors, issuing 3,729 tickets amounting to more than $3 million in fines. But the dispensaries mostly ignored them; only $184,250 has been paid.

Then the city began trying to shut down illegal operators with injunctions.

In March of this year, 53 dispensaries banded together to file a constitutional challenge, saying closing the operators would breach Canada’s Charter of Rights and Freedoms by denying patients access to medical marijuana they purchased at the black market stores.

“The City is using legalization to try and impose Prohibition,” said Robert Laurie, the lawyer representing the dispensaries.

The case is before British Columbia’s Supreme Court.

Kerry Jang, a left-leaning councillor on the Vancouver City Council who is also a professor of psychiatry at the University of British Columbia, and who helped develop the 2015 rules, said the injunctions were necessary to root out “a wild West” of illegal dealers.

Today, those who want to operate legally must pass rigorous criminal background checks and apply for a $30,000 license from the city.

But Professor Jang conceded that the restrictiveness of the new federal cannabis law posed enforcement challenges. “If you make cannabis legal but restrict where you can use it, it will just go underground.”

The challenge of enforcement is all too visible on Vancouver’s gritty downtown east side, an epicenter of Canada’s opioid crisis. Hundreds of addicts sit sprawled on the pavement every day, shooting Fentanyl, a potent synthetic opioid that Professor Jang said killed, on average, seven people a week in Vancouver.

Traffic is periodically interrupted by the sound of sirens as police officers break up drug deals.


Chief Constable Del Manak, police chief of Victoria and president of the British Columbia Association of Chiefs of Police, noted that the police had to grapple with Fentanyl overdoses, violent crime and sex offenders, and must prioritize resources according to public safety.

Investigating whether British Columbia residents are violating the law by growing more than four pot plants per household is not a priority, he said.

The legalization of recreational marijuana in Colorado, Washington State and Uruguay, he added, has shown that “it is naïve to think that just because cannabis is legalized, the criminal will walk away from a highly lucrative industry.”

Nevertheless, as the government floods the market with legal cannabis, prices are falling, squeezing out illegal growers. Black market growers who were able to fetch more than $3,000 United States dollars for a pound of cannabis five years ago complain that today they can barely get $1,000.

The new legal marijuana supply chain was in full force on a recent day outside of Vancouver at Pure Sunfarms, where immigrant workers in surgical masks were trimming buds from cannabis plants next to a sprawling greenhouse that once housed tomatoes.

Rob Hill, chief financial officer of Emerald Health Therapeutics, a licensed producer which owns part of Pure Sunfarms, predicted that it was only a matter of time before black market growers went out of business as consumers demanded the purity of government-approved pot, free of contaminants found in some street marijuana.

“We expect a new consumer market of women age 35-45 who will smoke pot instead of drinking chardonnay,” he said.

But Dana Larsen, owner of several illegal dispensaries in Vancouver, countered that underground cannabis cultivation remained deeply entrenched.

Legalization is doomed to fail, he added, because there is so little will to enforce it.

He said he had accumulated heavy unpaid fines from City Hall, had no intention of applying for a license, and was far more concerned about being able to provide cannabis to the elderly and ill customers who relied on him. “In Vancouver,” he said, “you have to make an effort to get busted.”



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World first clinical trial – impact of medicinal cannabis on Australians with malignant brain tumours

The phase 2 trial will examine whether high THC medicinal cannabis* can be tolerated by people with glioma (a type of brain tumour) and if it can affect tumour growth when taken with standard treatment, according to lead researcher Dr Janet Schloss, the Clinical Trials Coordinator at Endeavour College of Natural Health. (*THC is the main psychoactive ingredient of cannabis)

“This will be the first clinical trial worldwide to examine tolerability and tumour effect from orally ingested medicinal cannabis in humans with cancer of any type,” Dr Schloss said.

“Our Endeavour College research team will collaborate with Professor Teo to examine the impact of medicinal cannabis when it is used alongside standard treatment for cancer.

“As well as tumour impact, we’ll be looking at whether medicinal cannabis can improve quality of life, by reducing common symptoms such as headache, nausea and vomiting.”

Dr Schloss said glioma is a particularly aggressive brain tumour that often proves resistant to surgery, chemotherapy and radiation.

“This resistance means it’s vital for researchers to develop new therapies to treat this disease, which is one of the reasons why the clinical trial is important,” she said.

“Recent studies have shown that the active agents in cannabis may slow tumour growth and we believe further research is essential. If we can establish dosage guidelines and understand whether medicinal cannabis can assist standard treatment, this could be life-changing for glioma patients and their families.” (see page 2 for glioma details)

Coming together for better patient outcomes

Professor Teo, a former Australian of the Year, will be an Associate Investigator for the trial and will lead patient recruitment through his clinic at the Prince of Wales Private Hospital.

“This is a great example of complementary medicine researchers working in conjunction with the medical fraternity to bring about better outcomes for our patients,” Professor Teo said.

The clinical trial is funded by BioCeuticals, Australia’s leading provider of nutritional and therapeutic supplements, who have invested more than $500,000 as part of their commitment to provide practitioners with evidence-based solutions for health conditions.

BioCeuticals Director of Research, Development and Emerging Markets, Belinda Reynolds, said: “There is increasing public, political and practitioner awareness of medicinal cannabis, and it’s important that we have credible research into any health benefits”.

About the world-first trial

The trial has ethics approval and NSW ministry of health approval. Endeavour’s research team will assess the suitability of volunteers from among Professor Teo’s patients and other glioma patients who meet the inclusion criteria. The team will then administer the liquid medicinal cannabis and coordinate MRI, blood and other testing.

Patients will continue to see Professor Teo, his colleague Dr Mike Sughrue, or their medical specialists for treatment during the trial, while being monitored by Dr Schloss’ team during the three months of taking medicinal cannabis. The team will then follow patients for up to two years after the trial.

While medicinal cannabis is classified as a medicine, it is actually a plant. The herbal medicine expertise of Endeavour’s Office of Research, and their experience leading robust empirical research, makes them ideally placed to bring this world-first trial to fruition.

The clinical trial aims to strengthen complementary medicine’s evidence-based research and explore how it can impact on patient care and outcomes.

Dr Schloss said she hoped the trial’s findings would be valuable in guiding policy change, given the growing public demand for safe, reliable and legal access to medicinal cannabis through authorised doctors.

About gliomas

• Glioma is the most common form of primary brain tumour and among the most malignant cancers, often not responding effectively to surgery, chemotherapy or radiation therapy.

• Median survival time is one year. Gliomas remain a major medical challenge due to the tumour’s location, aggressive behaviour, rapid growth and low survival rate.

• Treatment usually involves surgical removal of the bulk of the tumour, followed by radiation and chemotherapy. Prognosis for patients is bleak, with only half surviving for 15 months and less than 5% of patients still alive five years after diagnosis.

• Gliomas can affect any age group but are more common in older people (average age of diagnosis is 64). 1000 Australians are diagnosed each year.

• Common symptoms are memory and speech difficulties, weakness on one side of the body and changes to vision.

Lead researcher Dr Janet Schloss is Clinical Trials Coordinator at Endeavour College of Natural Health’s Office of Research. She has dedicated her career to supporting cancer patients and expanding the body of evidence-based research for complementary medicine and its ability to assist people undergoing chemotherapy and radiation. Dr Schloss has coordinated and conducted clinical trials for more than 8 years on a variety of research topics involving cancer, chemotherapy and chronic disease.

She has 19 years’ clinical experience in the field of oncology and complementary medicine, and collaborates with many oncologists around Australia. She also currently practices at the Mater Private Breast Cancer Centre and Body Organics, alongside medical and radiation oncologists, surgeons and related health professionals.

Endeavour College of Natural Health’s Office of Research is dedicated to strengthening professional practice for complementary medicine professionals through an expanded body of evidence-based research for complementary medicine in Australia. It works to disseminate and critically examine all aspects of contemporary complementary medicine practice through the application of non-partisan, rigorous, and robust empirical research. The Office of Research is an arm of Endeavour College of Natural Health, Australasia’s largest degree conferring tertiary institution offering qualifications in complementary medicine and natural health. It has six campuses in Australia and two in New Zealand, five Bachelor degrees, four Honours degrees, 5,000 students, 350 staff and leading academics in the field.

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