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Canadian pot companies see medical exports growing under Trudeau law


By Josh Wingrove and Jen Skerritt, Bloomberg News

OTTAWA, Canada — Canada’s push to legalize recreational marijuana is rippling beyond its borders as companies move to boost exports of medicinal pot.

Prime Minister Justin Trudeau’s government unveiled its framework last week, quelling concern it would clamp down on export permits for existing medical-pot producers such as Canopy Growth Corp. and Aurora Cannabis Inc. Those companies, which have a head start on the legal recreational market, will continue to be allowed to export marijuana to countries such as Germany and Australia for medical and scientific use.

“It might not be so limited,” said Emily Larose, a partner with law firm Cassels Brock who specializes in cannabis regulation. Industry fears of onerous export restrictions have receded over the past year as bureaucrats typically approve any permit so long as the main requirements are met. “The way in which they’ve been granted so far seems to be more box-ticking.”

Companies in Canada, the second country and first major economy to unveil plans for legalization of recreational pot, have already secured investments and partnerships in countries where support for legalized medical marijuana is gaining ground. The global cannabis market may be worth $200 billion, with the medical market accounting for 25 percent to 50 percent of that, Daniel Pearlstein, a research analyst in Toronto at Eight Capital, said by email.

Canopy is already exporting to Brazil and Germany. Last year, the Smith Falls, Ontario-based company acquired pharmaceutical distributor MedCann GmbH, which has placed its cannabis strains in German pharmacies.

Bedrocan Canada Inc., a unit of Canopy, exported 10 kilograms of dried cannabis to Brazil to be used in a clinical study targeting epilepsy and pain management, according to a November statement.

Canada is emerging as a leader in public policy around marijuana and other countries will need its know-how as they shift toward making cannabis and cannabinoids part of standard medical treatment, said Chief Executive Officer Bruce Linton. That gives Canopy the chance to export product while the domestic industry makes that transition, and to set up production on the ground once it has, he said.

“All of these jurisdictions are contemplating or structuring a way in which production will occur in them,” Linton said by phone. “We are actually an exporter of public policy.”

That meshes with Trudeau’s view for the future of the Canadian economy: one pivoting from raw resource extraction toward white-collar jobs in the services sector.

“You’re going to develop know-how on how to make this stuff,” said Eileen McMahon, a partner at Torys LLP and chair of the law firm’s intellectual property and food and drug regulatory practices. “That know-how arguably could be used” outside Canada under the Trudeau law, she said, adding it’s possible “employees with that expertise could cross the border.”

Aurora intends to be a “significant” player in the Australian market and is looking at others as well, said Cam Battley, an executive vice president. The Cremona, Alberta-based company plans to use its capital and experience to export its product, and to set up in countries where marijuana may soon be legal, he said.

“Canada more broadly is a leader in the cannabis industry,” Battley said by phone. “That gives us a lot of potential power in other markets.”

Exports will be allowed “as long as they meet the strict regulatory requirements,” lawmaker Bill Blair, a former police chief and Trudeau’s point man on pot legalization, said in an interview. He brushed aside questions about whether the government wants to encourage companies to be exporters. “We want to make sure there is a viable industry capable of supplying that well-regulated retail market” domestically in Canada.

The government has to issue export permits repeatedly, and could clamp down, change guidelines or slow its issuing of permits if it wanted to cool the market.

In a notice posted last year, Canada said it “does not support facilitating a regime premised on servicing global demand given the associated public health, safety and security risks” and that export “would be permitted under very limited circumstances.” Fears stoked in industry by that notice have since eased, Larose said.

Aurora secured a 19.9 percent stake last month in Cann Group, the first Australian company to be licensed for research and cultivation of medical cannabis for human use.

Aphria Inc., based in Leamington, Ontario, is investing $25 million in a dispensing operation in Florida, the company said April 4. Aphria’s U.S. expansion strategy is to target key states that have approved medical marijuana, according to the statement.

Canada’s legalization effort may violate its obligations under international law, Steven Hoffman, director of the University of Ottawa’s Global Strategy Lab, wrote in a Globe and Mail editorial this week. “Unless we change our constitution, Canada cannot legally legalize cannabis without either renegotiating the U.N. treaties, obtaining special exceptions, finding creative workarounds, or withdrawing from them,” he wrote.

The government believes its restrictions on production or sale outside its strictly regulated regime, as well as restrictions on some exports and use by minors, keeps it onside, Blair said.

“We believe this enables us to uphold and maintain our obligations under those treaties,” he said, speaking in an interview after Justice Minister Jody Wilson-Raybould referred questions on the matter to Blair.

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Import & Export of Medicinal Cannabis Products…to and from Canada.

Blue Diamond Ventures, Inc. a Colorado Corporation ( OTC PINK : BLDV ) today announces that the company has entered into a Joint Development Agreement with Alternative Medical Solutions Inc., to import & export Targeted Medicinal Cannabis Products and Advanced Cannabis Technologies, to and from Canada.

The recent CannaTech Conference in Israel provided the forum to secure the initial agreements required to pursue this effort. Blue Diamond Ventures is not alone; Jeffrey Friedland, noted author and cannabis thought leader, has announced that CannRX is taking a similar approach by partnering to bring Israeli Technologies into the U.S. and other countries. https://israel-cannabis.com/2017/03/22/cannrx-icanisrael-ican-sleep/

Alternative Medical Solutions (AMS) is in the final stage to gain a full license to grow, market and sell medicinal cannabis products via Health Canada. BLDV has been working with AMS over the last year to finalize funding for its Fifty (50) thousand square foot cultivation facility. “There has been recognition, by the Canadian Government, for the need to allow import and export in this industry,” says Joshua B. Alper, CEO of BLDV. “This new effort will ensure that AMS, when licensed, will be a Global Project, with their products being available worldwide and with access to the ingredients and technology that will continue to make AMS a leader in the Canadian market.”

“We are excited to launch this effort with BLDV,” said Joseph Groleau, VP Business Development for AMS. “With the specialized products and technologies coming into Canada from Israel, and access to global markets with our finished products, we see this as a separate profit center that could even outgrow our efforts in cultivation.”

Canada will be the home to the new joint venture, and the first market focus will be to bring Israeli Cannabis products and technology to Canada. “AMS is the perfect partner for this project,” said Joshua B. Alper, CEO of Blue Diamond Ventures, Inc. “They have a great team at AMS that has been challenged by the ever-shifting landscape of compliance and financial requirements, this project can create significant revenue even prior to AMS receiving the cultivation and manufacturing licenses from Health Canada.” BLDV senior project manager, Jonathan B. Alper, who is fluent in Hebrew and has been involved in import and export of products from Israel, to Canada, and the U.S. for over 25 years, will manage the effort in cooperation with a team of license and compliance experts in Canada.

In other news:

BLDV has filed its Annual Report on the OTC Markets and has recently secured employment contracts with all key personnel for common stock, without the need to raise authorized common stock levels, or issue special warrants, options and/or preferred stock.

About BLDV:

Blue Diamond Ventures, Inc. seeks to partner with individuals and companies that share a common synergy, mission, and vision to enable products/services that are produced, delivered and consumed utilizing fewer natural resources, providing a sustainable alternative to traditional products on the market today. As a diversified customer centric Management / Holding Company; Blue Diamond Ventures, Inc. seeks opportunities in various markets and is driven by critical thinking and the scientific method.

About AMS:

Alternative Medical Solutions (“AMS”) is in the process of becoming a Licensed Producer of Medical Marijuana in Canada and is led by a highly passionate team dedicated to being at the forefront of the growing Medical Marijuana industry.

Safe Harbor:

This press release contains forward-looking statements. Such forward-looking statements are subject to several risks, assumptions, and uncertainties that could cause the Company’s actual results to differ materially from those projected in such statements. Forward-looking statements speak only as of the date made and are not guarantees of future performance. We undertake no obligation to publicly revise any forward-looking statements.

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Republican Congressman Introduces Bill That Would Resolve the Conflict Between State and Federal Marijuana Laws, Allow States to Determine Their Own Policies – CBE

Rep. Dana Rohrabacher’s Respect State Marijuana Laws Act exempts marijuana consumers and businesses from federal criminal penalties if they are acting in compliance with state marijuana laws

By Robert Capecchi

WASHINGTON — Republican Congressman Dana Rohrabacher of California introduced legislation in the U.S. House of Representatives on Tuesday that would resolve the conflict between state and federal marijuana laws and allow states to determine their own marijuana policies.

The Respect State Marijuana Laws Act exempts individuals and entities from certain provisions of the Controlled Substances Act if they are acting in compliance with state marijuana laws. This is the third time Rohrabacher has introduced the bill. Twenty of his colleagues in the House, including seven Republicans, co-sponsored the Respect State Marijuana Laws Act of 2015, which was introduced in the 114th Congress.

“This is commonsense legislation that is long overdue,” said Robert Capecchi, director of federal policies for the Marijuana Policy Project. “It is time to end marijuana prohibition at the federal level and give states the authority to determine their own policies.

“States throughout the country are effectively regulating and controlling marijuana for medical or broader adult use,” Capecchi said. “Federal tax dollars should not be wasted on arresting and prosecuting people who are following their state and local laws.”

Eight states and D.C. have enacted laws making possession and cultivation of limited amounts of marijuana legal for adults 21 years of age and older. Four states — Alaska, Colorado, Oregon, and Washington — have established systems for regulating the production and sale of marijuana for adult use. Four additional states that adopted such laws in November — California, Maine, Massachusetts, and Nevada — are in the process of setting up similar systems. Twenty-eight states, D.C., and the U.S. territories of Guam and Puerto Rico have adopted comprehensive medical marijuana laws that allow seriously ill patients to access medical marijuana if their doctors recommend it. Eighteen additional states have adopted limited and/or unworkable medical marijuana laws.

“Nine out of 10 Americans now live in states that have rejected federal marijuana prohibition by adopting some sort of marijuana policy reform,” Capecchi said. “This legislation would ease the tension between state and federal laws to ensure these state-level reforms are successful. It would also help states address the public health and safety priorities shared by state and federal authorities.”

A national Gallup poll released in October shows public support for making marijuana legal in the U.S. has reached a record high of 60%, up from 58% in 2015 and 50% in 2011. The Pew Research Center also released a national poll in October showing support at 57%, up from 53% in 2015. In August 2015, the National Conference of State Legislatures (NCSL) approved a resolution urging the federal government to allow states to determine their own marijuana policies.

“The call for federal marijuana policy reform is growing louder and louder,” said Don Murphy, MPP director of conservative outreach. “Congress needs to listen to their constituents and to state lawmakers, most of whom agree marijuana policy is an issue best left to the states. This is a bipartisan solution that ought to find support on both sides of the aisle.”

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CEO Bruce Linton of Canopy Growth -on the opportunity for Canadian cannabis exports…..in Germany

Written By:  January 23, 2017

Canopy Growth Corp’s Bruce Linton on Germany’s Cannabis Future

Canopy Growth Corp (TSE:CGC) (OTCMKTS:TWMJF) (FRA:11L1) CEO Bruce Linton returns to share his thoughts on the opportunity for Canadian cannabis exports that exists in the gradual spread of legal medical marijuana rules in Germany and beyond. He also shares his views on potential incoming Attorney General Jeff Sessions, and how that might actually turn out to be a boon for Canadian growers as well.

Midas-Letter-financial-radio-podcast-thumbListen to the podcast interview with Bruce Linton:

Audio Player



James West:    Thanks for joining us today, Bruce.

Bruce Linton:  Hey, thanks for having me back, James.

James West:    Bruce, let’s cover a couple of things today. First, let’s talk about Germany’s approval of medical marijuana coverage by insurance companies. That’s a new development for you guys, and I’m sure it’s going to have some implications for 2017 revenue. What do you think about that?

Bruce Linton:  Yeah, so you know, this has kind of been the slow build, and where it comes from, and if people are looking at other countries as well as Germany, it starts by somebody in a country establishing something called the OMC, or Office of Medical Cannabis, which is almost like an indicator that in fact, in the future, there’s likely going to be cannabis available. That happened in Germany some time ago. We knew, and you could see, that these regs were moving through their Parliamentary process, and it appears the next steps are to do a German thing, which is almost like a public reading of them, and then they become how they reorganize or organize the appropriate bureaucracy, and then they’re ready to go.

So I kind of think by March or end of March, they’ll be through those steps, and then they’re going to start saying we need more product, and we need more producers. They currently have no producers in the country, so that’s, I think, why it keeps getting more interesting.

James West:    Sure. Would Canopy look to set up production within Germany’s borders, or just look to exploit it from an export position?

Bruce Linton:  NO, listen man, I come at this from the perspective of, the reason Smiths Falls in Ontario loves us is, we took the abandoned chocolate factory and turned it into a centre of employment. They don’t perceive anything about what we do other than that; it is creating employment, and there are big parts of Germany where they haven’t had the benefit of the boom. So I would fully expect they’ll be non-tariff barriers that will protect a domestic supply chain, and we’ll be part of that. And I think the things that we’ve learned here, you can really take and apply there.

So our goal is to participate in the markets rather than send product in, because I think that’s a very short term business.

James West:    Okay. So you’re basically going to set up a local producer there?

Bruce Linton:  Yeah, for sure. It worked for bottling lines for Coca-Cola as an expansion process. Our intent though is, in most countries, to go in where it’s 100 percent corporate store, which is why in November, we acquired the company that had been our export partner, so we actually have our boots on the ground in Germany to work through the process rather than, you know, a JV and everybody’s not aligned.

James West:    Right. And so what’s the size of the market in Germany for this medical marijuana?

Bruce Linton:  I don’t know, James. There’s about 82 million people, and if the government’s paying for it, do you think marijuana could catch on?

James West:    Mm-hmm. That’s a good point, good point. Now, I saw a report from Arcview Research in the United States just issued yesterday that suggested that in North America, consumers had spent $56 billion on marijuana products in 2006. Do you think that’s a credible number, or do you think that’s conservative? Do you think it’s accurate?

Bruce Linton:  Well, I don’t know. They had a US election, so that might have triggered quite a lot of consumption. But no, I’m being a little bit – that number is an incomprehensible number, really. Like, 56 billion? I don’t know what would also land in that category as total sums spent. Like I have no idea how does that compare to, you know, all of food category or types of pharmaceuticals. It’s a new number to me, but I would almost need to correlate it with some other consumption pattern items to sort of get a perspective on what 56 billion really means.

James West:    Sure, okay. And switching gears a bit here now, we saw a bit of negative press come out surrounding a product recall on Mettrum’s behalf, and that was interpreted by some media outlets as a negative. But what’s your take on that?

Bruce Linton:  Well, you know, I think there’s a system in place, and the system is intended to be sure that everybody follows the rules and the resulting product can be a trusted supply chain. So it is too bad that it happened for Mettrum, and it’s happened for Peace and a few others have had recalls, and we’ve got to see the frequency and scope continue to decrease on those. But we want people to trust the supply chain, and when they do, that gets rid of moonshine, or it gets rid of any other kind of alcoholic absence of the same trust or confidence supply chain, which is really what’s going to make people more comfortable trying and buying a product, not just because it’s not illegal.

So, it happened. Our take on it is, if the system catches the results of not following the rules, then that’s a pretty good system.

James West:    Yeah. You bet. Now, there was an article published by Bloomberg last week which caught my attention as well, that was highlighting the crashing prices of marijuana in the legalized states because of the advent of massive grow-ops that are completely automated driving the price down because there’s an excess of product in the market. Now, to what extent do you think that risk’s happening in Canada, or to what extent might that be Canada’s opportunity given the lower dollar, our lower cost of production which we’ve always had to deal with?

Bruce Linton:  I think the basis of the issue is in America, there’s no filter on who can become a grower effectively. If you can scrape together the capital, you can become a grower. And so there was a very high price. So initially, the price of cannabis in the US states was extremely high, and the transfer price, and then it started to come down because too many people went in because the price was too high. They have just way too many suppliers, so pick a small state, will have more than 1,000 growers. So it’s not just the big growers, it’s the number.

In Canada, it’s a pretty restrictive process to become part of the supply chain, and I think for the next three years or so, there’s probably going to be more of a demand exceeding supply than supply exceeding demand. So I don’t think that’s the issue, and I find in Canada, because we have larger companies, we can actually do a lot more research and vertical integration. When you start to extract from the dry cannabis the oils and start to create those either into medically identified products or branded consumer packaged goods, really, the discussion about the variability of the cost of your base material isn’t as relevant as, do people buy the brands or the indications you’ve gone against, which will probably defend the margin.

James West:    Mm-hmm. Okay, so then, in 2017, what are the big events that are going to happen for Canopy?

Bruce Linton:  Well, I think it’s the sector, right? We’ve got legislation hitting Parliament; what it says and when it times it and how close to the Senate will be relevant. We’ve got Germany, Brazil, which means you really have Europe and South America looking to create opportunities for production and supply and proper medical structures.

We’ve got, in Canopy Health operations, a kickoff to do a number of indications for which we wish to get medical-related intellectual property filings, and so those should become kind of interesting. Last year we went from the sector having 30,000 or 40,000 patients to finishing the year with more than 100,000. And I would think that the pace at which people become comfortable with this as a therapeutic option, probably isn’t slowing. And so you have the base market, is it going to triple again? I don’t know, but certainly growing at quite a substantial rate because of the common discussion and comfort of the topic.

James West:    Right. Right. Okay, and turning back to the States for a moment, Jeff Sessions threatened to become the Attorney General of the United States. With Trump’s inauguration today, is that an opportunity for Canada and a threat to recreational marijuana in the United States, from where you sit?

Bruce Linton:  I think it’s going to keep things pretty scattered and broken in the US, which gives the Canadian MC the chance to just get a lot more substantial knowledge and expertise, which will be helpful for us. And I do think that within Trump’s first term, they will look at medical and they will take a really dim view on rec. I think they’re going to divide the two.

I don’t think Sessions is the only actor you’d want to look at; I think it would be pretty important to keep track of who they put in to run the DEA and what budget they give the DEA, because it’s not had much, and whether or not they end up for the drugs are that takes a different approach than under Obama. Because it wouldn’t take too long for the cost of capital in some of these rec plays in the US to go up quite a lot if the Feds started squeezing it all.

James West:    Right. Now across the board, valuations of Canadian marijuana plays have flattened out a bit since the big enthusiasm, the big lift in November. Do you see that as a reflection of the wait and see attitude of the investment community towards when are we going to see this recreational marijuana on the shelves? Do you think it’s just a sign that the market is fully valued? Or do you think it’s some other factor?

Bruce Linton:  I think there was a pretty good run-up and then they sort of stabilized, and so now I think most folks are starting to take maybe a ‘What’s this going to look like in 6, 12 and 18 months’ rather than ‘If I buy it this morning, will I make some money this afternoon’. And so I don’t feel that’s particularly a bad thing, because there are some folks who probably would like to be in the business and running it and then finish maybe by lunch today, but there’s a handful of us that intend to be creating quite a lot of value in the longer-term businesses. So I do like when I have lots of volume; I don’t need all the shares in my pool to trade every week. There’s some balancing act, and I think we’re probably starting to see a little bit of that, and then it’s not bad, because things can actually build from a bit more analysis and a little less hyperactive trading.

James West:    You bet. Okay, Bruce, let’s leave it there. Very informative as usual. Thanks for your time today.

Bruce Linton:  Thanks, James. Talk soon.

James West:    All right. Bye for now.

Bruce Linton:  Bye.