Canada Cannabis Industry

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In a move that can only be described as hypocritical, impractical and politically-charged, Quebec went through with its move to pass Bill 2.

As CTV News reports, Quebec’s alleged goal is to protect youth from marijuana’s adverse effects. While there is no denying that, as a drug, cannabis has its risks, most critics argue that this is not the way to go.

But as we have seen before, Quebec is not known for its common-sense approach to marijuana, which leads many to believe that the government is simply pandering to a socially conservative voter base.

Nonetheless, the bill sparked fury among industry representatives, advocates and health critics.

 

“Protect Young, Developing Brains”

 

Quebec Junior Health Minister Lionel Carmant’s – the mastermind behind the bill – says it aims to “protect young, developing brains.” But he has essentially gone against that goal.

One of the reasons for legalization was to provide a safe, regulated alternative to the black market. It is no secret that illegal cannabis has no safety or manufacturing standards, leaving the door open to harmful microbes, fungi, heavy metals, and pesticides. The recent vaping epidemic based on illegal THC vape pens and cartridges is a prime example.

Francois Limoges, who is a spokesperson for the Quebec Cannabis Industry Association (QCIA) says:

 

“You’re pretty much telling the younger generation that you wanna protect, well, ‘go back to your dealers’ — or ‘find a dealer’ — because they’ve been buying legal cannabis for the last 12 months and as we know, when you’re a younger adult you’re not going to wait [until age 21].”

 

Limoges is also concerned that, once they reach legal age, disenfranchised consumers will be less likely to use legal marijuana.

 

Politically Motivated

 

It could be argued that Carmant is misguided, but his apparent disregard for the clear flaws presented about Bill 2 indicates that he has his agenda.

CTV News explains:

 

“Quebec’s association of public health has also criticized the bill, with spokesperson Marianne Dessureault saying it lacks a scientific basis. In an interview earlier this year she worried that ‘we are going ahead and maybe transforming a law that sought to protect public health, towards a law that has more of a political flavor.’

She described the bill as having a “populist appeal,” which “doesn’t have [a] place in public health policy.’”

 

 

Based on Stigma

 

Despite tobacco being the leading cause of preventable death and alcohol having a massive kill count of its own, both products are legally consumable by age 18. Yet cannabis, which to date has no recorded deaths related to THC consumption, is considered the worst of the three.

Strangely, voters are fine with declaring that 18-year-olds are adults when it comes to tobacco and alcohol. But cannabis is in a league of its own. It is quite clear that this is just an old Reefer Madness mentality that, to this day, people everywhere cannot shake.

Francois Limoges puts well when he says Bill 2 is based on “social conservatism from the government … [which] appears to be stuck in the old ways of thinking.”

 

WeedAdvisor’s Support for Common Sense Policy

 

We understand the importance of protecting youth from the potential health risks of marijuana. But the Quebec government’s restrictive policies will do little – if anything – to support that goal.

Unless something changes, the negative impacts of this supposedly well-meaning bill will show themselves in the coming years, especially when it comes to the black market

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CannTrust continues its fight to remain in the industry following a set of violations that nearly sank the company, according to BNN Bloomberg.

Initially, CannTrust’s situation seemed untenable. But when Bonify – a company known for allowing massive amounts of illegal cannabis into its supply – regained its license, CannTrust’s case actually has a fighting chance.

After months of investigation and internal changes, CannTrust submitted a remediation plan to Health Canada, aiming to meet all compliance requirements in the coming months.

 

Aiming for First Quarter 2020

 

CannTrust’s license was suspended in September. But rather than make gradual progress to improve operations, Health Canada discovered additional violations as time went on.

But after months of treading water, CannTrust has regrouped and intends to push forward. BNN Bloomberg explains:

 

“CannTrust Holdings Inc. has submitted a remediation plan to Health Canada as part of its efforts to regain the regulator’s trust and return to compliance. The embattled cannabis producer says it’s aiming to complete all of the activities detailed within the plan by the end of the first quarter of next year, according to a release late Thursday.”

 

CannTrust has a lot of work ahead of them in the coming months. With issues like illegal grow rooms, poor labour practices, black market seeds, security flaws and deliberate attempts to withhold information from Health Canada, the company has built up quite a rap sheet since July.

 

No Specific Details

 

CannTrust’s specific steps have not been publicly announced. However, they do give a general idea as to what the plan entails.

The company says their plan includes:

 

“…an expanded internal training program, a strengthened governance and operations framework, infrastructure enhancements, and prescribed accountabilities and timelines for a variety of specified tasks.”

 

From what we can glean, the plan is highly focused on efficiency, compliance, facility enhancements and training – all of which were lacking prior to CannTrust’s suspension.

Although we are kept guessing about whether CannTrust will succeed, interim CEO Robert Marcovitch is optimistic, saying:

 

“CannTrust is confident that its remediation plan addresses all the compliance issues identified by Health Canada.”

However, not everyone shares Marcovitch’s optimism. Derek Dlay, an analyst at Canaccord Genuity believes CannTrust is on the right track, but also adds:

 

“Having said that, there is still significant uncertainty whether CannTrust will eventually achieve full compliance in the near term.”

 

Realistically, only CannTrust knows how much legwork is ahead of them. Those of us on the outside can only speculate.

 

Massive Layoffs

 

Unfortunately – albeit unsurprisingly – CannTrust was forced to scale back its workforce. In September, the company laid off 180 workers. Now, another 140 are joining them in order to save money in the interim.

CannTrust says these layoffs will save them $400,000 per month in labour costs. However, they need to rehire these employees within 35 weeks, or the total severance will be $880,000.

Marcovitch is not happy with the situation, but admits that it is necessary in order to reflect the company’s current sustainability. He explains:

 

“This was a difficult decision, but it is imperative that our workforce reflects the current requirements of our business. Reducing [CannTrust’s] current operating expenses supports our financial sustainability, and places us in the best position to fully resume production upon the reinstatement of our [licences]. We look forward to rehiring at that time.”

 

 

WeedAdvisor’s Compliance Solutions

 

Out of all the errors producers, distributors or retailers can make, non-compliance is arguably one of the most egregious. Whether accidental or intentional, the consequences may amount to millions in fines, lost productivity and severe loss of public trust.

WeedAdvisor understands the critical balance required to ensure compliance, which is why one of our many business solutions include key functions like inventory tracking, real-time data, safety monitoring, reporting and more.

We help our clients remain compliant in a seamless, automated fashion, so they can focus on providing the best products possible.

 

 

 

 

 

 

 

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Canadian licensed producer Hexo Corp. recently announced that it will lay off 200 workers, reports the Ottawa Citizen. With its main plant in Gatineau, Hexo began as Hydropothecary, a medical cannabis provider with its own line of proprietary strains, sprays and other products.

Recently, the company made headlines for its new cannabis product, which undercuts the average price of illegal marijuana by about one dollar per gram. Unfortunately, it may be some time before this product takes off. Meanwhile, the company has to cut costs.

A once expected cannabis boom soon fell short of expectations after several variables were introduced, both before and after legalization. In Hexo’s case, the predicted $400 million net profit did not materialize.

The worst part is that none of this is Hexo’s fault, meaning there is little they can do to remedy the situation.

 

A Regrettable Decision

 

As of May 2019, Hexo had 1072 employees, which are now about to be cut down to around 800. To their credit, however, Hexo has expressed regret over the move. CEO and co-founder Sébastien St-Louis said in a statement:

 

“This has been my hardest day at Hexo Corp. While it is extremely difficult to say goodbye to trusted colleagues, I am confident that we have made sound decisions to ensure the long-term viability of HEXO Corp.”

 

Whether in the interest of fairness, finance or both, the layoffs will span all levels of the organization, from junior employees to executives. Every one of their facilities – Gatineau, Belleville, Montreal, Niagra and Brantford –will lose employees.

 

Black Market, Regulations and Slow Rollout to Blame

 

Although the last year has seen some improvements, there are still massive obstacles that stand in the way of Hexo’s (and other companies’) profits. The Ottawa Citizen explains:

 

“In its statement, Hexo cited a number of reasons for the layoffs: the delay in opening retail cannabis stores; regulatory uncertainty; pricing pressures; and ‘jurisdictional decisions to limit the availability and types of cannabis derivative products [that] have contributed to an increased level of unpredictability.’”

 

The “jurisdictional decisions” Hexo mentions is Quebec’s overzealous decision to ban certain edible products. Despite the fact that the federal government approved many of the affected products, items like baked goods and other sweet items will be banned in recreational stores. This is bad news for Hexo, who is working on chocolate and candy edibles.

Furthermore, topicals will only be available for medical recipients. Given that a large portion of Hexo’s customer base is located in Quebec, this seriously cripples Hexo’s profitability.

Meanwhile, its other cash cow, Ontario, suffered from lower sales due to its delays in opening physical dispensaries, which are still currently limited to 75. However, 22 of those 75 approved stores are currently open, along with just 24 in Quebec.

Finally, there is the black market, which still dominates around 80% of the cannabis market. Hexo’s new value strain may help make a dent in illicit sales, but this will take time.

 

WeedAdvisor’s Role in Supporting Licensed Producers

 

Naturally, we are saddened by the latest news from Hexo, both for its employees and the industry itself. With stories like these, it is easy to believe legal cannabis has a bleak future.

But keep in mind that analysts made similar doomsday stories during the initial rollout, when things were in much worse shape.

Until revenue increases for licensed producers, saving money is crucial. WeedAdvisor’s many business solutions are not only inexpensive, but also meant to improve efficiency and ensure compliance, preventing potential fines and other financially harmful issues.

 

 

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The first year of legalization saw its share of scandals. But while CannTrust stole the spotlight in the summer of 2019, Winnipeg-based licensed producer Bonify was arguably worse.

As we covered in our article from early 2019, Bonify’s most egregious offence was when it sourced and sold illegal cannabis into the open market. This was during a volatile time, where pressure to provide inventory was massive as a huge shortage bottlenecked the nascent cannabis industry.

However, BNN Bloomberg now reports that Bonify, despite the seriousness of their violations, had its licensed reinstated after a massive overhaul.

 

“A Landmark Moment”

 

When it comes to dealing with punitive measures from the government, there was no precedent for whether or not working to improve would even yield results. But Bonify proved that, while Health Canada does not hold back when it comes to non-compliance, it is possible to bounce back.

When Bonify’s licensed was suspended, they brought in RavenQuest Biomed to get them back in the right direction. Now, RavenQuest CEO George Robinson says:

 

“Having guided Bonify through corrective action vis-a-vis operational procedures, proper record-keeping, training, and all other standard operational procedures within the Bonify facility, we now have the roadmap to licence reinstatement for non-compliant operators. This is a landmark moment in an industry that has faced several high-profile compliance challenges.”

 

Essentially, Bonify went from a complete regulatory disaster to total redemption – although it took about eight months to accomplish. More importantly, it provides a living guide for companies like CannTrust, who are still fighting to once again become compliant.

BNN Bloomberg explains:

 

“Bonify’s ability to sell cannabis legally again also offers a clear pathway for other suspended producers to return to compliance with Health Canada if they can demonstrate that they can abide by the regulator’s various measures aimed at ensuring public safety and compliance with the law.”

 

A Learning Experience

 

The Bonify debacle has taught us some very valuable lessons. First of all, Health Canada is not to be trifled with. It is likely that offending licensed producers underestimated the government’s resolve to enforce compliance.

But we are in a time where image is critical. Any health issues from contaminated or substandard cannabis can drastically affect consumer confidence – something we desperately need in order to fight the black market. Consequently, regulators will scrutinize LPs very closely.

Second, it is clear that actions have consequences. Bonify’s offences were severe and the punishment more than fit the crime.

However, the third major lesson here is that there is always the opportunity to be better, whether it is due to Health Canada’s orders or voluntary, proactive measures to improve best practices.

In the words of George Robinson:

 

“The lessons from Bonify are clear: Follow the rules, train your staff and run a clean, well-designed facility capable of producing high-quality cannabis without cutting corners.”

 

WeedAdvisor’s Compliance Solutions

 

WeedAdvisor understands the severity of non-compliance and its effects on both the industry and consumers. It is also important to understand that it is possible to unintentionally fall short of Health Canada’s highly intense standards.

Keeping track of every critical area is no easy task. But thanks to our business solutions, we make compliance automatic, easy and inexpensive.

Inventory tracking, real-time data gathering, reports, safety and quality compliance are just a few areas that our solutions effectively cover. In turn, this brings valuable protection against fines or suspensions, while ensuring continued public confidence.

 

 

 

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The first year of legalization saw its share of scandals. But while CannTrust stole the spotlight in the summer of 2019, Winnipeg-based licensed producer Bonify was arguably worse.

As we covered in our article from early 2019, Bonify’s most egregious offense was when it sourced and sold illegal cannabis into the open market. This was during a volatile time, where pressure to provide inventory was massive as a huge shortage bottlenecked the nascent cannabis industry.

However, BNN Bloomberg now reports that Bonify, despite the seriousness of their violations, had its licensed reinstated after a massive overhaul.

 

“A Landmark Moment”

 

When it comes to dealing with punitive measures from the government, there was no precedent for whether or not working to improve would even yield results. But Bonify proved that, while Health Canada does not hold back when it comes to non-compliance, it is possible to bounce back.

When Bonify’s licensed was suspended, they brought in RavenQuest Biomed to get them back in the right direction. Now, RavenQuest CEO George Robinson says:

 

“Having guided Bonify through corrective action vis-a-vis operational procedures, proper record-keeping, training, and all other standard operating procedures within the Bonify facility, we now have the roadmap to license reinstatement for non-compliant operators. This is a landmark moment in an industry that has faced several high-profile compliance challenges.”

 

Essentially, Bonify went from a complete regulatory disaster to total redemption – although it took about eight months to accomplish. More importantly, it provides a living guide for companies like CannTrust, who are still fighting to once again become compliant.

BNN Bloomberg explains:

 

“Bonify’s ability to sell cannabis legally again also offers a clear pathway for other suspended producers to return to compliance with Health Canada if they can demonstrate that they can abide by the regulator’s various measures aimed at ensuring public safety and compliance with the law.”

 

A Learning Experience

 

The Bonify debacle has taught us some very valuable lessons. First of all, Health Canada is not to be trifled with. It is likely that offending licensed producers underestimated the government’s resolve to enforce compliance.

But we are in a time where image is critical. Any health issues from contaminated or substandard cannabis can drastically affect consumer confidence – something we desperately need in order to fight the black market. Consequently, regulators will scrutinize LPs very closely.

Second, it is clear that actions have consequences. Bonify’s offences were severe and the punishment more than fit the crime.

However, the third major lesson here is that there is always the opportunity to be better, whether it is due to Health Canada’s orders or voluntary, proactive measures to improve best practices.

In the words of George Robinson:

 

“The lessons from Bonify are clear: Follow the rules, train your staff and run a clean, well-designed facility capable of producing high-quality cannabis without cutting corners.”

 

WeedAdvisor’s Compliance Solutions

 

WeedAdvisor understands the severity of non-compliance and its effects on both the industry and consumers. It is also important to understand that it is possible to unintentionally fall short of Health Canada’s highly intense standards.

Keeping track of every critical area is no easy task. But thanks to our business solutions, we make compliance automatic, easy and inexpensive.

Inventory tracking, real-time data gathering, reports, safety and quality compliance are just a few areas that our solutions effectively cover. In turn, this brings valuable protection against fines or suspensions, while ensuring continued public confidence.

 

 

 

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In a hardly surprising turn of events, the RCMP conducted another raid that yielded a plethora of colourful edibles, according to City News.

The media hysteria around edible poisonings has died down significantly, but the upcoming entrance of edibles into the legal market has sparked some concern.

Following the product seizure, the RCMP put out the following tweet:

 

“We’re asking that if you are going to be purchasing these kinds of edibles in the future that you are aware of how they may be mistaken for regular candy and snacks and ensure they are stored safely.”

 

Attached were several pictures of the edibles seized, looking identical to common products found in any food or confectionery store.

But while these products could be harmful to small children, preventing accidental consumption is not a difficult thing to do.

 

Responsibility and Open Dialogue

 

Law enforcement and government regulation are critical, but the widespread and decentralized nature of the black market makes it difficult to stop. Consequently, the onus lies on parents.

Regardless of where they get their edibles, parents need to keep them stored safely away. It is also critical that adults be open about the nature of these products and the harm they can do to very young children.

Corporal Brett Cunningham from the Burnaby RCMP says:

 

“We’re asking that if you have these kinds of edibles in your home that you are careful where you leave them and ensure they are not confused for non-cannabis products.”

 

Essentially, the same logic parents would apply to alcohol and tobacco should apply here. These are age-restricted products and need to be treated as such.

 

Packaging Differences

 

Although not the best for marketing, the logic behind plain packaging is that it is less eye-catching to minors. But the real problem with the grey market’s use of appealing labels and designs is that it can lead to simple mistaken identity, especially for children who are too young to read.

So far, no recorded deaths have been associated with THC poisoning, but even the relatively low potency of legal edibles (once available) could easily sicken a small child.

But candies are not the only potential risk:

 

“When it comes to the edibles, it wasn’t just candy that worried officers. Other items seized include potato chips, drinks, cookies, cheesecake, and even macaroni and cheese.”

 

Cannabis drinks and cookies are commonly-known, but more obscure foods can potentially even catch adults off-guard. Plain packaging naturally would help differentiate regular products from THC ones, but some of the above items are not available legally, making them a perpetual risk.

 

Legal Edibles as a Safeguard

 

Many are concerned about legal edibles hitting store shelves in December. But even if adults are careless with the way the handle edibles around children, legal products have a failsafe.

Legally, these products cannot contain more than 10mg of THC per unit. This is still a decent amount for new and occasional users, but the dosage is safe enough to prevent severe reactions.

Of course, a smaller child will react more strongly to 10mg, but not nearly as badly as illegal edibles, which can easily contain hundreds of milligrams per unit.

However, this is not an open invitation to be reckless. 10mg may not require a frantic trip to the emergency room, but it can easily lead to “greening out” – a term used when someone consumes more THC than they can handle. Thresholds vary, but the symptoms typically involve severe dizziness, poor coordination, nausea, and vomiting.

 

WeedAdvisor’s Emphasis on Responsible Edible Consumption

 

Public health and safety are things we always take seriously. When children get their hands on THC products, it is usually due to negligence by adults.

Accidental underage consumption is 100% preventable, provided that adult users are careful when storing these products. Again, we also must stress the importance of open communication so that young children understand why these edibles are off-limits.

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According to CBC News, many analysts say that the upcoming round of edible products will boost cannabis sales and take away business from grey market dispensaries. With many users understandably turned off by the idea of smoking, it is safe to say that these products will be well-received in some circles.

But are experts truly correct in their prediction? Let us not forget what happened with the first stage of legalization. Investors flocked to licensed producers in droves, driving up stock prices well above the companies’ respective valuations. In the end, sales were – and continue to be – short of expectations.

Analysts and industry insiders alike, however, seem more comfortable with the future of edibles. However, this is likely because they missed one critical factor.

 

Cannabis Industry “Optimistic”

 

Licensed producers have a lot of faith in their products and the legal market as a whole. Understandably, a major goal is to eliminate their primary competitor, the illegal industry. However, experts warn that the fight is far from over:

 

“Licensed cannabis producers are optimistic that the introduction of legal edibles will help displace the black market, but analysts say it will take time to displace illegal sales.”

 

Aurora Chief Corporate Officer Cam Battley says consumers are interested in edibles because they provide an alternate consumption method to smoking. Battley says:

 

“This will give the legal industry the real opportunity to make significant strides in replacing black market sales with attractive and safe adult consumer products,” Battley said. There is a willingness to pay for products that are deemed to be properly regulated.”

 

Andrew Udell, another analyst, says a successful legal edible market requires a certain equilibrium between competitive pricing and public safety. He explains that we need to:

 

“Try and find the right price at the right size for how much goods or products should cost, versus societal goals of, say, public health and reducing social costs of consumption.”

 

Unfortunately, these “societal goals” could prove to be the Achilles heel of the edible industry.

 

One Size Does Not Fit All

 

While safety is a bonus for many consumers, the limitations on Canada’s edible products will force many recreational users to stay with the grey market.

At a THC limit of 10mg per unit, this level is adequate for new and casual users. But veteran consumers are another story.

Many heavy users consume products containing hundreds of milligrams of THC. For them, 10mg will not provide any intoxicating effects. These individuals will have no choice but to buy from illegal sources, whether they want to or not.

Analysts may be correct that legal edibles will affect illegal sales to a degree, their appeal is heavily limited by the outrageously minuscule potency. This is something that seems to have eluded them and will likely set them up for disappointment.

But we cannot entirely blame the government for this decision. In the months leading up to legalization, the media started a frenzy as they reported story after story on children and adults ingesting excessive amounts of THC.

Even though the edibles in question were all purchased illegally – a fact that most of the stories conveniently failed to address – it made people and lawmakers uneasy. Consequently, the government overcompensated and will likely see the unfortunate results.

 

WeedAdvisor’s Hope for a Growing Industry

 

As a provider of critical business solutions for cannabis retailers, licensed producers, and government agencies, WeedAdvisor stands firmly in support of the legal edible market. However, we cannot ignore the fact that, like the first wave of legalization, people are being overly optimistic.

The reality of the situation will not be clear until edibles finally reach consumers. In spite of potential challenges, we hope this addition to the open market will ultimately achieve its goal of promoting legal sales.