What’s Up in Weed

By: Andrea Hill

I am pleased to bring you the second instalment of my weekly blog, rounding up what’s currently happening in the cannabis industry in Canada and abroad.

Licensed producer announces LOI for distribution with pharmacy

• CanniMed Therapeutics Inc., the publicly-listed parent of licensed producer CanniMed Ltd., announced that it has entered into a letter of intent with PharmaChoice, a co-op comprising over 700 independent pharmacies across Canada. Under the LOI, the parties have agreed to collaborate on, among other things, the distribution, sale and marketing of medical cannabis products, if and when legislation is introduced which allows pharmacies to do such activities.

• The announcement builds on the news from late 2016 that Shopper’s Drug Mart had applied for a unique form of producer’s licence which would allow it to distribute – but not produce – cannabis.

• Together, these movements signal the growing interest of the Canadian pharmaceutical industry in being able to distribute medical cannabis.

• They also suggest anticipation by both pharmacies and licensed producers that new legislation will allow for various forms of “cannabis licences” which authorize only specific commercial activities, such as distribution. All ACMPR licences issued to date contemplate that both production and distribution will be performed by the same entity.

The full press release available here: https://cannimed.ca.

I’ll show you mine…

• CanniMed also recently made the news for proactively publicizing the result of lab tests of its cannabis products, demonstrating the absence of prohibited pesticides.

• Although each batch of cannabis must be tested before it is sold to patients, licensed producers are not currently required to publicize testing results, and to date virtually never have except where a problem with the product has prompted a recall. Recently, prohibited pesticides found in cannabis from several licensed producers have prompted large scale recalls and changes to Health Canada’s testing policies (such as the introduction of randomized pesticide testing).

The full press release available here: https://cannimed.ca.

“Biggest ever” licensed producer financing closes for $75 million

• Aurora Cannabis Inc. closed a bought deal for proceeds of $75 million, a deal it says is the largest such investment in a Canadian licensed producer to date.

• The scale of the deal, following up on an aggregate of $466 million raised for licensed producers in 2016 and at least $65 million in other bought deals announced thus far in 2017, indicates strong and sustained investor interest in the medical cannabis industry and the promised recreational cannabis regime on the horizon.

• Like all other bought deals involving public licensed producers so far, this transaction exclusively featured independent investment banks as the source of financing. The traditional “big six” banks have avoided getting involved in cannabis-industry financings.

The full press release available here: https://newcannabisventures.com.

Landlord loses insurance coverage due to tenant legally growing cannabis

• Underscoring the challenges posed by the multiple kinds of production contemplated by the Access to Cannabis for Medical Purposes Regulations (the ACMPR), CBC News has reported that a BC landlord has had his residential insurance policy revoked after reporting that his tenant was using the home to grow cannabis plants.

• The ACMPR, which were enacted in August of 2016, continue to allow for production of cannabis by licensed producers, but also contemplate personal production in residential buildings by patients themselves as well as by individual “designated persons”. The designated person category is a holdover from the original medical marijuana regulations when large-scale commercial growing was not yet contemplated, and reflected the fact that authorized patients may not be able to grow cannabis themselves.

• Currently, patients and designated persons must register with Health Canada and may only grow a limited number of plants, but may otherwise operate with much less oversight and fewer infrastructure standards than are applied to licensed producers.

• Administration of safety standards, such as fire and electrical code compliance, in places used by patients and designated persons to grow cannabis has largely been left to local authorities, as Health Canada has focused on regulating licensed producers.

• The ACMPR do not currently require patients or designated persons to notify or seek the consent of their landlords to produce cannabis in their residences. Health Canada’s view is that requiring such consent would likely infringe on patients’ right to reasonable access to cannabis for medical purposes.

• The December 2016 report issued by the federal Task Force on Cannabis Legalization and Regulation has recommended eliminating the category of designated persons.

• My op-ed of August 2016 in The Globe and Mail discusses this likelihood: http://theglobeandmail.com.

The full article is available here: http://cbc.ca.

Germany announces cannabis-growing program for 2019

• The Associated Press reports that Germany’s Federal Institute for Drugs and Medical Devices has announced that it is setting up a “cannabis agency” to oversee the country’s newly-enacted medical marijuana regime, with a domestic production program expected to be up and running by 2019. Germany plans to solicit bids from EU-based companies to produce marijuana.

• Until domestic production is in place, prescriptions for medical marijuana to Germany’s approximately 1,000 patients will continue to be filled by companies in the Netherlands and licensed producers in Canada. Last year, Germany imported approximately 750 kilograms of cannabis for these purposes.

The full article is available here: http://staging.hosted.ap.org.

Andrea Hill is a corporate and securities lawyer with SkyLaw Professional Corporation in Toronto. Recognized as one of Canada’s leading legal experts in corporate cannabis law, Andrea writes for the Globe and Mail about cannabis laws, and works with a broad variety of clients in the cannabis space, including publicly-listed licensed producers of marijuana, licence applicants, and ancillary businesses such as tech companies focused on the cannabis industry. For more information about Andrea, visit the SkyLaw website here.

If you have any questions or would like further information, please contact us at 416-759-5299 or online through SkyLaw.ca.  We would be delighted to speak with you.

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