New regulations in Canada’s legal cannabis market include shifts in the licensing landscape that have brought about new licenses, like the Health Canada Standard Processing License.

Canada’s cannabis legislation under the Cannabis Act is ushering in a new era of growth in an already booming market, opening up a broad range of cannabis product categories from natural health products, fortified foods and beverages to cosmetics, household and pet products.


The new legislation also brings a host of changes to the licensing system under Health Canada’s Access to Cannabis for Medical Purposes Regulations (ACMPR) and Narcotic Control Regulations. But what will remain is the many advantages of the licensed processors in the cannabis marketplace.

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Under the previous framework, the two most important licenses for cannabis companies were the producer’s license and dealer’s license. Becoming a licensed dealer bestows many advantages on cannabis companies over licensed producers (LPs). LPs can grow cannabis, but when it comes to cannabis products outside of dried flower, they are limited to formulations with only carrier oils; they cannot use additives involved in the manufacture of edibles, pharmaceuticals, nutraceuticals or natural health products.

The Cannabis Regulations under the Cannabis Act that came into effect October 17, 2018, requires that licensed producers will transition to cultivation license classifications and licensed dealers will migrate into the new regulatory framework as licensed standard processors while still retaining clear advantages over their peers in the industry.

With a standard processing license, a cannabis company can expand the scope of their business model by pursuing a number of cannabis-related activities that are not sanctioned under the cultivator’s license; including manufacturing, extraction, formulation and distribution of cannabinoids, packaging, laboratory testing, university-level research and development (R&D), as well as importing and exporting.

Cannabis companies with standard processing licenses will have the ability to grow their market reach in the pharmaceutical industry as well as the rapidly growing natural health product and nutraceutical industries — revenue generating avenues which are closed to cannabis cultivators. This market advantage is especially strong in the increasingly important realms of cannabis R&D, testing and analytics, the extracts market and the emerging international cannabis markets.

In these ways, the standard processing license allows cannabis companies to become fully vertical, bringing production and processing in-house. This improves quality control, lowers production costs, and ultimately enhances a company’s profitability. By vertically-integrating its operations, a company is able to more quickly address the rapidly evolving cannabinoid extract markets to develop and launch new consumer products, diversifying its product portfolio. Thus, being granted a standard processing license in Canada is an especially important milestone.

Integrating cannabis R&D and analytical testing silos

R&D capabilities will be a key differentiator in the cannabis industry and securing a standard processing license is an important step in this direction. Licensed companies are able to perform exploratory trials to refine products, develop innovative formulas and test new products for a wider market. Licensed standard processors can also perform all the activities outlined above as services under contract to other cannabis companies — which represents a huge revenue generating opportunity in the global cannabis market.

The demand for analytical testing services in the cannabis industry is on a steep upward trend. The global market for cannabis product testing alone, according to Coherent Market Insights, is expected to grow at an annual rate of 13.2 percent to reach $1.5 billion by 2026. Licensed cultivators around the world are seeking to better understand the pharmacology and therapeutic potential of varying cannabis strains and products. Companies that can perform these services are looking at an excellent avenue for generating further revenue in the global cannabis market.

“The efforts of today’s licensed dealers [now licensed standard processors] are helping to solve some of the core scientific and medicinal issues the industry is facing from regulators, medical professionals and the general public,” writes Samuel Bouabane, Cannabis Strategic Licensing Manager at Cannabis Compliance Inc. “Through clinical trials, product formulation, packaging and stability studies, licensed dealers are able to address product shelf life concerns, determine standard dosages, and help shed light on the overall safety and therapeutic efficacy of cannabis.”

Cannabis Compliance Inc. is helping a number of cannabis companies in their application process, including Naturally Splendid Enterprises (TSXV:NSP), which has developed a growing portfolio of hemp-based cannabis products including bulk, branded, and white-label targeting the fortified foods, pet products, cosmetics and nutraceutical markets. In addition to its network of 2,000 retail distribution points in North America, the company has been actively building an international presence in the US, Europe and Australia.

Through strategic acquisitions and partnerships, the company has achieved a significant level of vertical integration that includes industrial hemp processing, R&D, product development as well as packaging and distribution. Naturally Splendid intends to deepen that vertical integration by including cannabinoid extraction and formulation to its business model. Hence its submission of a dealer’s license application to Health Canada in July 2018. The company is now working with Cannabis Compliance Inc. to transition that application to a standard processing license.

Health Canada standard processing license and the CBD extract market

The cannabis extracts market, particularly for cannabidiol (CBD), is one of the fastest growing segments of the global cannabis market. CBD is believed to reduce chronic pain and inflammation. Research is underway to discover the effectiveness in treating a broad range of illnesses including epilepsy, anxiety and post-traumatic stress disorder. Extracts are products derived from cannabis buds that contain higher concentrations of active cannabinoids than the unprocessed flower.

Today’s consumers want the benefits cannabis can bring to their health and wellbeing while avoiding the negative health impacts of smoking cannabis. Extracts also provide more discreet consumption and allow medical practitioners to better control proper dosing for patients. The total market for CBD extracts is expected to grow to $2.1 billion by 2020.

In Canada, cannabis oil sales in the first three months of 2018 outpaced those of dried flower by 56 percent. In terms of year-over-year (YOY) growth, cannabis extracts sales increased 82 percent over the same period in 2017 compared to 13 percent in YOY performance for dried flower.

Industry shaking changes to hemp-based CBD regulations

Hemp has been especially popular with extract producers because the plant’s miniscule amount of THC has made it ideal for use in a tightly regulated CBD oil market and the lower costs associated with growing hemp versus cannabis. Hemp-based CBD products are in high demand in international markets where THC levels are highly controlled. Global sales for consumer hemp products reached $688 million globally in 2016, and the market for hemp-derived CBD products is expected to have a 22-percent compound annual growth rate over the next five years.

In Canada, hemp-based CBD companies are set to benefit further from an August 2018 amendment to regulations under the Controlled Drugs and Substance Act pertaining to the extraction of CBD from industrial hemp. Under the amendment, companies with a dealer’s license (standard processing license after October 17, 2018) can now use the whole hemp plant for commercial purposes. The Cannabis Act also allows for whole hemp plant use and legalizes the extraction of CBD from hemp. The August 10 amendment to the previous regulations gives companies a head start on research and product development, creating a faster path to commercialization for new hemp-based CBD products.

Takeaway

The Cannabis Act has brought significant changes to Canada’s legal cannabis market. What won’t change is the business development and revenue generation benefits of the dealer’s license under the previous framework. With the standard processing license, cannabis companies will still have a smooth path toward full vertical integration across the most lucrative of the market segments, from R&D and analytical testing to CBD extracts and other value-added products.

This INNspired article is sponsored by Naturally Splendid (TSXV:NSP). This article was written according to INN editorial standards to educate investors. 

Progressive Planet Solutions Inc. (TSXV: PLAN) (“PLAN” or “Progressive Planet”), announces that, further to its news releases dated December 22, 2020 and January 7, 2021 the Company has closed its non-brokered private placement financing comprising of 7,500,000 units, at $0.10 per unit, for total gross proceeds of $750,000 .

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 Revive Therapeutics Ltd. (” Revive ” or the ” Company “) (CSE: RVV) ( USA : RVVTF), a specialty life sciences company focused on the research and development of therapeutics for medical needs and rare disorders, is pleased to announce that is has entered into an agreement with Canaccord Genuity Corp. and Leede Jones Gable Inc. as the co-lead underwriters (collectively, the ” Underwriters “), pursuant to which the Underwriters have agreed to purchase, on a bought-deal basis, 20,000,000 units (the ” Equity Units “) at a price of $0.50 per Equity Unit for gross proceeds to the Company of $10,000,000 (the ” Offering “).

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The Australian cannabis market has been maturing since medical marijuana was federally legalised in 2016.

The next year, Food Standards Australia New Zealand legalised low-THC hemp food for human consumption in Australia. The country went on to legalise medical marijuana exports in 2018, allowing medicinal marijuana products developed in Australia to be exported to licenced recipients in countries where the drug is legal.

Recreational cannabis remains federally illegal in the country, but recent legislation shows the door may be opening. In 2019, the Australian Capital Territory passed a bill allowing for the possession and growth of small amounts of cannabis for personal use. The law went into effect on January 31, 2020.

More recently, in late 2020, the Therapeutic Goods Administration greenlit the sale of low-dose cannabidiol (CBD) through over-the-counter methods without a prescription. The ruling from the Australian regulatory agency is expected to officially come into effect in February 2021.

With these and other changes in the works, Australia’s cannabis industry is projected to have long-term potential. The legal cannabis market in Oceania is expected to be worth US$1.55 billion by 2024, with Australia accounting for 79 percent of the region’s market, Prohibition Partners forecasts.

According to a study from FreshLeaf Analytics, the value of the medical market in Australia reached AU$95 million in 2020, and the firm expects revenue to jump again to over AU$150 million in 2021. In short, Australia’s role in the global cannabis industry will certainly continue to grow.

Here the Investing News Network profiles 10 ASX cannabis stocks with market caps between AU$30 million and AU$225 million. All ASX cannabis stocks below are listed in order of market capitalization from largest to smallest, with data compiled using TradingView’s stock screener on January 12, 2021.

1. Creso Pharma (ASX:CPH)

Market cap: AU$209.83 million

Creso Pharma was the first company to import medical cannabis into Australia and the first to launch these products in Switzerland for people, as well as animals. The cannabis company’s anibidiol product was the first hemp CBD complementary feed in animal health thanks to a partnership with Virbac Switzerland. Creso Pharma has also launched cannaQIX in Switzerland; it was the first CBD nutraceutical in human health.

The company’s medicinal cannabis product lines cover therapeutics, nutraceuticals, animal health, lifestyle and topicals.

2. Cann Group (ASX:CAN)

Market cap: AU$176.84 million

Cann Group provides a range of medicinal cannabis products for patients in Australia and globally. In 2017, the company was granted Australia’s first cannabis research licence, as well as the first medicinal marijuana cultivation licence. Cann Group partners with leading medical scientists in Australia to research and harness the therapeutic potential of cannabinoids, terpenes and other bioactive constituents of cannabis.

The company has secured supply agreements in global cannabis markets, including the UK, Germany and other European segments.

3. Incannex Healthcare (ASX:IHL)

Market cap: AU$166.42 million

Incannex Healthcare is a clinical-stage cannabinoid medicine company with global export capacity. It has four clinical programs underway for the development of a variety of cannabis medicinal products aimed at major unmet medical needs, including obstructive sleep apnea, traumatic brain injury/concussion, sepsis-associated acute respiratory distress syndrome and temporomandibular joint disorder.

In 2020, the company worked to advance its clinical trials. By the second half of the year, cannabinoid products accounted for Incannex’s entire revenue stream.

4. Botanix Pharmaceuticals (ASX:BOT)

Market cap: AU$131.37 million

Botanix Pharmaceuticals has a product pipeline that includes three advanced clinical programs using synthetic cannabidiol for the topical treatment of serious skin diseases and for antimicrobial applications. The company also has an exclusive licence to use a proprietary drug-delivery system called Permetrex for direct skin delivery of pharmaceuticals.

Botanix Pharmaceuticals’ programs are focused on treating acne, rosacea, atopic dermatitis and microbial infection. The company secured a clear development path for its BTX 1801 synthetic cannabidiol antimicrobial product after the successful completion of a pre-investigational new drug meeting with the US Food and Drug Administration.

5. Althea Group Holdings (ASX:AGH)

Market cap: AU$114.2 million

Althea Group Holdings takes the concept of medical cannabis a step further with its work as a pharmaceutical-grade cannabis supplier. In addition to offering relief through accessible medical cannabis, the company is implementing components of the plant in its research on advanced drugs.

Althea has successfully expanded into the global cannabis market with a wholesale supply agreement to import a range of Althea-branded finished products for sale and distribution in South Africa beginning in Q2 2021. This agreement came on the heels of the news that the company is slated to become the first commercial supplier of Australian medicinal cannabis extract products to the German market, with all necessary licences for sale and distribution granted by the German government.

6. Zelira Therapeutics (ASX:ZLD)

Market cap: AU$113.79 million

Zelira Therapeutics’ efforts are on unmet clinical needs and on using medicinal cannabis to treat a range of diseases and disorders. Its most common target areas include pain, anxiety and sleep.

Zelira is largely focused on developing treatment options using plant-based medicinal marijuana, and currently has three clinical-stage programs with a focus on insomnia, autism and opioid reduction. The company is also conducting a pre-clinical research program to test cannabinoids in breast, brain and pancreatic cancer.

7. Medlab Clinical (ASX:MDC)

Market cap: AU$75.51 million

Medlab Clinical is a medical research and development company focused on novel biotherapeutics such as nutraceuticals and pharmaceuticals. The company is also developing pharmaceutical cannabis products.

In early 2020, Medlab Clinical launched the NanaBis Observation Study in Australia. NanaBis is a cannabis-based pain treatment drug that may prove useful as an alternative to opioid medication. It is also being used to investigate cancer pain management.

8. BOD Australia (ASX:BDA)

Market cap: AU$49.25 million

BOD Australia is focused on cannabis and hemp-related products. It develops, distributes and markets health and skincare products created using plant-based extracts in Australia. The company secured a foothold in the European cannabis market in 2020 with a AU$200,000 purchase order for four Swiss-branded hemp seed oil products to be sold in France, the Netherlands and the UK.

BOD Australia’s reach in Australia ranges from selling prescription and over-the-counter products to more than 1,000 outlets, such as pharmacies, retail stores and healthcare chains. It also has distribution agreements with two pharmacy wholesalers in Australia.

9. IDT Australia (ASX:IDT)

Market cap: AU$42.47 million

One of Australia’s oldest listed life science companies, IDT Australia is a pharmaceutical manufacturing company with extensive experience in the development and production of pharmaceutical products. Through its GMP-compliant facilities, the company provides full-scale services for new drug development, plus scale-up and commercial active drug manufacturing for local and international clients.

IDT Australia’s clients include Cann Group; IDT Australia is the manufacturer of the medical cannabis products that are a part of two of Cann Group’s export supply agreements with European and UK partners.

10. MMJ Group Holdings (ASX:MMJ)

Market cap: AU$31.04 million

MMJ Group Holdings has a wide range of cannabis investments, including healthcare products, technology, infrastructure, logistics, processing, cultivation, equipment, retail and research and development.

Among other companies, it has invested in Harvest One Cannabis (TSXV:HVT,OTCQB:HRVOF), which develops health and wellness products; Fire & Flower Holdings (TSXV:FAF,OTCQX:FFLWF), a recreational cannabis retailer that’s developed a variety of cannabis products and accessories; and MediPharm Labs (TSXV:LABS,OTQQX:MEDIF), a cannabis extraction company that received its cannabis oil production licence from Health Canada in 2018. MediPharm Labs has launched cannabis extraction services in Australia.

Investor takeaway

The presence of these ASX-listed cannabis companies shows that the cannabis industry in Australia is undoubtedly growing, as are investment opportunities in Australia’s cannabis industry. While recreational marijuana remains illegal in the land down under, the medical cannabis industry is thriving, making that side of the sector worth considering.

So far, Australia has no timeline attached to the legality of recreational use of marijuana, but it will be a story to watch over the coming years for those interested in the space.

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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.

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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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 BioHarvest Sciences Inc. (CSE: BHSC) (the “Company” or “BioHarvest”) invites its shareholders and the general public to join a Live Video Conference (“Webinar”) on Thursday, January 21st, 2021 at 2:00 PM Eastern Standard Time (11:00 AM Pacific Standard Time). Ilan Sobel, CEO of BHSC, will host the event and discuss progress on Bioharvest’s Growth Plan, which will include highlights of the 2020 milestones achieved, key business capabilities built, and will provide an important overview of 2021 Priorities.

The presentation will be approximately 35 minutes, followed by a live question and answer session.

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