Canadian Regulatory Authorities Struggling To Define Rules

Now that Canada finally has a date for the recreational market start, the federal government, provinces and other regulatory authorities are beginning to issue guidelines and rules that are going to define the early days of the recreational industry.

These include regulations on retail trade, medical sales and use. However this is precisely where the confusion is growing.

The Government Will Continue To Run The Medical Cannabis System

In a move to protect patients, Health Canada has announced that it will continue to run the medical part of the market for at least the next five years. In good news for medical users, this announcement was made against calls from the Canadian Medical Association for the medical infrastructure developed on Canada’s path to recreational reform to be phased out. The reason, according to the CMA? Many doctors feel uncomfortable prescribing the drug because of a lack of research and a general lack of understanding about dosing.

Both patients and advocates have expressed support for continuing the medical system. This includes organizations like the Canadian Nurses Association who fear that if a focus is taken off of medical use, producers will ignore this part of the market to focus only on recreational sales.

In the future, after legalization, Health Canada will also continue to support more research and trials.

Provinces Are Setting Their Own Rules For Recreational Sales

Despite early statements, the recreational market is still in the throes of market creation and regulation. The laws are also changing in progress, a situation one regulator has described as building an airplane as it hurtles down the runway for take-off.

Athletes in Canada are still banned from using any kind of cannabis.For example, Ontario, the largest provincial market, is also delaying private sector sales in retail shops until next year. It is also moving away from a government-run dispensary model. Government sales will begin in October, but private dispensaries will have to wait until next April to open their doors (and existing operations will have to close their doors while they apply for licenses). This is also a reversal of the regional government’s position that it would only allow government-controlled shops to sell recreational cannabis.

But perhaps the largest unknown in both national and provincial policy outside of retail brick and mortars is in the area of online sales. A major fight is now brewing in many places where the established industry is now siding with the government about unregistered dispensaries (see Ontario) and established if not registered producers are competing directly with the government not only on main street but online as well.recreational users are beginning to sound alarms that they do not want the government to have so much personal information about them

Retailers with a web presence operating in a grey space will continue to pose a significant challenge to the online system now being implemented by the government for two reasons. Product availability (which will be far more limited on the government-run sites) and privacy.

Beyond the lack of diverse products and strains to be initially offered via the online government portals, recreational users are beginning to sound alarms that they do not want the government to have so much personal information about them – and point specifically to the differences in the regulated alcohol industry vs. the new regulations for the recreational cannabis market.

Beyond Market Rules, There Are Other Guidelines Coming

The Canadian military has now issued guidelines for active duty personnel and cannabis. It cannot ban it from soldiers entirely of course, and as it stands, the situation will be ripe for misunderstandings. For example, soldiers are prohibited from consuming cannabis 8 hours before any kind of duty, 24 hours before the operation of any kind of vehicle or weapon and 28 days before parachuting or serving on a military aircraft.

The only problem, of course, is being able to enforce the same. Cannabinoids, notably THC, can stay in the body for up to 30 days for casual users long after the high is over.

Athletes in Canada are still banned from using any kind of cannabis. The reason? They are subject to the Canadian Anti-Doping Program (CADP) under which the use of cannabis will still be prohibited.

That said, the Canadian Hockey League is reportedly now examining how to revise how it addresses the issue of medical use.

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A Province-By-Province Look At Recreational Cannabis In Canada

Federal recreational reform is coming to Canada next month, the second country after Uruguay to take the plunge. For the first time in almost a century, in other words, cannabis is now about to be legal again.

The federal government will license and regulate the industry. However each province and territory (analogous to American states) will set the rules on distribution and sales. As a result, there is quite a bit of difference across the country with implications both for licensed producers (LPs) and consumers.

A quick guide to the general Canadian regulations broken down by Province.

Who Can Buy, Sell and Grow?

With two exceptions, the legal age of consent is 19, home growing of up to 4 plants is allowed across many provinces (with only Quebec, Manitoba and Nunavut banning the practice), and rules vary by province on both public and private consumption.

However what the industry is really looking at right now is where private enterprise will be allowed to flourish at the retail end of the industry. Private retailers will be allowed to operate in 7 provinces and territories where they will compete with government run outlets. In New Brunswick, Nova Scotia, Ontario, Prince Edward Island, Quebec and the Yukon, consumers will be required to shop in only government-run establishments.

Nunavut, with no licensed producers, will allow online sales only, even in a recreational market. This gives Tilray an instant advantage with their established online presence not only from the company website, but Leafly.However, the two largest provinces are also where the competition will be most intense nationally.

Power Provinces

One of the most interesting statistics to look at is mapping this information to the number (and size) of licensed producers in each province. For example, Ontario currently clocks in at 59 producers, British Columbia at 23, Quebec at 8 and Alberta at 6, while the Yukon, the Northwest Territories and Nunavut have none. Of these, Ontario and Quebec will not allow producers to sell direct to private establishments but rather mandate sales via government-run dispensaries.

Ontario is slated to become the largest of all provincial markets in the country with Quebec coming in second.

However, the two largest provinces are also where the competition will be most intense nationally.

Where The Big Dogs Lie

Even these statistics do not tell the entire story. The biggest producers (especially those engaged in international rather than just domestic production and distribution) are scattered all over the map. For example, Tilray is in British Columbia. This gives the company the unprecedented ability, via its online portal and information website, Leafly, to engage in direct sales to both patients (via online sales) and recreational users from its home base.

How this will shape regional sales figures once the rec market actually starts is uncharted territory.Aurora is in a similar situation as it is situated in Alberta.

Canopy is headquartered in Ontario, but has grow sites across the country, giving it wide market access, and has just been picked as one of four companies to begin recreational sales in Manitoba.

Aphria and MedReleaf headquarters are also both located in Ontario. But it is not necessarily where such producers are located which will determine market access. Ontario has opened the door to suppliers of all sizes, across the country.

Quebec, in contrast, has signed deals with Canopy, Aphria, Aurora, Tilray, MedReleaf and Hydropothecary with both Aurora and Hydropothecary expected to have large home-court advantage when it comes to branding. MYM Nutraceuticals, with a huge greenhouse in Weedon, Quebec, has now also signed the largest deal in Quebec (as of June). The company represents one of Canada’s largest greenhouses.Canopy_Growth_Corporation_logo

Prince Edward Island and Brunswick have followed a bit of a hybrid model, signing deals with both small local players and the larger national companies.

The interesting twist to the Canadian medical market (that does not exist in Europe for example) is that all licensed producers are allowed to sell directly to patients online. How this will shape regional sales figures once the rec market actually starts is uncharted territory.

Ontario, with 40% of the country’s population and home to more than half of Canada’s registered producers, is slated to become the country’s largest recreational market.

British Columbia, in contrast, is developing as a place where mom and pops can still thrive.

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GW Pharma’s Enormous Price for Epidiolex

In a fascinating early August conference call with Seeking Alpha, British-based GW Pharmaceuticals finally revealed their retail price point for CBD-based drug, Epidiolex, as it goes into distribution in the U.S.

The drug is designed for the treatment of certain kinds of childhood epilepsy – although not all kinds. Also notable of course, is that GW Pharma’s “other” drug for treatment of resistant epilepsy failed in late stage trials in Eastern Europe earlier this year. It also knocked off 5% of the price of the company’s stock.The company is estimating it has a potential patient pool of between 25,000- 30,000 patients in the U.S.

British Advocacy Over Access And Pricing

The ineffectiveness of GW Pharma’s drugs for many patients (along with the cost charged for them) was responsible for pre-empting the entire access discussion in the UK this year. The mother of an epileptic British child tried to import a personal store of cannabis oil (produced by Canadian LP Tilray) only to have it confiscated at the airport this summer. Her son ended up in the hospital shortly thereafter.

The national uproar this caused pushed forward the country’s new medical cannabis policy– indeed drug rescheduling is due to go into effect in October. Conveniently, right as Epidiolex goes on sale in the U.S. (where cannabis remains a Schedule I drug).

The company is estimating it has a potential patient pool of between 25,000- 30,000 patients in the U.S.

Price Tags and Politics

What is the price of Epidiolex? $32,500 per patient, per year. If that sounds high, the company insists it is pricing the drug to be “in line” with other drugs for this segment of the market.

The majority of this cost will not be picked up by private health insurers but rather the federal governmentActually, according to industry analysis, this is about 70% more than the price of one comparable drug (Onfi), and slightly more expensive than Banzel, the two competing (non-cannabinoid based) medications now available in the U.S. for this market.

Here is the other (widely unreported) kicker. The majority of this cost will not be picked up by private health insurers but rather the federal government, which is also not negotiating with GW Pharma about that high price  (unlike for example what is going on in Europe and the German bid).

Why the difference?

Two reasons. The first is that Epidiolex has obtained “orphan drug” status (a medication for a disease that affects fewer than 200,000 patients in the U.S.) The second is that the majority of the insurance that will be picking up this tab is Medicaid. The patient pool will be unable to afford this. As a result, the bulk of the money will remit not from private insurance companies but rather federal taxpayers. And, unlike in say, Germany, none of this is pre-negotiated in bulk.

Epidiolex-GW
What is the price of Epidiolex? $32,500 per patient, per year.

Co-payments are expected to range from $5 to $200 per month per patient after insurance (read: the government) picks up the tab. This essentially means that the company plans to base participation at first at least on a sliding scale, highly subsidized by a government that has yet to reschedule cannabis from a Schedule I in the U.S.

Creating, in other words, a new monopoly position for GW Pharmaceuticals in North America.

A Hypocrisy Both Patients And The Industry Should Fight

The sordid, underhanded politicking that has created this canna monster is hardly surprising given the current political environment in both the U.S. and the U.K. right now. The people who benefit the most from this development are not patients, or even everyday shareholders, not to mention the burgeoning legitimate North American cannabis industry, but in fact highly placed politicians (like British Prime Minister Theresa May). Philip May, the PM’s husband’s firm is the majority shareholder in GW Pharma. Her former drugs minister (with a strong stand against medical cannabis) is married to the managing director of British Sugar, the company that grows GW Pharma’s cannabis stock domestically.

So far, despite a domestic outcry over this in the UK (including rescheduling), there has been no political backlash in the United States over this announcement. Why not?

Look To Europe For A More Competitive Medical Market

This kind of pricing strategy is also a complete no go in just about every other market – including medical-only markets where GW Pharma already has a footprint.

For example, German health insurers are already complaining about this kind of pricing strategy for cannabis (see the Cannabis Report from one of the country’s largest insurers TK – out earlier this year). And this in an environment where the government, in fact, does negotiate a bulk rate for most of the drugs in the market. Currently most German cannabis patients are being given dronabinol, a synthetic form of THC which costs far less.

GW logo-2On top of this, there are also moves afoot by the German government to begin to bring the costs of medical cannabis and medicines down, dramatically. And this too will impact the market – not only in Europe, but hopefully spark a debate in every country where prices are also too high.

The currently pending German cultivation bid for medical cannabis has already set an informal “reference” price of at most 7 euros a gram (and probably will see bid competitors come in at under half that). In other words, the government wholesale price of raw, unprocessed cannabis flower if not lightly processed cannabis oil is expected to be somewhere in the neighbourhood of 3-4 euros per gram come early next year. If not, as some expect, potentially even lower than that.

Processed Cannabis Medicine vs. Whole Plant Treatment

The debate that is really raging, beyond pricing, is whether unprocessed cannabis and cannabis oil is actually “medicine.” At the moment, the status quo in the U.S. is that it is not.

GW Pharmaceuticals, in other words, a British company importing a CBD-based derivative, is the only real “medical cannabis” company in the country, per the FDA. Everyone else, at least according to this logic, is placed in the “recreational camp.” And further, hampered still, with a lack of rescheduling, that affects everyone.

If that is not an organizing issue for the American cannabis industry, still struggling with the many issues inherent in the status quo (from insurance coverage and banking to national distribution across state lines) leading up to the midterms, nothing will be.

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The Awakening Green Giant: China and Cannabis

There are many ironies along the path towards global cannabis legalization. Too many to count. But surely one of the oddest was always going to be the reacceptance and relegalization of cannabis in China.

The path so far has been, at a minimum, tortured.

Ritualistic, religious, and medical use of cannabis is mentioned in Chinese texts as early as 3,000 years B.C. and medical literature for the last 2,000 years. Fast forward through Imperial dynasties, the western Age of Empire and exploitation, a cultural and political revolution and two world wars, and it took China until 1985 to actually declare cannabis “illegal.”

Flag_of_the_People's_Republic_of_China.svgDuring the 19th Century British occupation, the majority Muslim Xinjang region of the country was a major cannabis producer (and exporter) to British India.This was done legally and under tariff until 1934 when the communist government cut off legal trade.

Currently,punishment for possession yields10-15 days jail time and a 2,000-yuan (approximately $300) fine. Illegal sales, however, carry the death penalty. Last year, China executed 10 people convicted of drug trafficking in a public space to send a strong statement about the launch of a new anti-drug campaign. It certainly sent a message.

But to Westerners, in particular, a highly confusing one.

So where is the “market?” And how and where is cannabis being slowly reintroduced to the country in the age of global reform?In 2003, they issued regulations to normalize the industry.

Hemp Is Widely Farmed

Farmers in the northerly province of Heilongjiang province, near Russia, are producing hemp legally these days – bound for industrial, medical and edible commercial use. The crop is highly profitable for farmers – bringing in about USD $1,500 per acre.This is far more than other crops like corn. Chinese authorities had, until earlier this century, turned a blind eye to its production. In 2003, they issued regulations to normalize the industry.

This production region also accounts for half of all farmland currently under legal hemp production, globally.

That is not a typo.

More Than Half Of Global Cannabis Patents Are Chinese

During the 20th Century,as cannabis reform moved on, not to mention western medical knowledge expanded about the plant, no surprise, the Chinese government began to lend support to a burgeoning industry and medical research. That also began surprisingly early. During the Chinese involvement in the Vietnam War during the 1970’s, the government needed a source of cheap clothing material for soldiers. They also needed cheap, accessible medicines with strong anti-bacterial properties, particularly in the humid jungle.

Given the highly politicized nature of the plant itself, not to mention current geopolitical developments shaping the global industry, Chinese exports are likely to stir a global conversation.Approximately half of the world’s 600 cannabis patents are now held in China, rivalling the potential of Israel on both the cannabinoid medicine and medical device front.

These days, there is a greater appreciation than ever for “traditional” Chinese medicine,long stigmatized by Western approaches to the same, far from China. The discovery of the so-called “endocannabinoid system” of the body by Israeli scientists at the turn of the century also supports this sea change. Including not only the use of cannabisbut other natural herbs and procedures like acupuncture to stimulate it.

The Chinese domestic medical cannabis trade, in other words, is ready to take off in the world’s largest greying population. The horse has, obviously, left the barn in the West.

But what does all this mean for non-Chinese competitors not only in Chinabut outside of it, as the drug heads for export crop status?

Cannabis Trade Wars Are In The Offing

Given the highly politicized nature of the plant itself, not to mention current geopolitical developments shaping the global industry, Chinese exports are likely to stir a global conversation.

President Donald Trump’s administration, it should be remembered, allowed a British CBD import to enter the U.S. pharmaceutical market this summer (while still banning all U.S. producers from entering the same thanks to delays on rescheduling domestically). It is not an unreasonable prediction to make, certainly after Trump also struck a deal with Israeli President Benjamin Netanyahu to delay the date of Israeli medical cannabis to the rest of the world in exchange for political support in moving the nation’s capital from Tel Aviv to Jerusalem.

A U.S. “ban” on Chinese-sourced cannabis would be one of the most natural responses in the world for the current American administration, which has not only used the cannabis trade card before (Israel, UK) but has yet to move on rescheduling the drug at home.

What To Expect If Considering Importing

Tread carefully. While Europe (at least to North Americans) has its eccentric quirks when it comes to international business, the situation in China is far different.Tread carefully, and find local partners where possible. 

Beyond appalling penalties for getting the paperwork (or etc.) wrong, there aremany differences in business, medical and even broader culture that are completely foreign to Westerners (in particular).

Tread carefully, and find local partners where possible. Where to meet Chinese partners?

Chinese investors are beginning to enter particularly European markets via conferences. In the past several years, while they are still a trickle, Chinese doctors, investorsandscientists have begun appearing in the West. Particularly in more medically oriented forums in Europe.

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Are Global Cannabis Markets Moving In Synch?

In American political lingo, an “October Surprise” is an event or incident that is deliberately planned to impact a political election – usually during a presidential year.

The cannabis industry, of course, is still highly political – starting with reform itself.

So what to make of the fact that over the course of the summer, three major markets have started to align in terms of timing?

Canada, Germany and The UK Moving In Synch?

None of these things were original, publicly planned or announced, of course. During July, the Canadian government finally announced the recreational market start date, the German government issued its new cannabis cultivation bid (due in October), and of course, the British government announced that they would reschedule cannabis and create more access for British patients.Canadian companies, for example, are perfectly poised to enter both markets and dominate the industry

What is in the air? And could this, in any way, be a deliberate cannabis industry power play by political forces in motion right now?

The Canadian-German Connection

Planned or not, it is certainly convenient that the much stalled German cultivation bid will now be due right at the time that the Canadian rec market goes into hyper drive. Why? The largest Canadian LPs are currently dominating the European market. These companies are also widely expected to take home the majority of the tender opportunities and are already producing and distributing across Europe.

For this reason, it is unlikely that there will be any “shortages” in the market in terms of deliverable product. However, larger Canadian cannabis companies have already announced that a certain percentage of their stock will be reserved for medical use (either at home or presumably to meet contract commitments that now stretch globally). Inefficiencies in the distribution network will be more responsible, at least in the short term, for consumer “shortages” rather than a lack of availability of qualified product.

Regardless, the connection between these two markets will generate its own interesting dynamics, particularly given the influence of both the Canadian producers and the size of the German medical space on cannabis reform as well as market entry.

The German-British Connection

Germany and the UK are connected historically, culturally, and now on the topic of cannabis reform. While it is unlikely in the short term that German-produced cannabis would end up in the UK, British grown cannabis products are available across Europe, including Germany, in the form of drugs developed by GW Pharmaceuticals.

In the future, given the interest in all things “export” in both economies, this could be a fascinating, highly competitive market space. Whether or not Brexit happens.

The British-Canadian Connection

While not much has emerged (yet) from these two commonwealth countries now embarking on the cannabis journey, it could certainly be an interesting one. This starts with the major competition GW Pharmaceuticals now faces at home from external (Canadian in particular) companies looking to expand their reach across Europe.

Whether Britain Brexits or not could also impact the pace of market development here. Particularly as cannabis supplies can be flown in (via Heathrow), or shipped via the Atlantic, thus missing the Channel crossing point and literally parking lot delays on major motorways.GW logo-2

Canadian cannabis companies could also decide to build production sites as the market matures in the UK.

As it emerged earlier in the year, the UK is also the world’s top cannabis exporter – ahead still of the entire Canadian export market. Do not expect this to last for long after October.

However, in one more intriguing connection between the markets, Queen Elizabeth II in the UK must sign the final authorization for the Canadian recreational market to commence. With a new focus on commonwealth economies,if Brexit occurs, cannabis could certainly shape up to be a major “commonwealth crop.”

Much like tea, for that matter.

The common language between the two countries also makes international business dealings that much easier.

But What Does This All Mean For The Industry?

The first indication of this synching phenomenon may well be simply market growth on an international level unseen so far.

Canadian companies, for example, are perfectly poised to enter both markets and dominate the industry simply because this odd calendrical synching is also very convenient for business,

British companies coming online in the aftermath of rescheduling will also be uniquely positioned, no matter the outcome of the now looming divorce agreement between the parties. Whether the first market beyond domestic consumption is either commonwealth countries or the EU (or both in a best case scenario), the British cannabis market is likely to be even more globally influential than it already is.

The German market may also, depending on the pace of patient growth and cultivation space, become the third big rival, particularly with the near religious fervour all exports are worshipped here.

In the more immediate future, Germany is actually shaping up to be the most international market. Established companies from Canada to Israel and Australia are clearly lining up to enter the market one way or the other. And all that competition is starting to predict a seriously frothy, if not expanding, market starting now with connections that stretch globally.

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Food Safety Consortium To Address Cannabis Safety, Edibles Manufacturing

The 6thAnnual Food Safety Consortium Conference & Expo will feature an entire track dedicated to cannabis this year. As announced back in May of this year, the Cannabis Quality series will feature presentations by subject matter experts in the areas of regulations, edibles manufacturing, cannabis safety & quality as well as laboratory testing.

The Food Safety Consortium itself is hosted by our sister publication, Food Safety Tech, but the Cannabis Quality series will be co-hosted by Cannabis Industry Journal as well. A number of cannabis-focused organizations will participate in the series of talks, which are designed to help attendees better understand the cannabis edibles market, regulations surrounding the industry and standards for manufacturers.

Ben Gelt, board chairman at the Cannabis Certification Council (CCC) will moderate a panel discussion where leaders in the edibles market will discuss supply chain, production and other difficulties in manufacturing infused products. That panel will include Nancy Whiteman, CEO of Wana Brands, Jacob Pasternack, CEO of Binske, Justin Singer, CEO of STI Brands, alongside other leaders in the infused products and edibles markets.

Radojka Barycki, CEO or Nova Compliance, will discuss the role of food safety in the cannabis industry and identify some biological and chemical hazards in cannabis product testing in her talk, “Cannabis: A Compliance Revolution.” Larry Mishkin, counsel to Hoban Law Group and partner at the law firm, Silver & Mishkin, which serves cannabis businesses in Illinois, will also be speaking earlier in the conference.

Cameron Prince, VP of Regulatory Affairs, The Acheson Group
Cameron Prince, VP of Regulatory Affairs, The Acheson Group

Cameron Prince, vice president of regulatory affairs at The Acheson Group, will help attendees better understand key market indicators and current trends in edibles manufacturing during his talk on November 15th. “With the current trend of legalizing cannabis edibles, medicinal and recreational suppliers alike are looking to quickly enter the edibles market,” says Prince. “Understanding the nuances of moving to food production relative to food safety, along with navigating the food industry’s regulatory environment will be critical to the success of these companies.”

Tim Lombardo and Marielle Weintraub, both from Covance Food Solutions, will identify common pathogens and areas where cross-contamination can occur for edibles manufacturers as well. This year’s event will be held November 13-15 in Chicago, Illinois. To see the full list of speakers and register for the conference, go the Food Safety Consortium’s website.

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International Summer Cannabis Roundup

As August comes to a close, it is clear that it has been one busy quarter for market development – all over the place. Developments in the UK and Germany in particular, however, have been dramatic. In turn, this is also starting to bring other countries online – even as potential producers move in on the market and before real domestic medical reform has occurred (in countries ranging from Turkey to Spain).

And, say no more, Canada finally announced its “due date” in October.

How all three markets will move forward is also very interesting. They are all interrelated at this point, and even more intriguing, increasingly in synch.

This trend is also one advocates should take note of to push forward on further legislative and access issues going forward.

The EU looks poised to hop on the legalization train

In the future, no matter what happens with Brexit, developments in both the UK and Germany will continue to push the conversation forward in the EU, a region that is now the world’s most strategic (and globally accessible) cannabis market. Advocates, particularly in Canada and the U.S. right now, can also do much to support them.

Germany

Events here, while they may seem “slow” to outsiders, are in fact progressing – and as Cannabis Industry Journal has been reporting – quite fast even if the developments haven’t been (initially at least) quite as public. As this ‘zine wrote, breaking the news in July, the Federal German Drugs and Medical Devices Agency (BfArM) quietly posted the revised bid in July on a European tender site after refusing to confirm that it had sent out (undated) cancellation letters to previous hopefuls.  Applicants for the new tender have until October 22 to respond. It is expected, given the new focus on “coalitions” that there will be many more applicants from global teams.

Even more interesting is the informal “reference price” that BfArM is appearing to set for bid respondents (7 euros per gram) and the impact of that on all pricing going forward across the continent.

german flag
Photo: Ian McWilliams, Flickr

Within a week, it also emerged that the Deutsche Borse, the organization that regulates the German stock exchanges, and working via its third party clearing arm, refused to clear any trades of any publically listed North American cannabis company that are also listed in Germany. This is an interesting development for sure – particularly now. How it will impact the biggest companies (read publicly listed Canadian LPs) is unclear, particularly because they can now raise capital via global capital markets – including the U.S.

Earlier in the summer, one of the largest public or “statutory” health insurance companies in Germany issued the “Cannabis Report.” It showed that cannabis has now moved out of “orphan drug territory” in Germany, and over 15,000 patients are now prescribed the drug. That said, over 35% of all claims are still being rejected. Most patients at this point, are also women older than 40.

The UK

It seems to be less than coincidence that the other big mover this quarter (and in fact most of the year) has been the UK. These two countries are linked by history and trade more than any other in Europe.

Epidiolex-GWAs of October, the country will not only reschedule cannabinoid-derived medicine to a Schedule II drug, but also allow more patients to access it. It is unclear how fast reform will come to a country in the throes of Brexit drama, but it is clear that this discussion is now finally on the table. What is also intriguing about this development is how far and fast this will open the door for other firms to compete, finally, with the monopoly enjoyed by GW Pharmaceuticals in the British Islands since 1998.

In one of the quarter’s biggest coups that stockholders loved but left the domestic industry with few illusions about the fight ahead, GW Pharmaceuticals also announced that it had managed (ahead of all U.S.-based producers and firms and even rescheduling in the U.S.) to gain U.S. federal government approval to import a CBD-based epilepsy drug (Epidiolex) into the United States from the UK and thus gain national distribution.

Canada

While it was more inevitable (and planned for) than developments in Euro markets, Canada also moved forward this quarter. There is now a set date for a recreational market start.

What is even more interesting is that the next formal “steps” in all three markets are now timed to coincide within weeks of each other in October this year.

Canadian producers of course are in the leading position to enter both German and British markets. Further their production centers now springing up all over Europe are supplying both their source markets and will be available for international distribution.

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British Government Agrees To Loosen Rules on Prescribing Medical Cannabis

After a year of embarrassing missteps and revelations, along with two well-run advocacy campaigns by the parents of children with drug-resistant epilepsy, the British government is finally throwing in the towel on medical cannabis.

Sadly, politics rather than science has driven the pace of British cannabis legalizationIn the last week of July, a mere two weeks after announcing his review of the issue against mounting domestic pressure and outrage in the media, Sajid Javid, the home secretary, announced that cannabis medications will be rescheduled by the fall, allowing doctors to prescribe them more widely.

“Fall,” it should be noted, is not only when the Canadian government moves ahead with its own fully recreational market, but also when the German bid respondents need to file their paperwork to participate in the country’s first grow bid, Round II.

A Political Embarrassment Beyond Brexit

Sadly, politics rather than science has driven the pace of British cannabis legalization, just like it has in other places. However the UK is one of the best examples of how far medical knowledge has outstripped the pace of political change, and in this case, exposed bare the banal reason.

News broke this summer, as two families mounted a highly successful battle in the public for medical access, that the Prime Minister herself has personally profited from a status quo that is only now slowly going to change.

How and why?

Theresa May, Prime Minister of the UK
Theresa May, Prime Minister of the UK
Image: Annika Haas, Flickr

It was bad enough in May that the publicly anti-pot reformer Victoria Atkins, the cabinet level British drugs minister, was married to the managing director of British Sugar, the company with the exclusive right to grow cannabis in the British Isles. British Sugar is also the sole cultivator for GW Pharmaceuticals, the only company with the license to produce cannabis medications in the UK (and export them globally). In June, however, it emerged that Prime Minister Theresa May’s husband, Phillip May, is employed by Capital Group– an investment firm that is also the largest shareholder in GW Pharma. This is against the backdrop of news that broke earlier this year that GW Pharma had made the UK the single largest exporter of cannabis-based medicine annually. Globally. Even more than all of the Canadian firms combined currently exporting to Europe and beyond. Even as the drug is largely denied to British residents.

You don’t even have to be British to think the entire situation is more than a bit of a sticky wicket.

Vested, If Not Blueblood Interests

This development also came to light right as GW Pharma’s newest focal epilepsy drug faltered to failure in Eastern European trials and as Epidiolex, the company’s drug for certain kinds of childhood epilepsy, was given the green light in the U.S. by the government as the “first” cannabis-based medication to be allowed for sale in America.Epidiolex-GW

No one has yet defined exactly what kind of cannabinoids will be allowed to be prescribed in the UK come fall, but here is the most interesting development of all that still hangs over the British Isles like stale smoke: Will competitors to GW Pharma be allowed to sell their products to medical customers in the UK or will this new opening for patients just create more of a monopolized windfall for one company whose profits, at least, lie in “pharmatizing” the drug rather than creating greater access to the raw plant or its close derivatives? And those profits flow to women (and men) with the greatest political control over the development of the industry in the country.

Is This Really A “Legalization” Victory?

In the short term, no matter how limited, the answer is actually yes. Rescheduling the drug is a step that has not even been taken in the U.S., and will serve, medically, to reset the needle if not the debate about the circumstances under which cannabis should be used for patients.GW logo

It will also move the punishment discussion in a way that still has not happened in places like Germany where, technically, the drug has not yet been decriminalized even though doctors are prescribing it and public health insurers cover the costs for increasing numbers of patients. Large numbers of Britons, just like everywhere else, are incarcerated every year or obtain black marks on their records for mere possession that in turn can affect lives.

Finally, it will put recreational reform in the room, even if still knocking at the door. This discussion too has been gaining in popularity over the past year in particular as reform moves elsewhere. Like Germans, like Canadians and like Americans, reform in Colorado and Washington set loose a global revolution, which will clearly not be stopped.

Even if in places like the UK, it is still moving far slower than it should be. For political and business reasons, not driven by science.

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German Drugs Agency Issues New Cannabis Cultivation Bid

Lessthan a week after Cannabis Industry Journal reported that BfArM had finally cancelled the first German tender bid for cannabis cultivation, and after refusing to confirm the story to this outlet, the agency quietly posted the new one online, at 3.45pm Central European Time, July 19.

First Thing’s First

For those who have not seen it yet, here is a first look at the “new” bid auf Deutsch. It is basically identical to the last one. For the most part, Europe is shaping up to be a high volume ex-im market.For now, that is all that exists. However,a move is on in Europe to translate the bid into English. Why? To hold BfArM accountable. And to help educate all the foreign and for the most part, non-German speaking investors who want to know what is required to get the bid in the first place. The process last time left a great deal to be desired.

Bid Redux

Apart from this, however, very little seems to have changed from the last time. Notably,the amount to be grown domestically is the same. This means that the government is deliberately setting production below already established demand.

german flag
Photo: Ian McWilliams, Flickr

Why?

As has become increasingly clear, the German government at leastdoes not want to step into the cultivation ring. Further,because they are being forced to, the government wants to proceed slowly. That means that for at least the next couple of years, barring local developments, it is actively creating a market where imports are the only kind of cannabis widely available – for any purpose. And in this case, strictly medical. With many, many restrictions. Starting with no advertising.

Import Europe

For the most part, Europe is shaping up to be a high volume ex-im market. This was already in the offing even last year when Tilray announced the constructionof their Portuguese facilities last summer, and Aurora and Canopy began expanding all over the continent, starting in Denmark, but hardly limited to the same.

These days it is not the extreme west of Europe (Spain and Portugal) that are the hot growingareas, but the Balkans and Greece. Cheap labour, real estate and GMP standards are the three magic words to market entry.

Can This Situation Hold?

There are several intriguing possibilities at this point. The simple answer is that the current environment is simply not sustainable.

In an environment where the clearing firm for all German securities has refused to clear any and all cannabis related North American public cannabis company stock purchases from Germans (and just updated the list to include companies like Growlife), citing “legal reasons,” it is clear the “fight” (read banking and finance) has clearly now landed in Europe.

The significance of all of this?

Clearly, it is two-fold. The first is to deleverage the power of financial success as a way of legitimizing the drug if not the “movement.” Further, if Germans want to profit from the legal cannabis market it is going to be very difficult. See the bid last year beyond this new development.

That means everyone else is going to have to get creative. The industry, advocates and patients have seen similar moves before. Patient access and profitability are not necessarily the same thing.An increasing numbers of companies are finding ways around being cultivators to get their product into the country anyway.

What Now?

The only problem with such strategies, just like banning German firms from competing in the bid, is that “prohibition” of this kind never works.

It will not keep cannabis out of Germany. The vast majority of the medical cannabis consumed by patients in Germany will come from the extremes – of east and western Europe – with Canadian, Dutch and even Danish stockpiles used as necessary. It will also not discourage the domestic cannabis movement here, which is critical as ever in keeping powerful feet to the fire.

It will also not discourage German firms from entering the market – in a variety of creative ways. Most German cannabis companies are not public, and most are setting themselves up as processors and distributors rather than growers.

So in summary, the bid is back. But this time, it is absolutely not as “bad” as ever. An increasing numbers of companies are finding ways around being cultivators to get their product into the country anyway.

As for raising money via public offerings? There are plenty of other countries where the publicly listed, now banned North American companies can raise funds on public exchanges (see Sweden and Denmark) as they target the cannabis fortress Deutschland.

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The Importance of Medical Cannabis Trials In Europe

Calls for more testing have been a watchword of both cannabis reform advocates and opponents alike for many years.

However, now is a really good time for cannabis companies to consider sponsoring medical trials across Europe for their cannabis products. This is why:

The Current Environment On The Ground

Germany is Europe’s biggest consumer of both prescription medications and medical devices dispensed by prescription. It is, as a result, Europe’s most valuable drug market. And ground zero for every international cannabis company right now as a result.Targeting Germany for your latest pharmaceutical product is difficult no matter who you are.

Here, however, are a few problems that face every pharma manufacturer, far beyond cannabis. Targeting Germany for your latest pharmaceutical product is difficult no matter who you are.

  1. The vast majority by euro spending on all drugs and devices dispensed by prescription must be pre-approved. To add to this problem, before they can be prescribed, new drugs must get on the radar of doctors somehow. To put this in stark relief, the entire prescription drug and medical device annual spend is about 120 billion euros a year in Germany. Only 20 billion euros of that, however, may be obtained relatively easily (without pre-approval from an insurer). Preapproval also only comes when there is trialor other scientific evidence of efficacy.
  2. There are strict rules banning the advertising of prescription drugs to patients and highly limiting this outreach to doctors.
  3. There are strict rules prohibiting the use of the word “cannabis” to promote anything.
  4. There is a strong reliance on what is called “evidence-based medicine.” That means that large numbers of doctors and insurance company approvers need to see hard data that this drug or device actually works better than what is currently on the market.

How then, is a new drug supposed to get on the radar of those who prescribe the drug? Or patients?

If this sounds like an impossible situation to navigate, do not despair. There is a way out.

The Impact of the European Medicines Agency

This agency has been much in the news of late. Namely, the British do not want to exclude themselves from the regulatory umbrella of this organization.

Largely unknown outside Europe, this agency actually has a hugeinfluence on how drugs are brought into the region. Specifically, this is the EU-wide agency (aka the EMA) that both regulates all drugs within Europe, but has also, since 2016, been making clinical reports submitted by pharmaceutical companies, available to anyone who asks for them. That includes doctors, members of the public and of course, the industry itself.

In the middle of July, the agency also published a report on the success of its now three-year-old program, including the usage of its entry website. Conveniently written in English, it is possible to easily search new trial data, which, also now must be made public.

Medical trial data, in other words, that can be created by sponsored cannabis company backed trials.

It remains the best way to get patients, doctors and insurance companies familiar with new drugs. Or even new uses for old drugs in the case of cannabis.

Will Trials Move Legalization Discussions?

Of all the established cannabis companies now in operations with producton the ground, GW Pharmaceuticals has learned that this strategy can actually cut both ways.GW logo-2

However,there are no other cannabis companies in the position of GW Pharma – namely with a monopoly on a whole country (the UK), where it alone can legally grow cannabis crops and process the same into medication and further for very profitable export. In addition, even more disturbingly, and clearly an era that is coming to an end, the vast majority of British patients have been excluded from access to cannabis except in the case of GW Pharma products.

The current row over expanded medical use in the UK, in fact, was triggered by two things. The failure of the latest GW Pharma trial for drug resistant epilepsy in Eastern Europe. And the deliberate importation by several desperate families, of good old cannabis (CBD) oil into the UK. No medical processing required.

GW Pharma said their product Epidiolex (for the treatment of childhood epilepsy) is being considered by the European Medicines Agency

However, that is the UK.

Other cannabis companies can take a page out of the company’s handbook. All that is required for faster market entry, is a slightly altered recipe.

By sponsoring cannabis-related trials in each country they want to enter, starting with Germany, cannabis companies can literally put themselves on the medical map.

Why?

Because doctors, patients andother researchers will be easily able to see and access country-specific medical data on each use of cannabis covered by a trial, per EU country. All made possible, of course, by the new open door policy of the EMA.

Growing the Medical Market

While this may sound like an “expensive” proposition, there are really few other alternatives. And with no advertising budget, plus a marketing budget that must include outreach to everyone in the supply chain including doctors, distributors and even pharmacies, the trial approach in the end may be the most efficacious in broadening both the demand and market. Not to mention the cheaper option.

How such a trial strategy might be coordinated at a time when domestic cultivation is still on hold is still a question. However for those companies considering market entry and cultivation bid if not domestic processing strategies for their products is an industry strategy that will pay off in spades.

Its role in the legalization of cannabis as medicine, as well as the speedier introduction of new drugs overall into the European system,cannot be underestimated, even if it is currently underutilized by the cannabis industry specifically now.

The post The Importance of Medical Cannabis Trials In Europe appeared first on Cannabis Industry Journal.