Cannabis Prospect Magazine - June '21 - Issue #15 by Straight Dope Media Inc. (Pulse Magazine)

David versus Goliath

Vape Markets

Medical Cannabis in Canada

For an industry that is supposedly built on objectivity and logic, the software world has created a pretty elaborate mythology for itself. One of the main narratives is about the scrappy newcomer toppling a seemingly invincible giant.

Recently, we’ve seen a few stories about the market share decline of vape in certain North American markets. Upon first glance, many of us were confused; all of the vape data we’ve studied this year has suggested the very opposite.

Canada’s medical cannabis system can be difficult for patients to navigate. There are many steps for a patient to take before gaining access to medical cannabis.

Cannabis Prospect Magazine

VOLUME 3 ISSUE 3

YOUR SEED-TO-SALE PUBLICATION FOR THE CANADIAN CANNABIS MARKETPLACE

WHAT’S IN STORE?

GROCERY STORES ARE BRILLIANT AT MAXIMIZING REVENUES BY KNOWING EXACTLY HOW CUSTOMERS THINK. IT’S TIME FOR CANNABIS RETAILERS IN CANADA TO DO THE SAME THING.

JUNE 2021

Table of Contents/

June 2021

SPACs

MAXIMIZING REVENUES

BC CRAFT COOP INTERVIEW

COVID-19 PRACTICES

SPACs — or Special Purpose Acquisition Companies — are the hottest investment trend of 2021. Investors of all types from Hollywood to Wall Street are providing a cash advance to help little-known businesses go public.

Grocery stores are brilliant at maximizing revenues by knowing exactly how customers think. it’s time for cannabis retailers in canada to do the same thing.

The BC Craft Farmers Co-op has 150 members and is committed to transferring as many cannabis cultivators, processors and retailers into the regulated market as possible.

In this issue, we have two articles related to cannabis and COVID-19: industrial and commercial equipment rely on foreign workers to provide emergency repair or installation services, and top 10 do’s and don’t when putting together your workplace vaccination and testing policies.

ON THE COVER REGULARS

Recently, we’ve seen a few stories about the market share decline of vape as a category in certain North American markets. Upon first glance, many of us were confused; all of the vape data we’ve studied this year has suggested the very opposite.

4 6 8 28 30 32 34

From the Editor Events News Provincial Updates Product Showcase Appointments List of Advertisers

Canada’s medical cannabis system can be difficult for patients to navigate. There are many steps for a patient to take before gaining access to medical cannabis.

June 2021 | Cannabis Prospect Magazine

LETTER TO THE EDITOR

Three Years Later... By David Halpert

f you work in the Canadian cannabis industry or are working in an industry tangentially related to it in some way (e.g. investing, tech, etc.), then you’ve probably heard talk about the upcoming review of Bill C-45 (better known as The Cannabis Act) set to take place by the federal government in October 2021, three years after federal legalization of cannabis. At the time, this was probably one of the smartest decisions when it came to cannabis. The country was headed into uncharted waters for this nascent industry. Canada was the second nation to legalize recreational cannabis and, while Trudeau had a Liberal majority government in Parliament, a federal election was looming in 2019, and there was no telling how it would end. Like any industry, cannabis is always changing. That said, I thought this would be a great time to review some of the provisions that are likely to be given a second glance come October 2021. 1. A Loosening of Advertising/Marketing Restrictions. Current laws regarding cannabis advertising and marketing activities are very stringent. There’s a reason why you don’t see cannabis ads on television and radio. While some provisions related to advertising make sense (such as not having celebrities endorse cannabis products, not advertising to minors, and so forth) others don’t make a lot of sense. Furthermore, with more provisions restricting what can’t be advertised or promoted, this might adversely affect how the messaging of this restrictive market is ultimately told, a product that is ultimately safe if the consumer is responsible and properly educated/informed.

testament to that), but it really irks me when I see all of the amazing packaging coming out of the US and it pains me to see the bland, stale packaging for Canadian cannabis products required under the Law. While I do believe that a cannabis product should have necessary warning labels and such, there’s really not much distinguishing one product from another in terms of branding. There’s definitely a lot of wiggle room to be had in this respect. Similarly, there needs to be more incentive for LPs to adopt sustainable packaging. On a product-versuspackaging basis, cannabis is one of the worst offenders in this regard and while we have great companies like TerraCycle, ND Packaging and CannaSupplies doing their part, more can be done as well. 3. Cannabis Delivery & Online Sales. In many Canadian jurisdictions (e.g., Ontario), provincial governments have a monopoly on online sales and/or delivery. In provinces that follow a public system (like Quebec, Nova Scotia and PEI), this isn’t an issue; however in provinces that have adopted privately-owned retail cannabis stores this has certainly become one. In order to operate in a fair and equitable system, brickand-mortar cannabis retailers should have the same opportunities as their public counterparts. This needs to be changed immediately. Here’s to sound policy amendments in the future!

President / CEO, Straight Dope Media Inc.

2. Packaging Laws. I’ll be the first to admit that I’m a huge nerd when it comes to graphic design (not really a secret since this magazine is a

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Cannabis Prospect Magazine | June 2021

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EDITORIAL For editorial submission requests or article ideas please email media@cannabisproonline.com Cannabis Prospect Magazine assumes no responsibility for any claims or representations contained in the magazine or in any advertisement. All materials contained are for educational purposes and intended for the legal marijuana business. Cannabis Prospect does not encourage the illegal use of any of the products contained within. ISSN 2562-1033. CANADIAN PUBLICATIONS MAIL PRODUCT AND SALES AGREEMENT NO. 43596516

Cannabis Prospect Magazine | June 2021

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News/

Virox Technologies Provides Infection Prevention Guide for Cannabis Facilities

Another milestone has been reached in the Canadian cannabis industry as Virox® Technologies, maker of SHYIELD™, introduced a new guide aimed at supporting licensed producers in achieving the high standards for cleaning and disinfection set out by regulators. While the industry sets high compliance standards for disinfection, little guidance exists on how to achieve this. Infection Prevention for Cannabis Facilities: Cleaning and Disinfection Guide, developed in consultation with experts and backed by peer-reviewed research, provides important information and easyto-implement steps to prevent common infections that can have costly consequences for cannabis facilities. This guide lays out the fundamentals of effective infection prevention, specifically through the lens of cannabis facilities; making it an especially relevant and essential resource. From protecting plant health to human health, the guide aims to equip key stakeholders to make informed decisions about their infection prevention protocols and feel confident that they have created the ideal environment for their employees and their yields.

High Tide Increases U.S. Presence Through Acquisition of Leading CBD E-Commerce Retailer FABCBD High Tide Inc., a retail-focused cannabis corporation enhanced by the manufacturing and distribution of consumption accessories, has announced that it is taking another step towards solidifying itself as a major player within the U.S. e-commerce marketplace for accessories and hemp-derived CBD products, by entering into a definitive agreement pursuant to which High Tide will acquire 80% of Fab Nutrition, LLC. (FABCBD), operating as FABCBD for US$20.64 million, and will have a threeyear option to acquire the remaining 20% of FABCBD at any time. Founded in 2017 with its headquarters in Milwaukee, Wisconsin, FABCBD has quickly grown to become one of the most popular brands for hemp-derived CBD products across the U.S., including CBD oils, creams, gummies, and dog treats. In 2020 FABCBD had more than 1.3 million online impressions and an average order value of US$91.90. FABCBD’s founder and sole shareholder, Josh Delaney, will join the High Tide team, as general manager of FABCBD, and will help with growing High Tide’s CBD business globally. Aleafia Health Secures Health Canada Research Licence for Human Sensory Analysis Trials of Cannabis Products Aleafia Health Inc., a global leader in cannabis wellness products and services, has secured a Health Canada Research Licence for its cannabis product manufacturing and innovation centre in Paris, Ont. The licence allows the Company to conduct human sensory analysis and palatability trials, evaluating the taste, touch, smell and sight of its growing portfolio of differentiated medical and consumer cannabis products. “As we continue to bring highly innovative formats to market, our development team

will now employ an important best practice of product evaluation used in the food and beverage industries,” said Aleafia Health CEO Geoffrey Benic. “Through a first to market product strategy, we’ve developed a track record for product innovation that will only be strengthened by this regulatory breakthrough.” Aleafia Health is developing several new product formats and line extensions to complement its existing cannabis portfolio of dried flower, edibles, sublingual strips, soft gels, extracts, and vape cartridges. The Company intends to conduct sensory assessment studies consistently during product development, allowing human panels to evaluate objective product characteristics, and evaluate preference between comparable products. Unique Toronto Startup HiBnb Wins International Award for Innovation / Disruption Toronto-based HiBnb has been catching interest in the startup world, racking up multiple international media mentions, and gaining attention from investors after closing its pre-seed funding goals. Hospitality industry watchers are saying the unique concept is a winner, and that HiBnb is a gamechanger. As travel returns, the company will be challenging AirBnb for the lucrative cannabis tourism market – beginning in Canada, but rapidly expanding North America wide. Last week, HiBnb won the Innovator / Disruptor Award at the high profile 2021 SHORTYZ AWARDS for the short-term rental industry. The event, by International Hospitality Media (the premier specialist in online publishing; conference, exhibition and event organization, and advisory services for growth sectors of the hospitality industry) had winners in 15 categories and ELIZABETH BECKER founder of HIBnb beat out seven other industry trailblazers in her category from around the world to win this

Cannabis Prospect Magazine | June 2021

very prestigious award. Announcing the award on social media she said, “To be acknowledged by the international hospitality and short term rentals industry means a lot and I am so grateful.” Syqe Medical® Receives Health Canada Approval for the First-Ever Medical Cannabis Delivery Device with Predictable, Consistent Dosing Syqe Medical, a global pharma-tech company, announced that Health Canada has approved the Syqe Inhaler, the first pharmaceutical grade medical cannabis delivery device system that provides predictable and consistent dosing through inhalation. The Syqe Inhaler’s metered-dose delivery system allows the patient to benefit from very low doses of medical cannabis and its unique, userfriendly design is easy for both physicians and patients to understand and use. According to a recent post-marketing report, patients using the Syqe® Inhaler, at one year and beyond, reported no adverse reactions. Due to its predictable, precise and consistent microgram-dosing capability, the novel drug delivery technology helps eliminate uncertainty surrounding dosage administration and allows physicians to consider and recommend appropriate dosages of medical cannabis with more consistent results. Zenabis Maltese Joint Venture Partner Zenpharm Receives Licence for Production & Distribution of Cannabis Zenabis Global Inc. announced that its Maltese joint venture, ZenPharm Limited, has received its Licence for the Production of Cannabis for Medicinal and Research Purposes issued by the Malta Medicines Authority, as afforded under Chapter 578 of the laws of Malta. The receipt of the Medicinal Cannabis Licence follows on the earlier European Union Good Manufacturing Practices (“EU

Station House Pre-Roll Product Continues to Outperform for Licensed Producer Sensi Brands

Canadian licensed cannabis producer Sensi Brands will be ramping-up retailer access to its signature pre-roll brand, Station House, in response to increased demand for its Amnesia Haze SKU in Ontario and other markets. According to sales data from the Ontario Cannabis Store (OCS), Station House pre-rolls have outperformed in 2021, having garnered the third highest in March sales at OCS, and fourth highest in 2021 YTD sales by total revenue. Additionally, Sensi Brands has exceeded expectations in popularity in other markets including Nova Scotia, where it is ranked second among all LPs by pre-roll sales and third in pre-roll by SKU since launch. Sensi Brands holds an 8.6% market share in Ontario and 12% in Nova Scotia. Station House’s success in Ontario, Canada’s largest and most competitive marketplace, has prompted OCS to make the Amnesia Haze pre-rolls (six-pack and 12-pack SKUs) more widely available for retailers. Beginning this month, retailers will have increased access and no limits on pull-downs, making Amnesia Haze a mainstay offering for OCS customers. Station House pre-rolls of the heady sativa-dominant strain that feature aromas of pine, musk and fresh citrus have quickly become asked for by name.

GMP”) certification issued by Malta Medicines Authority in January 2021. The Medicinal Cannabis Licence is the final licence requirement under Malta’s regulatory framework allowing for commercial bulk imports into Malta from Zenabis’ facility in Atholville and subsequent exports of finished medicinal cannabis products to countries of the European Union and United Kingdom. After closing of the Arrangement plan, HEXO and Zenabis’ combined product portfolio are expected to gain access to the European market. The Medicinal Cannabis Licence allows ZenPharm to commence commercial shipments to the European Union, where Germany is ZenPharm’s most prominent target market. ZenPharm has an executed supply agreement with a German-based customer to supply a minimum volume of 500 kg per year. To that end, ZenPharm will be accepting shipments of up to 300kg from Zenabis Atholville through the end of this calendar year. HEXO Corp to Acquire 48North Cannabis Corp. HEXO Corp. and 48North Cannabis Corp have entered into a definitive arrangement agreement under which HEXO will acquire, by way of court-approved plan of arrangement under the Canada Business Corporations Act, all of 48North’s issued and outstanding common shares in an all-share transaction valued at approximately $50 million on an enterprise value basis. “As we continue down our path toward achieving a top two position in Canada by adult-use sales, we are looking forward to welcoming the 48North team into the HEXO family.” said Sebastien St-Louis, CEO and co-founder of HEXO Corp. “48North’s innovative product portfolio complements HEXO’s existing brands which, combined with their additional market penetration, will further strengthen HEXO’s position in the Canadian market. We expect the deal could offer up to

$12 million worth of accretive synergies within one year following the close and ideally position HEXO to continue executing on our domestic and international growth strategy.” Eat Beyond adds Daydream Hemp and Adaptogen Drinks to its Portfolio Eat Beyond Global Holdings Inc. an investment issuer focused on the global plant-based and alternative food sector, announced it has invested in Daydream Drinks Inc. (“Daydream”). Daydream is an Ontario-based beverage company that has created Canada’s first sparkling water infused with hemp extracts and adaptogens. Daydream’s hemp oil contains below 0.03% CBD and zero THC, making Daydream a non-cannabis product. Hemp and adaptogens have a range of benefits, making them a suitable option for Canadian grocery and retail stores. Eat Beyond joins Global Edge Investments, a Toronto-based investment and management company, and other industry veterans, such as Jorn Socquet, a 14-year executive from ABinBEV, as an early-stage investor in Daydream. High Tide Closes Acquisition of Leading CBD E-Commerce Retailer FABCBD High Tide Inc., a retail-focused cannabis corporation enhanced by the manufacturing and distribution of consumption accessories, is pleased to announce that it has completed the acquisition of Fab Nutrition, LLC, operating as FABCBD thus meaningfully increasing its presence within the U.S. e-commerce marketplace for hemp-derived CBD products. The acquisition is just one of a series of recent steps the Company has taken to considerably expand its footprint in the United States market by selling products that are already federally permissible, and demonstrates that High Tide can drive profitability without having to wait for federal cannabis legalization. The Acquisition was completed pursuant to the

terms of the definitive agreement previously announced by the Company on May 3, 2021, pursuant to which High Tide has acquired 80% of FABCBD for US$20.64 million (the “Transaction“) and has been granted a threeyear option to acquire the remaining 20% of FABCBD at any time. All-Risks Insurance Brokers Ltd. and Senses Cannabis Group Launch Industry Leading Retail Cannabis Store Insurance Program All-Risks Insurance Brokers Ltd, a full-service insurance brokerage, and cannabis insurance broker Fady Kamel announced a partnership with Senses Cannabis Group, to launch a market-leading retail cannabis store insurance product through Burns & Wilcox, a globally recognized leader in wholesale insurance brokerage and underwriting. Senses Cannabis Group powers the largest network of cannabis stores in Ontario by providing group savings, distribution of retail displays, as well as technology and marketing consultations. Along with the many current benefits, Senses Cannabis Group members can now take advantage of the Insurance expertise of Fady Kamel, from the Erin Mills Branch of AllRisks, who has helped insure large cannabis licensed producers, processors, consultants, brands and countless retailers. This partnership will support existing retailers and allow new potential retailers to transition into a fully functional operation with ease, all while receiving preferred insurance policy pricing.

Have a news release? Send it to us. Forward to media@cannabisproonline.com

June 2021 | Cannabis Prospect Magazine

CANNABIS SPACS ON THE RISE: WHAT YOU NEED TO KNOW ABOUT COVERAGE

By Adrian Atilano and Jay Virdi

PACs — or Special Purpose Acquisition Companies — are the hottest investment trend of 2021. Investors of all types from Hollywood to Wall Street are providing a cash advance to help little-known businesses go public. An alternative to an initial public offering (IPO), SPACs are taking the $18.3 billion cannabis industry by storm. While more than $3 billion in cannabis SPACs launched between 2019 and 2021, the SPAC trend has exploded as of late and the most recent, high-profile cannabis SPAC deals were worth more than $2 billion each — Silver Spike Acquisition Corp. and Subversive Capital Acquisition Corp. A SPAC, sometimes called a “blank check” company, is a shell company looking to purchase a private company and take it public. Unlike an IPO, SPACs raise funds through a sponsor prior to formation so they don’t need to undergo the same scrutiny as an IPO, such as an audit. Along with rapid SPAC growth has come increased regulatory attention. Recently appointed Securities and Exchange Commission (SEC) Chairman Gary Gensler has indicated SPACs would be subject to heightened scrutiny in the coming months. Gensler’s announcement came on the heels of the SEC’s formal disclosure guidance for SPAC sponsors, made public in December 2020. In March 2021 the SEC announced an informal investigation into the SPAC sector. As a result, underwriters have taken notice. What’s at Risk for SPAC Sponsors, Investors and Targets While the rewards of investing in and targeting a business for your SPAC are great, each party in the SPAC journey takes on a different risk. Sponsors, who source deals, negotiate transactions and take a company public, face exposure for loss of at-risk capital and potential reputational damage should the SPAC deal go bad. Investors making an investment in a SPAC face significant exposures, as they could be liable for excessive valuation and failure to target due diligence. Target businesses have less market risk than a traditional IPO but will face dilution from sponsor promotion or warrants, as well as market execution risk.

D&O Coverage: Impossible to SPAC Without it In light of the increased risk, and especially for cannabis companies, already at risk for regulatory scrutiny, having the right coverage for your SPAC is critical to protecting the deal — and those investing in and brokering it. Directors and Officers (D&O) coverage helps shield sponsors and investors from the risks mentioned above, as well as claims of breach of duty, fairness, conflict of interest or underperformance. D&O insurance for the SPAC period (pre-combination) aligns with the search period, and unlike traditional IPO coverage, policy terms are often offered up to two years. This can be broken into 18-month terms plus six-month extensions to save premium. Tail coverage is also pre-negotiated to cover claims against the SPAC brought after completion of a business combination. This coverage typically has a six-year window to report a claim arising from an alleged wrongful act before the business deal is complete. A new D&O program would be put into place for the company post-combination. The explosion of SPAC growth and the anticipated increase in regulatory scrutiny and litigation trends have created a hard market for SPAC D&O coverage, meaning prices have little or no downward movement and coverage can be difficult to obtain. SPAC sponsors and investors will want to consider creative levers to help determine their D&O coverage, as well as avoiding popular exclusions. Insurance Considerations for SPAC Coverage With a tight cannabis insurance market, it is critical to prove to underwriters that your cannabis SPAC is a good risk. Consider the following when positioning your SPAC to an underwriter. 1.

Frame risk in a positive light. In a D&O policy application, explain the Reps & Warranties coverage in the SPAC deal, if applicable. Show the SPAC experience of the board of directors and sponsors and say why the SPAC is a good risk.

Cannabis Prospect Magazine | June 2021

Understand the appetite of the underwriter. Many D&O insurers are not insuring SPACs, so finding a partner who understands each underwriter’s risk appetite is key. Remaining knowledgeable of the underwriters and their appetite for risk — which will change — is critical in showing insurers why the SPAC is lower risk.

Eliminate exclusionary wording and policy limitations. There are several potential conflicts of interest around affiliated SPAC entities that could pose a liability. Determine if the SPAC D&O policy excludes these conflicts of interest.

Craft alternative D&O insurance program structures and timing of premium payments. D&O insurance is not a one-size-fits-all product. Given the different stages of a SPAC process, and the different component parts of a D&O insurance program, look to your broker for new and innovative ways to construct programs that optimize coverage and manage costs.

Considering a SPAC? If you’re considering investing in a SPAC, or if you are in the process of readying your cannabis business for an IPO and would like to consider a SPAC instead, work with your broker to determine what’s needed to ensure you and your investors are well protected for what’s next. Adrian Atilano leads the HUB CA Executive Liability Practice. He is well-versed in the complex issues facing public, private and non-profit organizations in the realm of executive risk. Jay Virdi is chief sales officer for Hub International’s cannabis insurance and risk services in the U.S. and Canada. In this role, he focuses on further developing Hub’s expertise and resources across the U.S. and Canada for the cannabis industry.

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WHAT’S IN STORE?

HOW CANNABIS RETAILERS CAN SURVIVE A CROWDED MARKET By Richard Berman, CEO, VerbFactory

f you’ve ever walked into a grocery store to buy milk, you probably had to go to a back corner of the store to get it. It’s just such a natural part of shopping that most of us don’t even think about, how everything in the local supermarket is precisely placed to maximize sales. Impulse purchases, such as candy, are usually displayed by the checkout because retailers know that’s where people are most likely to pick up a treat. Bread, butter, milk and other staples are placed throughout the store so that shoppers have no choice but to walk the entire floor to get the three or four items that they came for…and along the way they will most likely pick up other products that weren’t on their shopping lists. Grocery stores are brilliant at maximizing revenues by knowing exactly how customers think. It’s time for cannabis retailers in Canada to do the same thing. When the first legal cannabis stores opened in April 2019, just existing was enough to drive sales. There were literally lines around the block as Canadian consumers could legally purchase cannabis from a retail store for the first time. This kicked off a major “gold rush” as thousands of entrepreneurs applied for licences so that they could be part of the revolution. Two years later, there are around 500 stores open in Ontario alone, and there are nearly a thousand applications that are still being processed. On the surface, this is great news for everyone, but it’s not all wine and roses for cannabis store owners. The problem is that the pesky laws of economics actually matter. On the first day of legal retail, there were seven stores serving more than 14 million Ontarians: that’s a ratio of one shop for every 500,000 people. It’s no wonder that the original stores were so profitable! Today, the ratio is one shop for every 28,000 people in the province, and if all of the stores that have applied for licences get approved, the number could be down to one store for fewer than

10,000 people. Even when you factor in the fact that the total sales of legal cannabis in Ontario tripled between April 2019 and July 2020, perstore revenues will have actually fallen by more than 80 percent. That’s not great news for people who have invested hundreds of thousands of dollars (or more) expecting the same level of profitability that the market saw during the first year of legalization. Alberta & Alcohol So how can retailers possibly stay ahead of the curve in the face of such bleak numbers? The short answer is that not all of them will. It’s hard to predict how many cannabis shops will close their doors, but Alberta’s alcohol retail system may give us some clues. In 1993, the province announced that it was going to completely privatize sales of alcohol, which had previously been available exclusively through a network of about 200 government-owned stores. Within a year, all of the shops had been closed or sold to private investors, and the number of stores exploded to more than 2200. This has often been cited as a major success story and used as an argument against government involvement in the consumer retail sector. But the process hasn’t been painless or frictionless: about 20 percent of private stores in Alberta have closed because of a lack of business or high levels of competition, especially in urban areas where there are multiple stores in close proximity to each other. If that pattern holds in Ontario’s private cannabis retail market, we could see dozens of stores close in the next 12 months. But it’s not just the “little guys” who would be affected. A number of large cannabis retailers are either shuttering some of their locations or shifting their business models to focus on lower-cost products on the theory that people will buy more inexpensive items and fewer premium ones. But Ontario retailers – and retailers in most Canadian provinces – are limited in how they can compete because of strict regulations on

which products can be sold and how they can be marketed. All cannabis sold in Ontario needs to be purchased through the Ontario Cannabis Store (OCS), which eliminates the ability for retailers to differentiate themselves on product alone. In fact, it’s not an exaggeration to say that most stores pretty much sell the same items at the same prices. That’s not a great position to be in, but it’s even worse when there is a cluster of five or six stores in a small geographic area, as is becoming increasingly common. Okay…enough with the bad news. The bottom line is that Canadians are still buying billions of dollars’ worth of cannabis, and savvy retailers are actually doing well despite the increasing level of competition. So what separates the companies that are continuing to grow and thrive from those that may have to walk away because of low revenues? Look Up! Again, let’s look at a historical precedent that may provide some clues as to what the future will hold. Until the early 1980s, the US commercial aviation market was strictly regulated by the federal government. The FAA literally set prices for all flights, so going from Chicago to Denver on United Airlines cost exactly the same amount as a flight on American Airlines. The only exceptions were for business-class and first-class seating, as well as tickets purchased at the last minute, which commanded higher prices. You would think that in a market where all tickets cost the same amount that every airline would have the same level of success, but that wasn’t the case at all. The 1970s, American and TWA were the gold standard for US carriers, while United was an also-ran because it was perceived as a “tourist” airline. United embarked on a massive marketing campaign to get senior executives at large companies to switch airlines – and purchase expensive tickets – and by the

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When the first legal cannabis stores opened in April 2019, just existing was enough to drive sales... Two years later, there are around 500 stores open in Ontario alone, and there are nearly a thousand applications that are still being processed.

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early 1980s the company had vaulted its competition and became the top domestic carrier in the United States. In simple terms, it gamed a fixed system and managed to win. Cannabis retailers in Canada can take the same approach. The Byzantine regulations that cover the industry may be stacked against them, but there are still ways for savvy owners to come out ahead. As a first step, they need to do sophisticated market research to figure out where to place their stores. It’s one thing to decide that you want to open a shop, but picking the perfect location is everything. We’ve all seen street corners where there is a highly successful restaurant across from one that never seems to have any customers.

In many cases, that is related to traffic patterns, parking availability, curb appeal, and other factors. Many of the entrepreneurs who have opened cannabis stores in the last two years don’t have a strong background in the retail business and therefore pick their shops based on being in a certain neighbourhood or having a certain square footage. But no amount of a “cool factor” can compensate for a substandard location. Even with a perfect address, there’s no guarantee of success. That’s especially true in neighbourhoods where there are clusters of shops within walking distance of each other because the regulators who approve licences usually don’t factor location (aside from proximity to schools and houses of worship) into their decisions. This means that shops may find themselves being victims of their own success and ultimately having to split the pie with so many competitors that it doesn’t make sense to remain in business. That could actually create a second wave of opportunities for investors who want to be in the cannabis business without the massive infrastructure costs. An increasingly common scenario we will likely see over the next year in the legal Canadian cannabis retail market is one where new owners take over cannabis retailers that are struggling or shuttered completely as shops find themselves unable to stay out of the red ink, keeping in mind that lower overhead costs upfront and changing neighbourhood demographics may help these stores eventually turn a profit. A certain number of stores will close completely and be replaced by other kinds of businesses, but there is still good money to be made in selling cannabis, and buying distressed stores may be the next wave for people who want to be part of the industry. Richard Berman is the CEO of VerbFactory.

June 2021 | Cannabis Prospect Magazine

DAVIDS VERSUS GOLIATHS: WELCOME TO THE TECHNOLOGY PILLOW FIGHT

By Amar Singh, CEO, Elevated Signals

or an industry that is supposedly built on objectivity and logic, the software world has created a pretty elaborate mythology for itself. One of the main narratives is about the scrappy newcomer toppling a seemingly invincible giant. There are certainly plenty of examples of this, stretching all the way back to Bill Hewlett and David Packard in their garage in the late 1930s, and continuing to the rise of modern icons including Elon Musk, Mark Zuckerberg and the Google guys. But one thing that this storyline misses is that it’s never been David versus Goliath. Instead, the reality is a lot messier: there have always been more than one incumbent super power, and dozens (if not hundreds) of startups aiming to take their crowns. As the CEO of a rapidly growing technology company focused on the cannabis industry, I’ve seen this firsthand, and what it looks like from the inside is very different from what the public perception tends to be. So what’s it really like to launch a SaaS solution in a crowded industry, scale quickly and take on industry leaders while at the same time keeping tabs on other startups focused on the same market? It’s a bit like doing a 12x12 Rubik’s Cube while bungee jumping into an active volcano. One of the first things that successful software companies in the cannabis industry do is to fully commit. Back in 2018 and 2019 there were a lot of technology players who decided to enter this vertical because it was such a hot sector. That’s not a bad idea in theory (to paraphrase Willie Sutton, that’s where the money was), but this resulted in a plethora of products — that were not purpose-built for this industry — getting reskinned and

rebadged as cannabis-focused tools. If the technology works, that’s not an inherently bad idea, but the problem is that this industry is unlike any other vertical in the world. It’s not so easy to take a technology built for the general retail or agriculture industry and magically make it work for licensed producers. If you’re going to be a cannabis technology company, then genuinely be a cannabis technology company. Emerging technology companies in any industry need to be hyper-aware of every aspect of their competitors’ products and services, and this is especially true in the cannabis industry. As there are relatively few customers compared to most other verticals, competition is much more intense. It’s not enough to be able to say, “we do X” – successful companies need to identify gaps in existing solutions so that they can position themselves for sales. It’s essential to understand the bottom-line benefits of your technology, not just the ones and zeros. If you go into a meeting and talk about your technology, you are going to get a polite smile, but if you’re able to point to significant “X” factor or “Y” cost savings, better compliance or other tangible benefits, you will make the leap from “nice to have” to “need to have.” As Morgan Freeman said in The Shawshank Redemption, “Get busy living or get busy dying.” This is absolutely true in the enterprise software industry, where a failure to innovate every day is the first step to irrelevance. The corporate graveyard is littered with the bodies of promising companies that weren’t able to sustain their technological advantages and fell by the wayside. You don’t need to

Cannabis Prospect Magazine | June 2021

have a new version every six weeks, but your engineers need to know that there’s no such thing as sitting on your laurels. Long-term growth and viability are earned every day, and it’s not hard to go from the top of the pile to the historical dustbin very quickly. Remember that only a decade ago GE was regarded as one of the world’s top companies, but in 2018 they joined AT&T, Sears and General Motors on the list of iconic corporations that have been removed from the Dow Jones Industrial Average because of poor stock performance. And as these companies were receding from view, new players such as Facebook and Google took their mantle. That’s just the way of the world. There’s no single magic bullet that is going to make your technology company successful. I can think of dozens of great ideas that never found their place – and all of us know of some bad ideas that actually “made it” in the marketplace. But all successful technology companies share a key trait: awareness of their market and their role within that ecosystem. When it comes to technology in the cannabis industry, success is determined by not only understanding the market, but also distinguishing yourself from existing industry leaders and other emerging companies that want to knock them – and you – off the mountaintop. Amar Singh is the CEO and co-founder of Elevated Signals, a company that develops software for cannabis producers. He is passionate about the intersection of natural science with technology, particularly in relation to the production of molecules with the ability to benefit health and society.

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ASSOCIATION

THE FUTURE IS NOW FOR CANADIAN CANNABIS

By George Smitherman

resh off an advocacy win in getting the Government of Saskatchewan to call off a proposed tax on cannabis vaping products, the Cannabis Council of Canada (C3) is gearing up for the upcoming statutory review of the Act. Looking back, it’s hard to believe that it has been almost three years since adult-use cannabis was legalized. While we have successes to be celebrated – nearly $3 billion per year in legal sales, 10,000+ jobs created, and great products across a diverse range of categories – there’s still much that needs to be done to unleash the creative and innovative energy of Canadian cannabis. The Statutory Review of the Cannabis Act is set to begin by October 17, 2021 and will culminate in a report to both Houses of Parliament 18 months later. The review, led by Health Canada, will focus on the administration and operation of the Act, “including a review of the impact of this Act on public health and, in particular, on the health and consumption habits of young persons in respect of cannabis use, the impact of cannabis on Indigenous persons and communities, and the impact of the cultivation of cannabis plants in a dwelling-house.”s151.1 (1) of the Cannabis Act. C3’s efforts will focus on ensuring that the review includes an emphasis on the economic dimensions of the cannabis industry and the need to update parts of the Cannabis Act, specifically, its regulations that hamper the legal cannabis industry’s ability to support the objectives of cannabis legalization: protecting public health, keeping cannabis out of the hands of children and eliminating the illicit market. Recent signals from the federal government indicate that the Statutory Review of the Cannabis Act will include a focus on the economic dimensions of cannabis legalization. For many of our members, the time for change is now, not two or three years from now. C3’s messaging on the Statutory Review will include a call for immediate action from Health Canada and the Government of Canada on changes to the rules and regulations limiting the success of legal cannabis. The need for immediate change to government regulation of cannabis is a constant in all our advocacy efforts. While the Statutory Review will serve as a focal point of our efforts on behalf of our members, we are working on several

Cannabis Prospect Magazine | June 2021

fronts in support of the commercial needs and concerns of our members. 1.

C3’s “Pan-Canadian Distributor Caucus” is representing the interests of licensed cannabis companies with provincial cannabis distributors and the Canadian Cannabis Jurisdiction Leadership (CCJL). Our “Canadian Cannabis Vaping Caucus” is working on the development of cannabis vaping standards in response to coming regulations in Canada and internationally. The “Medical Cannabis Caucus” is actively engaged on issues related to medical cannabis for Random Clinical Trials, the testing of cannabis on human subjects for non-therapeutic purposes, and incoming Cannabis Health Product regulations. Our “Beverages Caucus” is seeking changes to cannabis beverage equivalency rules and will be broadening its focus to the entire edibles category.

Additionally, C3 has launched a Sustainability Caucus with a focus on curating collaborative solutions to address emerging Extended Producer Responsibility (EPR) regulations in Ontario, Alberta and other provincial jurisdictions. You can find the recordings of our Virtual Roundtables on our website (www.cannabis-council.ca) as we continue to build and grow our coalition toward a more sustainable Canadian cannabis industry for all. If you are a licensed cannabis company or a cannabis industry supplier, joining C3 provides you with a chance to shape the industry’s engagement with the Government of Canada and with elected officials. To learn more about C3’s efforts on behalf of the licensed cannabis industry and how you can help shape your industry’s voice, please reach out to us at hello@cannabis-council.ca or check out our website at www.cannabis-council.ca! George Smitherman is the President and CEO of the Cannabis Council of Canada.

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CenturionPro’s industrial trimmers are backed by a five-year warranty. The robust XL 5.0 trimmers produce the highest throughput rate of any single barreled trimming machine, with the XL 5.0 and XL 5.0 SE processing up to 1,500 lbs and 2,250 lbs of wet flower per hour respectively. With the XL 5.0 SE, CenturionPro saw an opportunity to get more throughput out of the XL 5.0 body frame by adding a third set of cutting reels right where the product cascades in the tumbler the most and upgraded other components such as the blower to accommodate the additional feed rate. The result was a substantially higher throughput. CenturionPro’s XL 10.0 produces the highest throughput of any trimming machine available anywhere in the world. The double-barrelled industrial solution can replace hundreds of human workers trimming by hand, delivering 840,000 cuts per minute and processing up to 3,000 lbs. of wet flower per hour, or 600 lbs. dry. The centralized power source and control panel keeps cables concealed for improved safety and allows operators to fine-tune the trim and account for cultivar variance to achieve the perfect cut every time. As cannabis and hemp markets expand internationally, producers need solutions that can support their operation at every stage of its development. With superior processing capabilities and the versatility to run both wet and dry cannabis or hemp, CenturionPro empowers growers globally to grow alongside the flourishing industries.

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To strengthen profit margins in an increasingly competitive market, cultivators must streamline tasks with solutions that simultaneously safeguard standards. For many the most resource intensive process is harvesting, which can make or break a crop.

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With a commitment to develop an industry-leading trimmer and bucker for every harvest, CenturionPro integrates the same revolutionary innovations into all its elite harvesting technologies. For more information on CenturionPro’s ground-breaking solutions, please visit the website at https://cprosolutions.com or email sales@cprosolutions.com

June 2021 | Cannabis Prospect Magazine

ACCESSORIES

WHY THE MARKET SHARE DECLINE FOR CANNABIS VAPES IS NOT A CAUSE FOR CONCERN By Dave Kalpan, Greentank Technologies

ecently, we’ve seen a few stories about the market share decline of vape as a category in certain North American markets. Upon first glance many of us were confused; all of the vape data we’ve studied this year has suggested the very opposite. So we dove into the data and discovered that although vape market shares have dipped slightly over the last 24 months, the cannabis vape industry, as a whole, is thriving and maturing at a steady, healthy rate. In fact, if there’s any lesson or insight to take away from these articles, it would be that market share percentages and their fluctuations tell only one part of the story—a small and often distorted part. Here’s why:

Market Share Metrics Are Often Misleading The market share declines referenced in these articles are determined by total sales, not by total units sold—and that is a critical distinction! That’s because only total units sold speaks to the

quantities moving through a market at any given time - much more than dollars does. This metric gives us a better gauge on growth and maturity, independent of other factors. For instance, if the average price of a product category is driven downward over time due to brand competition, product innovation or increases in product sizes and value, the category’s total sales figures and market share could be proportionally affected. That is exactly what has happened in the cannabis vape sector since 2018, where the average unit prices of both cartridges and disposables, for the most part, has dropped substantially in US rec-legal markets, despite the total number of units sold having gone up in the same period. Consider the following example (Figure 4) 12 million units of Category X are sold at an average price of $30 in Year One, generating $360 million in sales. The entire industry generates $1.8 billion in

Cannabis Prospect Magazine | June 2021

sales during Year One, resulting in Category X having a market share of 20% in the period. Now envision that each category within the industry experiences a 25% growth in sales the following year, but only Category X’s average unit prices drop by $10 per unit for any number of the aforementioned reasons. In this scenario, Category X would sell 15 million units at an average price of $20 in Year Two, generating $300 million in sales—a $60 million dip from Year 1. Category X’s market share would plummet to 12.8% in Year Two, despite selling more units than Year One and experiencing the exact same rate of YoY unit growth as every other product category in the industry. This knife cuts both ways: When the average price of certain product categories goes up over a period of time, its total sales and market share can also rise . . . even if the sector experiences a drop in unit sales! Market shares, especially in younger markets, are prone to

fluctuate over time for several other reasons as well: • •

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More product categories entering the industry over time Nascent product categories improving and thus becoming more attractive to consumers More first-time consumers entering the industry and experimenting with various product categories until discovering which they like best.

Year-Over-Year Vape Market Share Changes Have Been Minimal Indeed the market share of cannabis vape sales did dip over the course of 2020 from 22.9% in January 2019, but only by a total margin of 3.1%. Not exactly an earth-shattering drop, particularly when we consider that a shortterm vape crisis emerged over that same time period. More importantly though, the data shows that in most markets,

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At the end of the day, raw data is only as good as the tools used to interpret it,” says Greentank CFO, Jeremy Stepak. “We love opportunities like this that allow us to dive deep into the data and dispel surface-level conclusions. Having said that, the data coming out of the industry has truly never been better or more comprehensive. We use it every day to help inform our operations and partners. It truly has become one of our most valuable assets.

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shares of vape as a category of sales actually rose in 2020! Although vape dipped just over 4% in Michigan, 2.4% in both California and Nevada, and a negligible 0.1% in Colorado, healthy gains were made in Oregon (2.4%), Washington (2.8%), and Massachusetts (4%). Of course, California’s vape market is the biggest of the group, by far, and because of its sheer size, the year-over-year change of its vape market share alone will always distort the sector’s overall market share. The reality is that the market share of cannabis vape in 2020 went up in a handful of markets and down in a few others, but not by a significant amount in either direction. The amount of total cannabis vape units sold, on the other hand, went up significantly in 2020, but you’ll have to wait until the September issue of Cannabis Prospect Magazine to find out by exactly how much. Stay tuned for part two of this article series, where we’ll take a closer look at the cannabis vape sector’s impressive growth using comprehensive, real-time cannabis vape sales data. In the meantime, please reach out to Greentank for any additional industry insights, or to learn more about the industry’s top vape hardware solutions. Data was sourced from Headset Insights.

Figure 4

June 2021 | Cannabis Prospect Magazine

INTERVIEW PROFILE

BC Craft Farmers Co-op Keeping British Columbia’s Legacy Market Alive BY RUSSELL CAFFERTY

he BC Craft Farmers Co-op has 150 members, one of which is Tommy Chong. The organization committed to transferring as many cannabis cultivators, processors and retailers into the regulated market as possible. Established in 2019, when it became apparent the recreational industry was created for multinational corporations at the expense of the legacy market, the association remains on a mission to maintain British Columbia’s craft leadership position internationally. With an elected board and president, the BC Craft Co-op is one of Canada’s most respected and largest cannabis syndicates protecting the country’s small growers. We caught up with President Bob Davidson to discuss the co-op’s creation, values and vision for the future of BC bud.

Can you give me a quick overview as to the creation of the BC Craft Co-op and where the organization stands today, compared with a year ago? The BC Craft Co-Op is a grassroots movement started by long-time activists who were worried BC was losing its historic role as an industry leader, as small farmers were unable to transition into the legal market. The founders travelled the province meeting with producers and processors to identify what the best model would be to maintain the independence and intellectual properties. A co-operative was selected as BC already had legislation to guide its governance, The BC Co-operatives Act. Getting insurance was mandatory with the Act, so we got some quotes. The first came in at $3,000, which

Cannabis Prospect Magazine | June 2021

sounded pretty reasonable, so we signed. The day they were supposed to honour the contract, it was pulled due to our association with the cannabis industry. It went from $3,000 to $26,000, but we took it. We needed to establish our legitimacy and become the first insured cannabis co-op in Canada. One year ago, we had just been incorporated and had no members, and the hope of an accessible and fair legal cannabis industry was fading fast. Are you able to provide an overview of the organization’s membership with respect to producers, processors and retailers? We have four categories for Members and two categories for Supporters. For Members, we have, founders, micro-cultivators, processors and independent retailers. Vendors and consumers are welcome to join as Supporters. A lot of our members have experience in ACMPR and want to get into the legal space. Then we have a whole bunch of young exciting entrepreneurs who are full of energy and bring new ideas and gusto to the table. We want to help everybody, but especially minorities, to build an inclusive and diverse regional industry. We have five women and three men on our board, two of those women are First Nation and we’re proud of that. We recently secured a mutually beneficial partnership with a First Nation to build micro-facilities on its reserve to accelerate approval. The Nation provides its own agricultural expertise, workers, store and security. We’re sharing labels and logos to show conscious consumers that the can-

nabis was grown on First Nation land by First Nation growers. What are some of the challenges craft cannabis companies face, compared with that of big LPs. Does BC have more to lose than other provinces? The LPs were allowed into the industry to provide the highest-quality cannabis at the lowest cost safely for patients. They did so and built their companies around the market, but this all changed when recreational opened up. The price of cannabis went up to $18 a gram and all the good stuff went; it was a snub to the medical community and people became frustrated. In BC, 80% buy from non-licensed producers as they want quality. The product they want isn’t on the shelves, which is why BC’s growers need to be allowed into the industry. One of the biggest challenges is financing. Good luck getting a loan as Health Canada wants to see the full micro set up, before it does its security check. If a suspicion is flagged your license is denied, but what happens to the facility you’ve invested your life savings in? BC has a bigger legacy market than any other province; unfortunately as a result, it has more to lose if these small farmers are shut out. The community took a risk for civil liberty and a lot of people got prosecuted. A decade ago, Vancouver had more than 100 grey market dispensaries that set their own price without government interference; this is the bustling marketplace we’re looking to revive.

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INTERVIEW PROFILE

The BC Craft CoOp is a grassroots movement started by long-time activists who were worried BC was losing its historic role as an industry leader, as small farmers were unable to transition into the legal market.

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How did you become involved with the Coop and what is your background? When I started growing medicinal cannabis in 2006, it was really difficult to access full stop. Only seven diseases were deemed worthy and multiple sclerosis (MS) was one of them. When I signed my 56 exemption, it stated nothing about dosages and my specialist started me at eight grams a day. MS causes the brain to send fake messages, but cannabis helps dull the receptors. McGill University was in its third year of research to treat MS with cannabis when the funding was pulled by the Harper government. Nevertheless, my neurologist is blown away by the results, my sclerosis has shrivelled up and

I’m skating again. (Bob leaps from his chair to demonstrate his mobility) I used to skate with Tony Hawk and for me being able to skate again is huge. I was also part of the original MMR Coalition, from 2012 to 2016, who raised money for John Conroy’s fight against the government’s attempted repeal of medical access. So the latest plans on tightening medical cultivation isn’t the first time it has come after patients and it won’t be the last. Finally, what does the future hold for craft cannabis and the BC Craft Co-Op? Hopefully in the future, Health Canada can make legal cannabis work by acknowledging that a local thriving craft industry creates jobs, both directly and indirectly, and that the socioeconomic benefits to regional communities are massive. Within five years, craft cannabis will be one of the biggest job creators in the province, with illegal crops valued at around $8 billion a year. There is plenty of money to go around and we want everyone to be a part of it. The future is bright and the government is starting to see things our way. We want to expand our network, as there is another co-operative in Saskatchewan, and then the plan is to go national and unite everybody under one banner. My only concern is how long it will take and how many people we could lose in the process.

We Grow Together. At Kindred, we aim to both represent and deﬁne the future of the cannabis industry.

Discover more at www.kindredcanada.ca and on Instagram at @Kindred_Canada

THE CURRENT STATE OF MEDICAL CANNABIS IN CANADA

By Joel Taylor

anada’s medical cannabis system can be difficult for patients to navigate and oftentimes isn’t always easy to know where to go for answers. There are many steps for a patient to take before gaining access to medical cannabis. This can lead patients to move to the recreational market to get their products, which might not be the products they actually need. Medical Cannabis in Canada The Canadian government legalized medicinal cannabis in 2001. In the following decades, the sector has seen continuous evolution to its governance, enabling producers to become power players in the international export market while supplying medical cannabis domestically. In 2016 the Access to Cannabis for Medical Purposes Regulations (or ACMPR) came into force, with the goal of improving patient accessibility. The framework allowed for personal cultivation, empowering patients to grow their own medicine or designate a grower to do it for them. Under Health Canada’s new scheme, personal and designated growers had to apply for a registration certificate which also authorized patients to purchase medicine from licensed producers nationwide. However, despite this, finding where to go to secure medical cannabis can still be confusing and time-consuming. For instance, patients may need to register with one producer for oil, one for flower and another for seeds, which is laborious for anyone - let alone those with debilitating illnesses. When extract products became regulated in the adult-use industry, recreational retailers offered all these items under one roof, but as these budtenders were not qualified to give medical advice, patients could not be properly directed to effective solutions. The medical industry needs an ecosystem hub of wrap-around services, one that provides a comprehensive range of medical cannabis products and starting materials, underpinned by unsurpassed customer support on a user-friendly platform. By connecting patients and producers in an equitable ecosystem, Patient Choice provided a much-needed conduit between producers, processors and nurseries, empowering the medical community to secure medicinal cannabis from multiple sources without needing to re-register with multiple different suppliers. This enabled the community to strengthen its supply to mitigate shortfalls in medicine and cultivate its own with high-quality cuttings and seeds. “Medical cannabis patients deserve convenience, choice, and competitive pricing,” said Joel Taylor, co-founder at Patient Choice.

Cannabis Prospect Magazine | June 2021

“Right now, patients are returning to the recreational or illicit market for variety and pricing. Clinics and producers are over profiting from medical users. They take a significantly larger portion of the profit home in the medical market and should be passing those savings onto patients.” Health Canada’s Planned Restrictions In a bid to tighten restrictions on medical cannabis cultivation, Health Canada put forth several recommendations to crack down on the illicit market.” The regulator cited a discrepancy in the amount of medical cannabis grown, alongside licence infringements and sites used for ‘large-scale illegal production’. This is not the first time the federal government has accused medical growers of supplying the grey market, which is estimated to be worth $2.9 billion annually, and now wants extended power to remove their licences. In a guidance document to outline the proposals, the government pointed to a steady rise in the amount of medicinal cannabis grown, while the amount obtained from licensed producers stayed the same. Many patients rely on designated growers to cultivate cannabis on their behalf. This is especially true of those who require large amounts daily, as high potency products are too expensive to repeatedly purchase from external sources. Growers that create the best medicine attract increased demand and scale production accordingly, to satisfy the needs of their dependents. This often results in large, yet compliant and vital, medical cannabis operations. With the health of hundreds of thousands at stake, the ability to source medical cannabis from a variety of sources conveniently is essential. This includes the provision of high-quality starting materials, such as seeds and cuttings, which inspire patients to grow at home and reduce their reliance on external suppliers. Where Medical Cannabis Is Headed Previous proposals to curb the framework were defeated in the Supreme Court as recently as 2016. By Health Canada associating medical cultivation with the unregulated market and organized crime, the planned restrictions could intensify the stigma that still surrounds the industry and perpetuates the falsehood that cannabis is inherently dangerous. The public consultation period on the proposals closed in May, with the regulator expected to finalize its conclusions in the summer. Joel Taylor is the co-founder of Patient Choice.

CULTIVATION

Getting Foreign Equipment Repair & Installation Workers into Canada During COVID-19 By Sarah McInnes & Morganne Foley

any cannabis sector businesses with industrial and commercial equipment rely on foreign workers to provide emergency repair or installation services, both for unexpected outages and for scheduled maintenance. The COVID-19 pandemic has delayed and complicated the ability of many foreign workers to enter Canada. But certain equipment repair and installation personnel can still travel to Canada in a relatively timely manner – and are exempt from COVID-19 quarantine and testing requirements. Here’s how. 1. Emergency Repair or Repair of Out-ofWarranty Equipment Do you have industrial or commercial equipment that needs emergency repair, or are you experiencing an outage due to equipment malfunction that’s no longer covered under warranty – and the workers who can fix it aren’t in Canada? Despite COVID-19 restrictions, these workers are still eligible to travel to Canada from any foreign country under a work permit. Eligibility. Technicians or specialists who enter Canada as required for the purpose of maintaining, repairing, installing or inspecting equipment necessary to support critical infrastructure are exempt from the current Canadian travel restrictions because they are providing an “essential service” in Canada. To qualify for a work permit as emergency repair personnel: • The technician or specialist must be able to demonstrate the proprietary or specialized knowledge required to repair the equipment. To qualify for a work permit as repair personnel for out-of-warranty equipment: • The Original Equipment Manufacturer (OEM) must be outside Canada and have no commercial presence in Canada, and thus no technicians in Canada to perform this work. • There must be a need for specific, specialized knowledge regarding the equipment. In addition, in both cases the need must be urgent. For example, it must be essential for the technician(s) or specialist(s) to enter Canada to perform this work because failure to provide the repair will result in a significant productivity loss, which will in turn greatly affect Canadian jobs, may have environmental or economic impact, or may otherwise

negatively affect Canadian citizens and Permanent Residents. COVID-19 Quarantine Exempt. Workers who provide essential services or are urgently required on-site are also exempt from the current COVID-19 self-isolation requirements if they are required to provide their services within 14 days of their entry to Canada and have reasonable rationales for the immediacy of the work and the inability to plan for a 14-day quarantine. Public Health Agency of Canada (PHAC) officials will make the final determination as to the worker’s qualification for this exemption at the port of entry. However, it is possible, though not required, to apply for a letter of interpretation about eligibility for the quarantine exemption from PHAC in advance. COVID-19 Pre- & Post-Arrival Testing Exempt. Essential service providers are also exempt from the requirement to obtain a pre-arrival COVID-19 test when entering at a land border and from the requirement of post-arrival molecular testing. However, while in Canada the essential workers will still be subject to and must abide by all federal and provincial public health guidelines and recommendations, including: • They should only travel to their location of work and their accommodations. • They will not visit any public establishments. • They will wear a mask, wash their hands frequently, maintain six-feet distance from anyone around them and at all times abide by public health guidelines/recommendations. 2. Equipment Installation Do you require the installation of equipment but, again, the workers who can install the equipment aren’t in Canada? Despite COVID-19 travel restrictions, service engineers or technicians required to complete the installation process for certain equipment can still travel to Canada as Business Visitors performing “After Sales Service”, and they don’t need a work permit to do so. Eligibility. A “Business Visitor (After Sales Service)” can enter Canada without a work permit. To qualify: • The foreign worker must be in Canada temporarily (maximum six months). • They must not be entering the Canadian labour market during this time. • The purpose of their entry must be to perform

18 Cannabis 26 CannabisProspect ProspectMagazine Magazine| |June June2021 2021

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the initial installation and commissioning of equipment, and this must be a service that’s pursuant to the original sales contract or purchase order with the Canadian company. The foreign national’s source of remuneration must remain outside of Canada and their place of business and employment must remain with the foreign company, the profits of which are accumulated primarily outside of Canada.

Furthermore, the equipment and system in question must: • Be industrial in nature and not of a household or personal nature. • Have been purchased and manufactured outside of Canada. • Require a person with specialized knowledge of it to install it; the work can’t include handson installation that’s generally performed by construction or building trades. Exemptions to Current Travel Restrictions. These foreign workers are exempt from the current COVID-19 travel restrictions regardless of their country of origin: • Those entering Canada from the U.S. are exempt because they’re doing so for a nondiscretionary, or essential, purpose. • Those entering Canada from a country other than the U.S. are exempt because they’re providing an “essential service” in Canada. COVID-19 Quarantine & Testing Requirements. Like technicians or specialists who enter Canada for the purpose of maintaining, repairing, installing or inspecting equipment necessary to support critical infrastructure, service engineers or technicians required to complete the installation process for certain equipment are providing an essential service in Canada. Accordingly, they are also exempt from the current travel restrictions as well as the current COVID-19 self-isolation requirements and pre- and post-arrival testing on the same basis and subject to the same restrictions. Sarah McInnes is a Partner and Morganne Foley a Lawyer at McInnes Cooper, in Halifax N.S. and Saint John N.B. respectively. This article is information only; it is not legal advice. McInnes Cooper excludes all liability for anything contained in or any use of this article. © McInnes Cooper, 2021. All rights reserved.

HUMAN RESOURCES

Workplace COVID-19 Testing & Vaccination Policies: 10 Key Do’s & Don’ts By Ian Pickard & Andrea Williams

OVID-19 cases are ramping up and vaccines are rolling out. A COVID-19 testing and vaccination policy is a key tool to let your employees know your expectations of them and the consequences of their failure to meet those expectations. Since it will take some time to create and implement one, if you don’t have any testing and vaccination policy then you’re wise to start now; if you have one, review it. These 10 key do’s and don’ts will help you develop or revise your COVID-19 testing and vaccination policy: 1. Do properly implement it. As with any policy, follow the basic steps to properly draft and implement your policy. In this context, clear communication of the policy to employees in advance of implementation is a particularly crucial step. In a unionized environment, if the policy doesn’t form part of the applicable collective agreement and you’re introducing it unilaterally under your management rights authority, ensure it satisfies the “KVP” criteria: • The policy (or any aspect of it) must not be inconsistent with the collective agreement. • It must not be unreasonable. • It must be clear and unequivocal. • The employer must have brought the policy to the affected employees’ attention before acting on it, putting them on notice of what’s required, that a breach could result in discipline including discharge (if applicable), and if their employment is in jeopardy. • The employer must consistently enforce the policy. 2. Don’t “mandate” tests or vaccines in the sense that an employee who refuses to test or vaccinate faces disciplinary consequences or dismissal for that refusal. Instead, do give all employees an “off ramp”: ensure the policy provides options and alternatives to employees who refuse COVID testing or vaccination. Examples include allowing employees the option to vaccinate or mask (VOM), undergo regular testing (in the case of vaccination refusal), take vacation, or take an unpaid leave of absence and be permitted to return to work once herd immunity can be established.

3. Do ensure the policy provides that you will discipline employees for non-compliance with the policy generally. You ought not discipline or dismiss an employee for failure to test or vaccinate, but you can still discipline or even dismiss them (following the appropriate discipline processes) for breaching the policy. 4. Don’t “cut & paste” a policy from another employer. While there are some common elements to testing and vaccination policies, whether a court or arbitrator decides a specific COVID-19 testing or vaccination policy is “reasonable” will be a highly fact-specific analysis. Instead, do customize the policy to your workplace to maximize the opportunity that, if your policy is challenged, you can demonstrate the thoughtfulness with which you considered the risks of your particular workplace and how the policy you’ve developed reflects them. 5. Do ensure it contemplates human rights considerations and your duty to accommodate. The human rights law duty to accommodate to the point of undue hardship an employee’s personal characteristics that are protected by human rights laws applies to a COVID-19 testing and vaccination policy. Employees who request accommodation must demonstrate their membership in a protected group, which could include providing medical or other evidence, and cooperate in the accommodation process. Examples of protected characteristics commonly engaged in the context of COVID-19 testing and vaccination include physical disability, mental disability, pregnancy (included in sex), family status and religion. 6. Do make it evidence-based. A unique aspect of COVID-19 is that the law and the science are rapidly evolving, so courts and arbitrators recognize there are still a lot of risks and unknowns associated with COVID-19, such as new variant strains. To the extent there is medical evidence available, undertake medical consultation so you can present the medical evidence on which you relied as part of defending your policy if it’s challenged.

Cannabis Prospect Magazine | June 2021

7. Do address the privacy of employees’ personal health information. Confirm your commitment to maintaining the confidentiality of all employee medical information, including COVID-19 testing and vaccination records, and state how you will secure that information (and make sure you implement that security). The Personal Information Protection and Documents Act (PIPEDA, soon to be replaced by the Consumer Privacy Protection Act) applies to federally regulated employers’ collection, use and disclosure of their employees’ personal information. Federally regulated employers include banks, interprovincial road transportation services, and Crown corporations. Some provinces and territories have similar privacy legislation for provincially-regulated employers. If you’re subject to that legislation, ensure your privacy measures comply with it. Even if you’re not subject to specific privacy legislation, you might still want to follow their rules. 8. In a unionized workplace, do consult with unions as the collective agreement requires. An arbitrator could disallow an otherwise valid policy on this basis alone. 9. Do keep timing in mind and adjust your policy accordingly. If you’re going to make COVID-19 vaccination a condition for reporting to work, the vaccine must be generally available to all employees. And Canada isn’t there yet. 10. Do review it frequently - more frequently than you might other policies - and revise it as and when necessary. Circumstances around COVID-19 are evolving constantly and rapidly; it’s critical that your policy keep pace and stay current. Ian Pickard is a Partner and Andrea Williams a Lawyer at McInnes Cooper, in Halifax N.S. and St. John’s, N.L. respectively. This article is information only; it is not legal advice. McInnes Cooper excludes all liability for anything contained in or any use of this article. © McInnes Cooper, 2021. All rights reserved.

June 2021 | Cannabis Prospect Magazine

PRODUCTS SPOTLIGHT

Monster Guardian by Diablo Nutrients

Monster Guardian (just launched in Canada, not yet available in the US) is a chitosan-based product that can be applied as a drench or a foliar application and helps mimic the effects of a pesticide yet it is safe for plants, people, pets and the environment. Guardian, while not a pest control product, will help the plants fight off infections and pathogens and assist the plants to produce an accelerated immune response to a potential fungus or pest attack. Guardian is THE product looking out for your plants. It’s a safe alternative to pesticides, but just as effective. Guardian is available in a 500 ml, 1 litre, 4 litre, 10 litre and a 20 litre. Welcome to the Diablo family!

GreenBroz Launches Cannabis Rise-N-Sort PostHarvest Processing System

GreenBroz Inc. announced the launch of its Rise-N-Sort System. This powerful, fully integrated system combines the Rise Conveyor, Precision Sorter, and Sorter Table to efficiently consolidate the movement and segregation of product into differing size groups. This three-part system allows a processing rate of six pounds per minute, representing a steep gain compared with the rate of two pounds per hour for hand processing. This first-of-its-kind system operates gently without vibration, and is constructed using food-grade stainless steel, surgical steel, polyurethane, and ultra-highmolecular-weight polyethylene (UHMW), ensuring the product remains as close to fresh-off-thestem as possible. Human touch points are minimized, mitigating contamination risk and ensuring end product consistency.

Cannabis Prospect Magazine | June 2021

3 Linfa Weezy, the world’s smartest cannabis grow box

Harvest Brothers Corp., a Canadian start-up dedicated to the distribution of products for home cannabis cultivation, announced its first distribution agreement with Robonica, the producer of Linfa, the world’s leading cannabis grow box. Linfa’s high-quality cannabis is produced thanks to a special app that allows you to monitor the growing process through your mobile phone. Linfa has an onboard computer and a webcam capable of photographing the status of the plants under cultivation and informing the user, through a mobile notification system, of how to achieve a successful harvest in a completely automatic way. The product is compact in size 59x52x35 cm (31x15x11 inches) and can be installed in 15 minutes by anyone in any size apartment. Its hexagonal shape, white color and attention to detail make Linfa a product not only easy to use but beautiful and pleasant to have in the home. The regular price is $1,099 CAD.

4 ATG Announces New Development to Automate Twist Down Cartridge Caps.

ATG Pharma is pleased to announce a new automated solution for twist-down cartridges, the RoboTorq. The new development not only allows for faster outputs (approx. 10001200 per nozzle per hour), but it reduces the risk of injuries for operators who are manually twisting down each cartridge mouthpiece. The RoboTorq is a tool that can be added to your new or existing RoboCAP base, in which the filling nozzle is easily swapped out for the torquing arm. The system works by utilizing a locking plate, custom-made to hold your cartridge in place while the pneumatic torquing tool securely twists each mouthpiece down. For more information on the RoboTorq please visit us at https:// robotorq.atgpharma.com/robotorqregistration.

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PROVINCIAL UPDATES

Ontario

Canada’s most populous province, Ontario, has finally surpassed Alberta in terms of the number of licensed cannabis stores that are open for business. Ontario had 613 open cannabis stores as of late May, according to the Ontario Cannabis Store (OCS), which serves as the wholesaler to those stores. Meanwhile, 599 stores in Alberta were actively ordering from the province’s cannabis store regulator and wholesaler, the Alberta Gaming, Liquor and Cannabis Commission (AGLC), as of late May. The AGLC had issued 611 cannabis store licences, according to the AGLC licensing website. Not all of those licensed stores are necessarily open.

Manitoba

In late April, Jesse Lavoie brought attention to his court challenge against Manitoba’s prohibition on non-medical homegrown cannabis. On the steps of the legislative building, he was joined by the leaders of the three opposition parties where he presented his ‘Toba Grown’ flag, signed by dozens of dispensary and head shop owners from across the province. Lavoie says the lawsuit officially began in August 2020, and since then he has filed several affidavits contesting the province’s various reasons for keeping the ban in place.

Alberta

Since the March 22, 2021, the transaction that spun out Alcanna’s cannabis business into a separate publicly traded company – Nova Cannabis Inc. – the Company’s participation in cannabis retail is now indirect through its approximately 63% ownership of Nova. Total cannabis store sales for Q1 2021 rose 17.2% to $18.4 million from $15.7 million in the prior year. Total gross margin dollars decreased 8.0% to $4.8 million from $5.2 million and gross margin as a percent of sales was 26.0% for the period (Q1 2020 – 33.1%).

Cannabis Prospect Magazine | June 2021

Quebec

According to a report by Statistics Canada, Quebec is the province in Canada with the lowest percentage of citizens who consume cannabis. The report found that in the last three months, just 11% of Quebecers over the age of 15 had used it. This percentage has remained unchanged in Quebec since 2018.

Saskatchewan

In late April, Regina’s first micro cannabis cultivator, VIGR Life Cannabis (VLC), offered products at local cannabis stores. VLC operates a growing facility in Regina with two adjacent micro cultivation systems, including 24 grow rooms. It took over the building in 2019, received its growing licences in October and started growing its first crops right away. In early May, Heritage Cannabis Holdings Corp. announce that it has received an expanded order from Weed Pool Cannabis Co-operative in the province of Saskatchewan, with 31 additional SKUs soon to be available to consumers. Following Weed Pool’s initial and follow-on orders for Heritage’s Purefarma and Pura Vida products since November 2020, the co-operative is now expanding its offering in the province to include Premium 5, RAD and feelgood. branded products.

British Columbia

Tilray announced that its High Park Farms cannabis greenhouse near Petrolia will close by September, following the company’s recent highprofile merger with Aphria. A statement provided by the company said it’s making changes “to optimize operational efficiencies” as the two companies combine operations. There are about 225 employees at the greenhouse Tilray has operated since 2017 in Enniskillen Township, said Mayor Kevin Marriott, who was contacted by the company after employees were informed about the decision to close the five-hectare site.

Prince Edward Island

In a recent CBC article, a store in Summerside that sells smoking devices for cannabis use like pipes, bongs and vaporizers says it is caught up in the province’s recently changed rules around selling tobacco and electronic smoking devices. Island Releaf Glass smoke shop in Summerside doesn’t sell any tobacco products but co-owner Megan Patey says the store is classified as a tobacconist under the regulations. Patey said P.E.I. Cannabis locations have similar options such as papers and weed vaporizers for sale and she’s unclear why her selling the same products would be illegal. Officials with the province said it views the sale of cannabis accessories at government retailers as part of educating customers on safe cannabis consumption.

Newfoundland & Labrador

In late April, the Newfoundland and Labrador Liquor Corporation’s (NLC) regulatory compliance and enforcement department received custody of 375 packages of cannabis chips, candy and cookies, as well as 300 assorted candies, imitated to look like non-weed products. Also in late April, Argentia Gold Corporation celebrated its “Grand Opening” as one of the first fully licensed cannabis producers based in Newfoundland and Labrador.

Nova Scotia

Cannabis will soon be available at more NSLC locations, including a few in the Halifax Regional Municipality. NSLC cannabis sections will be opening in the Bayer’s Lake and Novalea liquor stores, and one will be added to the Eastern Passage store this June. In total, pot will be able to be purchased at another eight stores throughout the province this spring. As of April, it is available at 24 locations in Nova Scotia.

New Brunswick

Greg Engel has stepped down from Organigram Holdings Inc. as chief executive officer. The Moncton-based cannabis company says he will continue to act as a special adviser to the board during a “transition period”. Organigram’s board chairman Peter Amirault has been appointed to serve as executive chair on an interim basis and oversee day-to-day management of the company until a new CEO is named.

Yukon / Northwest Territories / Nunavut In late April, the Yukon’s first licence holder for the cultivation and processing of cannabis under the Cannabis Act of Canada was announced. ArcticPharm is also the first cultivation and processing licence holder in any of Canada’s territories. Its main facility is located north of Whitehorse, on the Takhini River. The company owns a 116-acre organically certified farm and will be growing a variety of cannabis strains using organic and natural methods. According to a recent report released by Statistics Canada in early May, the GDP rose in Yukon and Nunavut, the only jurisdictions across Canada to do so, 1.1 per cent and 3.5 per cent, respectively, while the Northwest Territories had the sharpest drop at 10.4%. Nunavut was the only other province or territory that saw a slight bump in sales in February, with sales reaching $982,000 for the month, a 0.7 per cent increase from January.

June 2021 | Cannabis Prospect Magazine

APPOINTMENTS

BRNT Ltd. has appointed Gage Gorda as Chief Executive Officer. Mr. Gorda is an experienced leader in the Canadian cannabis industry, having spent the last five years participating in the start up, mobilization and disposition of numerous private retail cannabis businesses, including one of the largest retail acquisitions in the Country to date. Mr. Gorda is a Principal of Prairie Commercial Mortgage Corp. and consults to PAV, both firms servicing the cannabis industry assisting cannabis entrepreneurs facilitate debt & equity solutions to fuel the growth of their businesses.

WeedMD Inc. has announced Beth Carreon as Chief Financial Officer (CFO). Most recently, Ms. Carreon served as Vice President of Finance at Tilray Canada where she successfully led and managed the company’s global treasury, shared services and financial planning teams as well as M&A integration activities. She brings significant experience in both the cannabis and the CPG industries, having previously worked more than 12 years at Nestlé Canada Inc. in progressive finance leadership roles. Ms. Carreon began her career as an auditor and management consultant with tenures at major accounting firms including Ernst & Young, PricewaterhouseCoopers and Deloitte.

Fire & Flower Holdings Corp. has appointed Nadia Vattovaz to her new role as Chief Operating Officer (COO). Ms. Vattovaz joined the Company in 2018 and was previously the CFO and Executive VicePresident, Operations. In her new role as COO, Ms. Vattovaz will lead the Company’s ongoing operations and oversee the successful execution of the Company’s aggressive retail growth plan. As part of the executive leadership team, this role will be responsible for overseeing the Company’s real estate, construction, marketing, merchandising, distribution and retail operations functions.

Auxly Cannabis Group Inc., a consumer packaged goods company in the cannabis products market, has hired Andrea Fraser as Chief People Officer. In this new role, Ms. Fraser will lead all aspects of the Company’s human resources, including crafting talent acquisition strategies, promoting inclusion in the workplace and further developing and evaluating career paths to meet the Company’s business goals. Ms. Fraser brings extensive experience and deep knowledge of leading People and Culture strategy and initiatives for multinational CPG and digital marketing companies, most recently working as Director, Global Human Resources at Tilray.

The Valens Company Inc., a leading manufacturer of cannabis products, announced the appointment Adam Shea as its Chief Commercial Officer. Adam Shea brings more than 16 years of experience in commercial strategy with various consumerfocused organizations in the food, beverage, tobacco and cosmetics industries. Most recently, he served as the Vice President, General Manager - North American Foodservice of leading bakery company Weston Foods Ltd., where he developed commercial strategies for a complex portfolio of bakery categories among some of the top food fast-food chains, operators, and distributors across Canada and the US.

The Valens Company Inc., a leading manufacturer of cannabis products, announced the appointments of Sunil Gandhi as its Chief Financial Officer. Sunil Gandhi brings 25 years of corporate and operational finance experience largely in the consumer packaged goods and alcohol beverage industries, with a demonstrated track record in refining operations and supporting growth for both large public companies and high-growth private enterprises. Most recently, he served as Chief Financial Officer of Trophy Foods Inc., a leading supplier of nut-based snacks, baking and confectionary products with operations in Canada and the US.

Melissa Verdicchio, office manager, previously worked at Blueprint, where she served as event coordinator and worked closely with musicians’ agents and teams. At Nine Point, Melissa is responsible for assisting the team and providing dedicated support to Tiffany Soper, founder and president.

Cannabis Prospect Magazine | June 2021

Tyron Harkiss-Foster, PR and digital specialist for Nine Point Agency, formerly served as creative services and marketing manager for Army & Navy Department Stores, where he was responsible for designing and executing brand strategy, generating creative and marketing collateral, and managing the brand’s appearance internally and externally. Now, Tyron is excited for the opportunity to do what he does best: deliver exceptional and resultsdriven digital and media strategies for Nine Point’s incredible roster of clients.

Cannabis Prospect Magazine Canada’s News Source for the Cannabis Industry

September 2021

PRODUCT RD MANUFACTURER ANNUAL DIRECTORY This September Cannabis Prospect Magazine will be publishing its third annual directory for product manufacturers in the Canadian cannabis industry. This comprehensive listing will be featured on Cannabis Prospect Online yearround as well as published in our upcoming September issue. While a basic listing is free, we are offering several additional options to help make your listing ‘STAND OUT’ among your competitors. This includes a logo above your listing, coloured font for your directory listing and an extended company/product description. Don’t miss out on this exciting opportunity!

»» Reach 1,000+ cannabis industry professionals in our upcoming September issue »» Have your listing posted year-round on Cannabis Prospect Magazine’s website »» IT’S FREE TO BE INCLUDED!!! Visit www.cannabisproonline.com/directories/manufacturer to fill out your free listing!

The Canadian cannabis industry is everchanging. Cannabis Prospect Magazine is proud to offer multiple platforms to keep you up to date in this constantly evolving industry. Stay informed and grow with us!

Cannabis Prospect Magazine

Advertiser Index Cannabis Council of Canada............................................................25 CannTX Life Sciences (Royal City Cannabis Co.).........................36 Centurion Pro Solutions..............................................................18-19 Experion Wellness............................................................................15 Fanshawe College.............................................................................15 Greenline POS...................................................................................5 Kindred.............................................................................................23 MJBiz................................................................................................17 Purity-IQ...........................................................................................11 Sevenpoint Interiors...........................................................................2 Taima Extracts..................................................................................35 Virox Technologies (Shyield).............................................................7

Cannabis Prospect Magazine | June 2021

CLEAR PATH TO SUCCESS “OUR BUSINESS MODEL IS SIMPLE, TO SET THE INDUSTRY STANDARD FOR QUALITY OF OIL.”

Taima Extracts is a family owned and operated processing facility located in Oakville, Ontario. Originating from the food production space, our expertise and the ability to run a state-of-the-art food processing facility has allowed us to easily transition into large scale production of high-quality cannabis oil. We vigorously vet and audit our suppliers in order to provide the highest quality derivatives from single source input creating ready-to-market products and bulk ingredients for further manufacturing. Our focus is client centric, and customization of turn-key solutions is what we do best. Quality and consistency are the pillars of our company.

info@taimaextracts.com 905-829-8814

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Cannabis Prospect Magazine - June '21 - Issue #15

Articles inside

Provincial Updates

Product Showcase