Cannabis Weekly Round-Up: Policy Update on Cannabis Regulation in Canada

- March 23rd, 2018

The Investing News Network rounds some of the biggest news in the cannabis market for the past trading week.

This past trading week (March 19-23) saw a new report from the Canadian government providing more information on the way it intends to regulate cannabis as legalization gets closer to reality. A rebalancing of the premier cannabis ETF and market news complete this Cannabis Weekly Round-Up.

A vote was made on Thursday (March 22) in the Canadian Senate to allow for Bill C-45, the Cannabis Act, to move forward into third reading. The final vote was 44 in favor and 29 against the motion. After voting on the third hearing, if the Senate approves the legislation cannabis will become legal all across Canada.

On Monday (March 19) the Canadian federal government released a report on its conversation with members of the cannabis industry when it comes to regulatory policy. The report can be found online, but some initial takeaways for the public markets relate to packaging issues and financial disclosures.

After the report was presented to the public, some cannabis companies and associations gave some initial feedback on the proposals from the government. Some groups reacted strongly against the government’s packaging rules.

“The packaging requirements proposed today will work against that goal,” Rewak said regarding the need for companies in the space to be allowed and make a clear difference on their products for adult consumers.

Cam Battley, the chief corporate officer of Aurora Cannabis (TSX:ACB; OTC:ACBFF) said the decision to pair cannabis with tobacco, in terms of packaging regulations, was “outrageous and scientifically wrong.”

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As part of the government’s proposals came the revelation that companies may be expected to disclose financial information from its shareholders during the licensing stage with Health Canada.

According to the document, the government is proposing companies to submit detailed financial information, including investors’ financial information, as a way to keep tabs on who is placing money in the cannabis industry during the licensing process.

“This information could then be used in determining whether to refuse to issue or renew a license… the regulations could require regular, ongoing reporting of financial information by [LPs],” the report said.

Top Cannabis ETF Adds 10 New Stocks

This past week the Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ) added 10 new holdings into its portfolio as part of a rebalancing expected to take place each quarter.

“It’s exciting to see an increase in the number of investable companies that qualify to be included in HMMJ’s portfolio,” Steve Hawkins, president and Co-CEO of Horizons ETFs said in a statement. The new holdings include:

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Market News

A new report from Marijuana Business Daily found there are, as of February 1, 476 pending applicants for cultivation licenses with Health Canada. The provinces of Ontario and B.C. lead the country in terms of applicants, with 167 and 153 companies respectively.

Despite the high number of production applications, there are only 21 production sites with a sales license as well, Russell Stanley, an analyst with Echelon Wealth Partners told Marijuana Business Daily.

In updates from the US, this past week Cronos Group (NASDAQ:CRON; TSXV:CRON) announced a joint venture with MedMen Enterprises, a company focused on legal cannabis markets in the US. The plan, according to Cronos is for a new operation called MedMen Canada to develop branded products and open stores in the country.

“MedMen stores have been integral to mainstreaming cannabis, and they have become one of the most well-known and respected cannabis platforms in the U.S.,” Cronos CEO Mike Gorenstein said in a statement.

According to the announcement, MedMen Canada will be allowed access to Cronos’ entire production facilities, including any future expansions.

It was revealed Cronos completed a $100 million bought financing deal with BMO Nesbitt Burns, alongside GMP Securities. The deal will get the underwriters 10.4 million Cronos common shares, or 12 million if the over-allotment is taken, at a price of $9.60 a share, according to the Financial Post.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Editorial Disclosure: Beleave, HIKU Brands, Isodiol International are clients of the Investing News Network. This article is not paid-for content.

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

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** This article is updated each week. Please scroll to the top for the most recent information**

Cannabis Weekly Round-Up: US Operator Launches on the CSE

By Bryan Mc Govern – March 16, 2018

This past trading week (March 12-16) the cannabis markets saw a new company enter the public sector on the Canadian Securities Exchange (CSE). A new study projected the benefits of legalizing marijuana for tax purposes in the US, market news and an interview with Namaste Technologies complete this Cannabis Weekly Round-Up.

The Investing News Network (INN) had the chance to catch up with Sean Dollinger, president, and CEO of Namaste Technologies (CSE:N; OTC:NXTTF), to talk about the company’s plans this year and the progress of their recently launched NamasteMD platform.

“Our whole idea is about being a platform, so LPs place their products on our platform; whereas we are the technology behind it,” Dollinger told INN.

Lawmakers for one of the biggest cannabis markets in the US are exploring the possibility of reducing taxes for the drug as a way to combat the existing illegal market. On Thursday (March 15) the Los Angeles Times reported a group of California lawmakers proposed a reduction of state taxes for three years on growing and selling cannabis.

“We need to give legal businesses some temporary tax relief so they do not continue to be undercut by the black market,” Assemblyman Tom Lackey (R-Palmdale) said. According to the Los Angeles Times, if approved the new legislation wants to cut the state excise tax from 15 to 11 percent, in addition to suspending a cultivation tax of USD$148 per pound.

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A new study projected the benefits a legal framework for cannabis could have on the US economy up to the year 2025. The report, prepared by cannabis research firm New Frontier Data, projected USD$105.6 billion in federal tax revenue benefit for the US by 2025 if marijuana were to be legalized nationwide.

Market News

Aurora Cannabis (TSX:ACB; OTCQB: ACBFF) completed its acquisition for the common shares of CanniMed Therapeutics (TSX:CMED) this week and as such the entire board of directors for CanniMed was replaced. However, it was revealed despite losing his seat on the board, Brent Zettl will continue to be CEO of CanniMed “to ensure a successful transition” for the company and the employees.

GMP Securities analyst Martin Landry issued a note to investors saying he sees Aurora fully valued, even after the CanniMed acquisition.

“By combining with CMED, ACB has evolved into the industry’s largest LP by market cap. with significant platforms to capitalize on both domestic and international growth opportunities,” Landry wrote, according to Cantech Letter. “While we like ACB’s strong balance sheet and growth prospects, we feel these are already reflected in the company’s valuation.

The Green Organic Dutchman Holdings, a private cannabis producer announced this past week it filed an amended and restated preliminary long form prospectus with the securities regulatory authorities as the company prepares for its initial public offering. At the Canaccord Genuity cannabis investor day conference, the company shared with investors it would be preparing for its public launch and revealed it expects to have a completely funded 116,000 kilograms of annual production.

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This past week CannaRoyalty (CSE:CRZ; OTCQX:CNNRF) and National Access Cannabis (NAC) (TSXV:NAC) revealed an upgrade to their partnership in order to set the foundation for a future in which CannaRoyalty can offer its cannabis products in Canada.

Afzal Hasan, executive vice president for corporate development with CannaRoyalty, told INN said the company doesn’t expect this option to materialize anytime soon, but he outlined the ways in which CannaRoyalty could enter the Canadian retail market eventually.

Another cannabis operator with assets in the US began offering its stock to the Canadian market, by launching publicly on the Canadian Securities Exchange. Cannex Capital Holdings (CSE:CNNX) officially started trading on Wednesday (March 14). Anthony Dutton, CEO of Cannex Holdings said in the statement, the CSE listing will give Cannex an opportunity to “build a strong public shareholder base.”

Beacon Securities analyst Vahan Ajamian told Bloomberg Cannex has the “highest trailing revenue” of any US focused cannabis companies in the public market. He also revealed the company raised $48 million as part of a financing deal.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Editorial Disclosure: The Green Organic Dutchman Holdings is a client of the Investing News Network. This article is not paid-for content.

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

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