StatsCan: 2M Use REC or MED Daily

Statistics Canada released an analysis of cannabis trends and related metrics.

Quick Hits

  1. A second man convicted of a minor possession offence (two joints) decades ago (37 years) has been banned for life from the United States since legalization.
    Global News
  2. Bill C-92, the Liberal government’s cannabis records-suspension law, cleared the Senate and will become law.
    iPolitics
  3. The number of cannabis-related lobbyists registered federally has jumped from 25 in the 2015–16 year to 114 in 2018–19. Companies lobbying the federal government were led by Canopy (33 reported communications), followed by Tilray (19) and Aphria (9).
    Ici Radio-Canada—In French
 

First Five Months Deliver $186M Tax Haul

Over the first five months of legal REC, governments across Canada collected some $186M in excise taxes, federal Goods and Services Taxes, and Harmonized Sales Tax including provincial sales taxes.

  • Provincial shares of the $97.9M excise tax revenues totalled $79.1M, while Ottawa kept $18.8M. ?
  • Ottawa collected $35.5M in GST, while provinces collected $52.7M in sales taxes.
  • Excise tax revenue increased 12.4% between the final quarter of 2018 and the first quarter of 2019.
  • Numbers aren’t as high as some predicted, which Conference Board of Canada economist Robyn Gibbard attributed to the difficult REC rollout.
  • Gibbard, in a statement, said, “We think that as the kinks are worked out, governments can expect strong growth in revenues from cannabis sales going forward.”
    Reuters

Provincial shares of the $97.9M excise tax totalled $79.1M, while Ottawa kept $18.8M. ?

Canopy Posts Significant Loss, Declining REC and MED Sales

Canopy reported REC sales down slightly in Q3, compared with its sales in Q2, which ended just after legalizationose last two weeks were the first of legalization. At the same time, the company posted a net loss attributable to shareholders of $335.6M, up from $61.5M one year ago. The loss was three times greater than analysts had expected.
CBC Business

Quick Hits

  1. Canopy said it will launch beverages and edibles in December, but will begin with a few markets and a smaller line of offerings to begin with.
    CTV News
  2. Analysts in the American food industry note the sector has been slow to make deals with Canadian LPs ahead of edibles/beverages legalization this fall.
    Food Dive

Packaging Update

As part of the new regulations released last week, Health Canada announced changes to its packaging regulations ahead of the legalization of edibles and beverages.
The Leaf

  • As of October 17, packaging will have fewer total messages, and will no longer contain statistical claims about potential cannabis harms (not persuasive enough) or warnings about cannabis addiction (likely not to be believed by consumers aged 18 to 24).

Quick Hits

  1. Police continue to note no increase in impaired driving since legalization.
    Waterloo Record
  2. Edmonton police described legalization as “lower than expected,” but they’ve laid 149 charges of improper transportation of cannabis. They launched a cute campaign to discourage carrying open cannabis in one’called “put your skunk in the trunk.”
    Edmonton Journal, CBC Edmonton
 

Health Canada: You Can’t Call That Beer

A new challenge the Health Canada regs present beverage producers is what they will call their products. Those making cannabisbeverages will not be allowed to describe their wares with general words like “wine” and “beer” (or specific terms like “ale” or “IPA”) that refer to existing classes of alcoholic beverages.

  • The regs, which are vaguely worded but demanding in spirit, do not allow cannabis products to be advertised in a way that associates them with alcohol, tobacco or vaping products.
    Vancouver Sun
  • Instead, manufacturers will have to find other ways to describe their beverages, such as “barley soda” or “sparkling beverage with THC.”
  • The regs pose a challenge to those brewing beverages from grapes associated with wines—they may not be able to describe their product as “made with cabernet sauvignon grapes.”
    CBC Saskatoon
  • Molson Coors’ joint cannabeverage venture with Hexo, called Truss, will offer a variety of cannabis beverages beginning on December 16.
    Bloomberg
  • Canadian laws governing cannabis remain significantly harsher than those governing alcohol.
    Global News

Quick Hits

  1. Valens executive Everett Knight said many underestimate the market for oil-based products, particularly when it comes to CBD.
    Benzinga
  2. CannTrust announced it had opened operations in the US with an agreement to access hemp production via California company Elk Grove Farming.
    New Cannabis Ventures

A Surplus of Worthless Inventory?

As of March, Health Canada reports LPs have 150,000 kgs of “unfinished inventory.” After months of uncertainty about what this might refer to, BMO Capital Markets warned some portion of this stock might actually be worthless—too poor quality even for extraction biomass. As a result, there may be industry-wide write-downs.
Bloomberg

  • Some producers have stressed their unsold inventories consist of product stockpiled for extraction.
  • For some time, insiders have warned “unfinished dried cannabis” inventory may refer to a variety of substances. It may be dried cannabis buds not yet processed or packaged, but it may also mean trim (fan- and sugar-leaves) or cannabis biomass.
  • “Unfinished inventory,” may still also refer to cannabis that has been damaged or is otherwise unusable for even extraction purposes.

High Street CEO Adrian Robinson told me, “A lot of companies have been saving their trim, their fan leaves or their sugar leaves, and people are building out these hundreds of thousands of square feet of greenhouse. You’re not able to prune those plants like you are in a smaller thousand or two thousand square foot room—you end up with so much more biomass you harvest. So I think you’ll continue to see the biomass increase although there isn’t a differentiation between biomass and bud on the balance sheet.”

Quick Hits

  1. BDS Analytics estimated the global market for legal cannabis will exceed $40B within the next five years, largely driven by North America.
    Globe and Mail—Paywall
  2. As Canada becomes accustomed to legalization, BDS Analytics predicted, spending on MED will decline from $607M to $506M—unless there’s a tax incentive to remaining a MED patient.
    The Leaf
  3. The deputy director of China’s National Narcotics Control Commission said the number of Chinese cannabis users increased by 25% in 2018, and blamed Canada and US states for legalizing.
    CNN

Degrassi Still Teaching Helpful Lessons

Degrassi-star turned harm reduction scholar Rebecca Haines-Saah (who played mean-girl Kathleen Mead) is bringing weed to Degrassi—again! This weekend in Toronto, 25 original stars will join fans from all over at Degrassi Palooza, a three day fans convention in Toronto. On Sunday at 11:00, Haines-Saah (along with NICHE CEO Jenna Valleriani and writer Rachelle Gordon) will present a “Cannabis 101” educational panel.

  • Given Kathleen Mead was the kid who found a joint in the tampon dispenser at school and introduced it to the girls at Melanie’s surprise sleepover for Diana’s birthday (season 5, episode 7), Haines-Saah is the right person to teach Degrassi fans about cannabis.

Quick Hits

  1. A all-party parliamentary health committee that toured the country to learn about methamphetamine consumption recommend decriminalization of drug possession.
    Globe and Mail—Paywall, Ottawa Citizen
  2. Public safety minister Ralph Goodale said he told US Homeland Security secretary Kevin McAleenan the US must take cannabis possession record suspensions seriously and keep records that “reflect the accurate legal status of Canadians.” Since the government has not expunged criminal records, U.S. border officials may still refuse entry to pardoned Canadians. Goodale said the US was receptive to his request.
    The Star
  3. Qwest makes among the most expensive cannabis in Canada. But in spite of the price, a BC retailer told me at Lift last week, “Those premium products keep selling out. People buy everything we have.”
    Leafly

UBC Scholars: Cannabis Driving Rules Too Strict

Researchers at the University of British Columbia say Canadian drug-impaired driving laws are too stringent.
Western Star

  • In a five-year study published in Addiction, UBC researchers determined there was no increased risk of crash in the blood-THC levels currently considered to indicate impairment.
  • While levels of THC spike after smoking a joint and dissipate quickly, THC builds up in body fat and is released constantly into the blood for weeks.
  • UBC’s Dr. Jeffrey Brubacher, lead researcher, said, “A medical marijuana user, for example, would never be allowed to drive.”
  • Brubacher said he believed impaired-driving laws should be changed.

Quick Hits

  1. THC BioMed launched Pure Cannabis Cigarettes, which will have commercial cigarette-style filters. The company claims using a filter is “a better way of smoking pot,” but filters in cigarettes do nothing to mitigate the harms of tobacco smoke. The press release also suggests the products can help smokers to quit, which would be an illegal health claim.
    NewsWire, Yahoo Finance, The Leaf
  2. Nanoemulsions are one of the key technologies that will allow easy infusion of cannabinoids—but there are concerns about how safe nanoemulsions are for humans to consume. Those who produce technologies competing with nanoemulsions are quick to point these concerns out, but independent health agencies are also uncertain whether nanoemulsions, according to one report, “may accumulate in the body, in particular in the lungs, in the brain and in the liver.”
    Vancouver Sun
  3. One way to get good publicity in spite of Health Canada’s stringent marketing laws is to partner with a charity and do good deeds, which CannTrust did in partnering with Project Share and Hospice Niagara.
    St. Catharine’s Standard
 

Desperately Seeking Test-Labs

A Radio-Canada investigation found there are too few testing labs nationwide, and far too few labs testing only cannabis. As a result, delays on lab results range from weeks to months.

  • Producers say delays are so long it affects the freshness and taste of their crops.
  • The introduction of edibles and extracts to the market will only worsen the situation.
  • The Canadian Cannabis Growers Association says Health Canada’s “over-cautious” licensing process has contributed to the shortage.
    Ici Radio-Canada—In French

Quick Hits

  1. Through its subsidiary Spectrum (formerly Mettrum), Canopy announced a two-year research plan to explore new MED treatments and applications to specific illnesses. Among the aims for the project will be developing standardized MED formulations for consistent dosing.
    Grizzle
  2. Micro-cultivators cannot have “shared spaces” in which there are two or more licensed sites within a single perimeter—though they can be housed within the same building.
    Twitter—Trina Fraser
  3. Ontario electrical utility Hydro One is running a new line into Leamington with enough electricity to power the city of Ottawa. Most of that will go to light up the grow rooms of Aphria and other LPs in the area.
    Globe and Mail—Paywall

Legalization: “A Gong Show”

Cannabis businesspeople argued Canadian regulations cost the country its chance at a major cannabis market. Instead, CBD is wildly popular across the US but is still difficult to buy legally in Canada, while legal REC is treated shamefully, “almost like you’re buying something dirty in brown paper bags. […] Like liquor in the ’60s.”
Bloomberg

  • Canoe Financial chair and former Dragon’s Den dragon Brett Wilson said the provincial and municipal interference in the legalization process has been “a gong show.”
  • “The jobs are there, the work is there but regulatory impediments are extraordinary,” he said.
    CanTech Letter

Quick Hits

  1. Aurora is investing $1.5M to upgrade its research and development capacity.
    Global News
  2. Zenabis CEO Andrew Grieve will waive compensation until the company has achieved its goals.
    The Province
  3. Aleafia announced it completed the planting of “Canada’s first legal outdoor grow facility.” Growers online quickly noted the plants were placed too close together, a proximity that may discourage flowering while encouraging the transfer of pest infestations between plants.
    Twitter