Cannabis in the news July 17, 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. For the first time Health Canada has moved to strip a cannabis grower of its licence to produce. Agrima Botanicals Corp. has now had its licences revoked by the federal regulator of the industry.

The move comes months after Health Canada says it found “unauthorized activities” at the firm production facilities.

Agrima has been unable to demonstrate Health Canada’s earlier suspensions were unfounded or show it has moved to rectify any alleged failure to meet federal licencing requirements. As a result, Agrima’s producer and dealer’s licences were revoked on July 12.

“This is the first time that Health Canada has revoked a licence since it first issued licences to companies to produce cannabis for medical purposes in 2013,” said Health Canada spokeswoman Anna Maddison in an emailed statement.

Agrima is now listed on Health Canada’s website of licensed producers with the status “revoked,” after having its licences suspended last fall.

The revocation comes after the B.C.-based cannabis company filed for creditor protection earlier this year to address near-term liquidity issues. Those issues, it says, were in “large part” caused by the suspension of its licences.


2. Members of the country’s fledgling cannabis industry say they’re worried regulatory investigation of a high-profile producer puts the entire industry under greater scrutiny.

CannTrust Holdings Inc. saw its stock price drop 48% last week after regulators allegedly found unlicensed rooms had been in production.

As a result, CannTrust halted all sales and shipments of its products, and the federal government may suspend or even cancel its license in response. Still, the whole industry may suffer if investors lose confidence in the ability of growers to meet demand while remaining within the law.

Statistics Canada reported last week that the price gap between legal and illegal pot is growing. In the second quarter, the average price of a gram of cannabis in the illicit market fell to C$5.93 from $6.23 in the first quarter, while the average price in the legal market rose to $10.65 from C$10.21. That’s the widest gap since recreational use was legalized last October.


3. Growing demand for cannabis as a medicine is raising concerns about the sustainability of the crop as more and more countries move to legalization.

In the U.S. alone, approximately 7% of Americans are using cannabidiol (CBD), a non-intoxicating compound of cannabis, for many purposes. That leaves room for the industry to grow to $16 billion by 2025.

In the U.K., the CBD market is predicted to expand 700% by 2020. However, factoring in future demand for CBD in emerging world markets raises concerns over sustainability practices.

As a result, cannabis firms are increasingly focused to how to improve extraction and farming methods to increase yields and sustain them.


4. Statistics Canada’s quarterly report on cannabis prices suggests the price gap between legal and illegal cannabis is widening.

The data agency reported this week that the price gap between the two types of cannabis is as wide as $4.72 a gram, on average.

StatsCan has been asking Canadian cannabis users to tell them about how often they use the drug, and what they pay for it when they do. The value of their responses may be somewhat limited, but StatsCan considers them credible.

Based on 572 voluntary responses the data agency says the price for illegal cannabis fell from $6.23 per gram on average, at the start of the year, to $5.93 a gram in the three months up to the end of June.

Legal cannabis, meanwhile, went from $10.21 per gram to $10.65. That means the gap between the two is now as wide as $4.72 a gram.

It also suggests that the illegal stuff today is roughly half the cost of the legal variety. More than half — 59% — of respondents said they purchased illegal cannabis during the period. Many of them cited cost as the driver.


5. A team of scientist working in Canada and Australia are now testing the effects of a drug called nabiximols on cannabis dependency.

A paper on the Australian study was published this weeky in JAMA Internal Medicine and concluded that regular smokers who used nabiximols smoked 18.6 fewer days than those who took a placebo over the course of the 12-week experiment.

Those findings suggest the drug could one day help cannabis users give up the habit, not unlike tobacco users who turn to over-the-counter medications to reduce or eliminate their smoking.

Nabiximols is actually a cannabis extract that’s been formulated to contain equal parts THC, marijuana’s psychoactive component, and CBD, a largely non-psychoactive cannabis compound.

Nabiximols, which patients take by spraying under their tongue, is sold under the brand name Sativex for the treatment of multiple sclerosis symptoms. It has yet to win U.S. approval.


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