April 27, 2017
By: Andrea Hill
I am pleased to bring you this instalment of my weekly blog, rounding up what’s currently happening in the cannabis industry in Canada and abroad.
Force of Nature: MedReleaf is going public
- ACMPR giant MedReleaf is headed for the TSX. On April 19, MedReleaf Corp. filed a preliminary prospectus.
- The LP, which is licensed to produce over 6,000 kg of cannabis per year through two licensed production facilities in Markham and Bradford, Ontario, estimates that it serves nearly 20% of the entire Canadian medical cannabis market. It has long been thought to be one of the most successful licensed producers, but the scale of its operations has been private until now. Financial statements included with the preliminary prospectus indicate that the company had revenues of $30 million in 2016, including gross profits of almost $12 million before biological asset gains. The preliminary prospectus does not contain the details of the LP’s valuation – those figures will appear in the final prospectus.
- Deborah Rosati, the Co-Founder and Chief Executive Officer of Women Get on Board, a SkyLaw client, is one of MedReleaf’s directors! We are thrilled for her.
- MedReleaf is the first LP to my knowledge to go public through an Initial Public Offering (IPO), rather than a Reverse Take-Over (RTO). An IPO, the traditional method of “going public”, is a process in which the disclosure document, a prospectus, is directly reviewed by the securities regulator. In a RTO, the company’s disclosure document is called a filing statement and it’s reviewed by the stock exchange on which the company intends to list its shares for trading. Both a prospectus and a filing statement must contain full, true, and plain disclosure of all material facts relating to the securities being issued. However, a RTO can be a more time- and cost-efficient process, especially for venture issuers. By choosing an IPO and heading straight for the TSX, MedReleaf is signaling the maturity of its business model and its willingness to undergo a searching review by the securities regulator.
Trademarking cannabis: How do you solve a problem like marijuana?
- IP lawyer John Simpson at Shift Law has prepared a terrific blog post interpreting the trademark provisions of the new draft Cannabis Act.
- The Act prohibits the promotion, packaging, or labelling of cannabis in a way that appeals to young people, “sets out a depiction of a person, character or animal, whether real or fictional”; or “associates the cannabis or one of its brand elements with, evokes a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring”. These prohibitions, Simpson explains, will rule out the possibility of trademarking characters like Tony the Tiger, “images of skateboards, scents like bubble gum or terms like ‘Get Happy’ or ‘High Society’ when associated with cannabis products.”
- This interesting article by US law firm Partridge Snow & Hahn LLP discusses strategies that American cannabis businesses can use to try to protect their brands and other IP.
- Securing a trademark on cannabis-related brands can be challenging in the US because a company must demonstrate lawful use of the mark in commerce, and cannabis remains a controlled substance under federal law.
Hello, Nurse! Nurse practitioners can now prescribe cannabis
- On April 19, 2017, the Ontario government joined New Brunswick as one of the first provinces to permit nurse practitioners (NPs), a special class of registered nurses, to prescribe controlled substances, including cannabis.
- Until now, only doctors were able to provide medical documents in Ontario. The addition of NPs to the group of professionals which can provide medical documents for cannabis significantly widens the scope of gatekeepers to medical cannabis and could have a noticeable impact on the number of authorized patients.
- NPs are included in the definition of “health care practitioner” under the ACMPR, a class of professionals which may provide a medical document (akin to a prescription) for cannabis to a client. However, provincial legislation and regulatory bodies which govern NPs must provide for this competency before a NP may exercise that power under the ACMPR. Regulations to Ontario’s Nursing Act –which sets out the scope of permitted activities for NPs – have only now been updated to permit NPs to prescribe controlled substances.
- To prescribe cannabis, NPs must have completed approved controlled substances education. According to the College of Nurses of Ontario, in the last five months, more than 80% of NPs have met this requirement and more are in the process.
- NPs who complete a medical document are expected to use evidence to inform this treatment decision, and to inform clients about the unique risks associated with medical marijuana as a result of the variability in composition and potency.
Aphria cuts new ground with a US expansion: the cross-border LP
- Aphria, which is set to add $100m in debt and equity to its pockets in a raise announced last week, recently became the first LP to talk about the Cole Memorandum in its public disclosure. That’s because Aphria executed a US expansion strategy by making a lead investment in “Aphria USA”, which will own a licensed Florida medical cannabis dispensary. The investment makes the LP the first to take on a leading role in respect of an American medical cannabis dispensary.
- Aphria’s MD&A indicates that it will consider potential investments in other states that have legalized the medical use of marijuana. Aphria already owns just shy of 20% of the equity of Copperstate Farms, LLC, an Arizona-based licensed producer and seller of medical cannabis.
- Residency requirements restrict foreign ownership of licensed cannabis companies in many states.
“I grew up in the 60’s!”: Exploring cannabis for seniors
- The Globe and Mail has posted an interesting article about how medical cannabis is being adopted by Canada’s senior population. Statistics on medical cannabis use by seniors are scarce, but 2013 data from Health Canada show that two thirds of Canadians registered to purchase medical marijuana were taking it to treat severe arthritis – a condition which often develops with age.
- Some issues surrounding seniors and cannabis are common to patients of all ages: for example, an assistant professor interviewed by the Globe suggested that many seniors don’t realize the difference between illegal storefront dispensaries and regulated licensed producers of cannabis.
- Other issues, however, emphasize the challenges of being a caregiver to a medical cannabis patient: one man fears that authorities will remove his elderly father from his care if they discover the son is providing him with marijuana. And at least one doctor has pointed out the risks of cannabis potentially interacting with other medicines or causing a senior to become disoriented.
- Some LPs have developed their business models to focus on seniors. Licensed producer WeedMD, which is set to go public this week on the TSX Venture Exchange, says that it has “plans to leverage deep industry relationships in long-term care facilities and senior living centres.”
What’s Up in Weed is not legal or financial advice. It is a blog by SkyLaw which is made available for informational purposes only and should not be used as a substitute for professional advice from a lawyer. This blog is subject to copyright and may not be reproduced without our permission.
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