A drop in cannabis wholesale prices has caused some friction between the companies behind a joint venture (JV) marijuana production company.

Shares of Village Farms International (NASDAQ:VFF,TSX:VFF) fell on Tuesday (October 15) after the company confirmed its 50 percent owned JV, Pure Sunfarms, will receive a dispute notice from the other JV partner, Emerald Health Therapeutics (TSXV:EMH,OTCQX:EMHTF), whose share price also took a hit.


The discord is centered around a “price deficiency obligation” invoice that Pure Sunfarms sent Emerald for approximately C$7 million, and Emerald Health is arguing that it’s not liable for the bill.

In a release, Village Farms notes that the price for wholesale cannabis in the most recent quarter has dropped in British Columbia (BC), where Pure Sunfarms operates, forcing the company to sell its product at a discounted price after Emerald failed to pick up its right to purchase.

Village Farms adds that it’s not a part of the supply agreement and states that any money that’s owed is payable directly to Pure Sunfarms.

Emerald Health has an agreement in place to purchase 40 percent of Pure Sunfarms’ total cannabis production; however, in instances when Emerald has not wholly exercised that right, Pure Sunfarms has sold the product on the open market.

As part of the deal, Emerald Health is required to pay the JV the difference between the predetermined price of the cannabis and the market price if the market price is lower than the originally agreed-upon price. This agreement allows Pure Sunfarms to cover its operational costs.

In an email statement to the Investing News Network, Bernie Hertel, vice president of finance and communications with Emerald Health Sciences, defended the company’s stance, stating:

We have previously stated that as Emerald’s business evolves we are aiming for each of our assets to perform on a stand-alone basis, and we will work to maximize margin at each operation. Purchasing product from a supplier in the context of wholesale pricing does not leave a lot of margin for Emerald, and that is not an activity we intend to build.

The market hasn’t reacted favorably to the news. Shares of Emerald Health dropped 11 percent over the course of the trading day from C$1 at open on Tuesday to C$0.89 by 11:35 a.m. EDT.

Village Farms shares also saw some fluctuation in Toronto, falling 1.4 percent to C$9.22 by 11:40 a.m. EDT from an opening price of C$9.35.

Emerald Health also issued a statement on the dispute, saying it believes it’s not liable for the cost under the supply agreement “due to the manner in which the JV conducted its recent cannabis sales.”

The release from Emerald Health notes that the company has the right to purchase, or reject, 40 percent of Pure Sunfarms’ production. In the event that it rejects the product, it is obligated to pay the difference “under certain circumstances.”

The disagreement puts the JV and its owner firms in a dispute that is set to be addressed at a later date.

Since Emerald Health doesn’t believe it is liable for the money under the supply agreement, it’s requesting the issue be addressed at an upcoming meeting with the board of directors at Pure Sunfarms.

The drop in cannabis prices is a phenomenon that is not restricted to BC.

Recently, data from Statistics Canada showed that the price of cannabis has fallen since recreational use was legalized. According to GlobalNews, BC Minister of Public Safety Mike Farnworth has said prices will drop even further in the province as supply ramps up.

Retail store owners in BC have also noticed a drop in the price of wholesale cannabis. Spiritleaf Vernon owner Sarah Ballantyne told Global the store passes the savings on to its customers.

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

Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.

Legal cannabis is spreading. According to a new report by Grand View Research, the global legal marijuana market is expected to reach US$73.6 billion by 2027 with a compound annual growth rate of 18.1 percent.

A survey of over 1,000 US consumers found that the modern cannabis user is largely representative of the general population. Moreover, cannabis consumption today blurs the lines between strictly recreational or medical. In fact, more than 50 percent of consumers report using cannabis for both purposes. As THC and CBD products make their way into an even wider array of product categories, our frame of reference for the modern cannabis user will continue to evolve.

In 2019, the medical cannabis market took home a leading revenue share of 71 percent, driven by the widespread adoption of cannabis as a pharmaceutical alternative for a wide range of conditions, including cancer, arthritis, Parkinson’s disease and more. A growing need for effective pain management therapies is expected to boost product demand even further.

This INNspired Article is brought to you by:

Khiron Life Sciences Corp. (TSXV:KHRN) is a vertically-integrated medical cannabis company fully licensed to conduct its core operations in Colombia.Send me an Investor Kit

Major telehealth platforms in the medical cannabis industry

Telehealth represents the intersection between innovative technology and the forefront of medical science. While remote medical practice saw its beginnings more than half a century ago, recent technological advancements have connected more patients to physicians than ever before.

In the US, platforms like NuggMD and IndicaMD provide patients with an online medical cannabis card that enables remote purchase of the drug. Patients can meet with physicians over secure video chat and can be approved to access cannabis within minutes. Physicians typically follow-up with patients by email, recommending the types of cannabis that would best alleviate their ailments and ensuring that they don’t purchase the wrong products. Other platforms exist to oversee the rapid delivery of cannabis and hemp products to patients across participating states.

Other parts of the world are undergoing the same transition. It has been more than eight years since Colombia — a country that represents more than a quarter of the world’s total export quotas — decriminalized the possession of small amounts of the drug, and roughly four years since the country legalized medical cannabis. In 2019, Colombia’s Constitutional Court overruled a ban on the public consumption of cannabis, which many considered a stepping stone toward full legalization. Recently, Colombia became one of the first countries in the world to extend national health insurance for patients requiring medical cannabis as a first-line therapy.

Khiron Life Sciences (TSXV:KHRN) was the first firm in Colombia authorized to sell both high and low THC formulations of medical cannabis. The company owns a telehealth platform that has accounted for over 5,600 medical cannabis prescriptions issued to date. Additionally, in June 2020 the company’s Doctor Zerenia telehealth platform was responsible for 14 percent of Khiron’s total medical consultations.

Since becoming the first company to fill medical cannabis prescriptions in Colombia, Khiron reports that 92 percent of its patients have experienced a marked improvement in their primary condition after four months of treatment. In light of these results, the Government of Colombia issued a directive that Khiron’s medical cannabis products and clinic services be covered by the country’s major health insurance providers. While countries such as Germany and the Czech Republic have taken similar legislative actions, a key difference in Colombia is that cannabis is considered a first line therapy with a vast array of applicable medical conditions. With more than 94 percent of Colombia’s population carrying health insurance policies, Colombia is quickly becoming one of the most favourable jurisdictions in the world for patient access; moreover, it has been shown that patient uptake is significantly increased by insurance coverage.

The next step forward for telehealth platforms includes opportunities such as virtual patient education and the fast, reliable delivery of essential drugs such as medical marijuana. Virtual care is also expected to expand across different types of patients, including those requiring intensive care. In the wake of the COVID-19 pandemic, many long-term care facilities have already adapted remote patient monitoring to maintain the safety of staff and patients.

The focus: Accessibility and improving patient outcomes

Medical marijuana has the power to improve patient outcomes across demographics. In the wake of groundbreaking research, patients, physicians and retailers are working together to increase the drug’s accessibility for patients who require relief from a range of health conditions. Telehealth platforms have been instrumental in not only increasing accessibility to medical marijuana, but also in improving quality of life across diverse populations of people.

A recent study completed by Canopy Growth (NASDAQ:CGC,TSX:WEED) in November 2020 found the absence of long-term toxicity despite long-term usage of CBD in a preclinical model, supporting the advancement of recent initiatives aimed at discovering CBD’s full range of therapeutic benefits. While CBD and tetrahydrocannabinol (THC) offer many of the same benefits, high levels of THC are responsible for most of cannabis’s psychoactive effects.

While the chronic pain segment dominated the medical cannabis market in 2019, application toward mental illness is expected to witness the fastest growth over the seven-year forecast period. Worldwide, a growing number of people suffer from depression, anxiety and other debilitating mental conditions with few low-risk pharmaceutical alternatives.

Medical cannabis is also becoming more popular among older adults. A recent study highlighted that cannabis use among individuals aged 65 and older has been steadily increasing, a trend that is consistent with reports from physicians who recommend cannabis in their daily practices. In the face of growing public acceptance and reduced stigma, we are beginning to see an increasing number of older adults rely on cannabis for relief against chronic pain, insomnia, neuropathy, anxiety and other conditions that traditionally call upon pharmaceuticals.

Much of the momentum in the medical cannabis market can be owed to the rise of telehealth platforms and health digitization efforts, increasing ease of access and promoting transparency. Over the next decade, legalization, increased awareness and the rise of remote medicine are expected to facilitate growth, creating lucrative opportunities for market stakeholders.

Takeaway

Telehealth platforms represent one of the easiest ways for patients, providers and retailers to collaborate remotely and fulfill needs faster. As more physicians and policymakers begin to recognize digital health tools as an advantage for maximizing efficiency and safety in health care, existing medical cannabis platforms are well-positioned to take advantage of a large-scale digital transition.

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