Cannabis in the news February 6, 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 the stories that we believe will mean most to you as a Canadian investor.

1. Health Canada has now suspended the sales licence of a Saskatchewan cannabis producer over allegations some of its supply was provided by an illegal source.

“The department found that Bonify Medical Cannabis was possessing, distributing and selling product that was purchased from an illegal source, and selling product that did not comply with the good production practices as required under the Cannabis Act and cannabis regulations,” Health Canada spokesperson Eric Morrissette told the CBC in a statement.

The case has now been forwarded to both the RCMP and Canada Revenue Agency for investigation.

A third-party investigation alleges the company sold unauthorized product at retailers in Saskatoon, Regina and Moose Jaw.

The investigator points to as much as 200 kilograms of unlicensed cannabis.  Three of Bonify’s executives have now left the company.

2. Publicly listed cannabis companies should expect increased attention from activist investors, say industry analysts.

That heightened activist scrutiny reflects the industry’s continuing growth but also concerns about corporate governance practices at some cannabis companies.

There are, in fact, some “justified criticisms” of the cannabis market, Matt Bottomley, director of equity research with Canaccord Genuity, recently told a Toronto audience. He pointed to reports by short sellers targeting Canadian pot companies.

“There’s going to be winners and losers in this space and I think short-sellers’ reports could, down the road, put some spotlights on those,” he said.

3. The industry’s leading producers continue to draw top execs from major mainstream corporations—something that deepens their corporate governance but also highlights their expanding influence.

Nanaimo, B.C.-based, Tilray is the latest to make four high-profile appointments of senior executives. The move is meant to bolster its top ranks as the company continues to expand internationally.

Former Nestle SA executive Greg Christopher joins the company as its new executive vice president of operations and will manage the strategic development and expansion of Tilray’s cannabis supply chain. Former Starbucks vice president Charlie Cain will now take on the role of Tilray’s vice president of retail, while Rita Seguin, a former senior vice president at Diageo’s North American operations, has been appointed the company’s new head of human resources.

Former Coca-Cola Co. counsel Dara Redler will also join the executive team as Tilray’s new general counsel.

The appointments follow key Tilray deals to further expand its operations beyond mere cannabis production. They include a joint-venture agreement with Anheuser-Busch InBev to research cannabis-infused drinks for the Canadian market. Tilray will also work with a subsidiary of pharmaceutical giant Novartis International AG to increase the availability of medical marijuana products globally.

4. Harvard researchers suggest there may be a link between cannabis use and sperm counts.

Investigators collected 1,143 semen samples from 662 men between 2000 and 2017.

All of the men, along with their spouses, were seeking conception help from a fertility clinic.

Analysis of the semen samples showed that men who had reported smoking marijuana had average sperm concentrations of 62.7 million sperm per millilitre (million/mL). Those who had never smoked cannabis had an average count of 45.4 million/mL.

Only 5% of cannabis users had sperm counts below the World Health Organization’s threshold for “normal” levels. That’s considerably lower than the 12% of men who had never smoked cannabis.

Researchers had, in fact, expected cannabis to have a negative impact on sperm count and fertility.

“These unexpected findings highlight how little we know about the reproductive health effects of marijuana,” says the study’s lead U.S. researcher, Dr. Jorge Chavarro of the Harvard T.H. Chan School of Public Health.

5. The director-general of the World Health Organization (WHO) is now calling for removal of cannabis from Schedule IV of the international Narcotic Drugs treaty.

The current classification dates back 58 years and is aimed at combatting drug abuse through coordinated international action. However, the growing legalization of cannabis worldwide had spurred calls to remove cannabis that list of banned narcotics.

Any reclassification by the WHO now would reflect today’s changing perceptions. While delisting cannabis may have limited impact, says one industry insider, it has the potential to further de-stigmatize marijuana use.

“The UN’s evolving policies on cannabis are welcome,” says Chris Bunka, CEO of Lexaria BioScience, which develops cannabis-based therapies.


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