Cannabis in the news April 24, 2019

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News on cannabis stocks and on developments in the industry haven’t let up in today’s volatile markets. Here are this week’s stories that we believe will mean most to you as a Canadian investor.

  1. Ongoing efforts to contain the odour coming from one of the country’s largest cannabis greenhouse operations have failed to stem complaints from its neighbours, including the Edmonton international airport.

The scent is coming from Aurora Sky, an Aurora Cannabis operation that produces more than 100,000 kilograms of marijuana per year. The company says it has actively tried to prevent the smell of its crop from wafting over into the airport’s terminals, as well as local hotels and outlet stores.

Those efforts include the introduction of two new exhaust units for deodorization and the addition of 800 HVAC filters throughout the grow-op’s processing areas. Aurora has also added 1,360 pocket filters throughout the cultivation bays.

Airport officials say they have received a handful of complaints about the cannabis smell.

“Aurora will continue to work at further reducing the odor, which is strongest at dusk and dawn.

We’re committed to continuous improvement and we do this for a very specific reason — we want to be good neighbours,” said Cam Battley, chief corporate officer of Aurora Cannabis.

  1. Canopy Growth’s US$3.4 billion acquisition of New York-based Acreage Holdings Inc. in fact depends on marijuana gaining legal status federally in the U.S.

While Acreage will receive $300 million U.S. in cash up front, more than 90% of the purchase amount will come in the form of  Canopy shares but only after the U.S. federal government decriminalizes cannabis production and use.

That legislative step remains in the distant future say analysts, pointing to proposed Congressional legislation that is expected to struggle to win the necessary votes.

In the meantime, under the deal, Acreage can issue an additional 58 million of its shares, at an implied valuation of $1.4 billion considering the exchange rate set for Canopy shares set by the Canopy deal.

The deal indicates just how competitive the U.S. market is expected to get for producers as more and more states move to legalize cannabis and those growers scramble to secure production sites.

Still, while the deal is a certainly a positive move for Canopy, says one analyst, the benefits for Acreage are less certain.

Canopy “locks in a price for an asset that will almost certainly appreciate upon any federal legalization measures,” said Andrew Kessner, analyst at William O’Neil & Co. However, Acreage won’t immediately get a liquidity or capital boost.

  1. A new study suggests high concentrations of a non-psychoactive compound in cannabis can counteract the effects of high-strength marijuana, including the possibility of psychosis.

The team of researchers from the University College London used scans to study the effects that different strains of cannabis have on the brain on first exposure.

They found that strains with higher-than-normal concentrations of CBD and THC (the chemical responsible for the high associated with cannabis use) caused less disruption to the parts of the brain linked to addiction and psychosis. That’s compared to strains with just high THC levels and low to “normal” levels of CBD.

“Over the last two decades, rates of addiction and psychosis linked to cannabis have been on the rise,” said Dr Matt Wall, lead author of the study which was published in the Journal of Psychopharmacology. That coincides with the development and growing use of stronger strains of cannabis with more THC and less CBD.

  1. One of the country’s leading cannabis producers is piloting a recycling program for pot packaging as a way of dealing the growing amounts of refuse attributed to the industry and its users.

Tweed, a subsidiary of Canopy Growth, has now partnered with TerraCycle, an American recycling company, to introduce the first Canada-wide cannabis packaging recycling program.

The initiative answers the concerns of cannabis consumers who have complained about the amount of packaging legally required for cannabis product.

Health Canada mandates the use of tamper-proof and child-resistant containers that also prevent contamination.

More than 165,000 containers have been diverted from landfills since a limited version of the recycling program was rolled out last fall.

The plastic collected will be melted down into pellets and used to make things like picnic tables and benches.

  1. Researchers at the University of Buffalo say their work supports the idea of a link between cannabis use and “the munchies.”

Department of Community Health and Health Behavior has officially proven that the “marijuana munchies” are real.

“Given the dramatic increase in the accessibility of cannabis, there will be many more people experiencing the munchies,” said Jessica Kruger, lead author on the study, published this month in the journal of the International Society for Human Ethology.

The findings lean on 2016 research that asked cannabis users to choose between potato chips, or similar a “munchie” snack, and a piece of fruit. The majority opted for the latter.

“We need more research and education on people who choose to use cannabis,” said Kruger. “This would include managing the dietary impact of cannabis use.”


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