Business
Australia, Israel top destinations of Canadian medical cannabis exports
Australia and Israel were the top markets for Canada’s medical cannabis exporters last year, as the quantity of flower shipped overseas continued to surge, according to new figures shared by Health Canada with MJBizDaily.
In the April 2022-March 2023 fiscal year, Canada’s exports of medical marijuana flower were 59,986 kilograms (roughly 132,200 pounds), a 48% increase over the previous year’s 40,640 kilograms.
The vast majority of exports, however, went to only three countries, meaning exporters risk being dependent on a very small number of markets.
Almost 80% went to Australia and Israel, which together were responsible for importing 47,332 kilograms of Canadian flower.
Germany was the next-biggest importer, accounting for 9,560 kilograms, or approximately 16% of the total, according to the Health Canada data.
Since 2017, Canada has exported 126,025 kilograms of medical cannabis flower for commercial and scientific use.
In total, the value of Canada’s medical cannabis exports last year increased to 160 million Canadian dollars ($118 million), about 50% more than fiscal 2021-22’s total.
Aurora Cannabis CEO Miguel Martin told MJBizDaily in a phone interview he sees medical cannabis exports as a long-term play for his company.
“It’s a big opportunity. The margins are about 2.5 times what they are in Canadian rec, and not declining,” Martin noted, referring to Canada’s recreational cannabis market.
Australia, meanwhile, was the top importer of Canadian cannabis extracts.
Among the top five importing countries, Australia accounted for 93%, or 8,392 liters (2,217 gallons), of the total 9,042 liters of medical cannabis extract products exported.
The Cayman Islands was second, receiving 320 liters of Canadian exports.
Brazil, Barbados and South Africa rounded out the top five last year, with 136 liters, 103 liters and 90 liters, respectively.
Driving export growth
Some of the factors driving Canadian cannabis exportsare:
- Increasingly higher-quality products in the Canadian domestic market, which remains saturated with competition and oversupply.
- Higher margins overseas, in part because of excise levies in Canada.
- Fewer competitors capable of competing internationally, given higher barriers to entry in most of those markets.
Aurora’s Martin said part of what is driving exports higher is the good reputation of Canadian products overseas.
“There’s a lot of equity and credibility for Canadian medical cannabis product,” he said.
But the export market is getting more competitive, with countries such as Colombia and Denmark aiming to grab more of Canada’s share.
Similarly, more nations have ambitions to be net exporters than there are countries with plans to import meaningful quantities, signaling competition in the import/export market will get more intense in the coming years.
Canadian licensed producers also risk becoming dependent on a handful of international markets, where regulations can sometimes change with little to no warning.
Martin said he’s confident more import markets will open up, as slow-moving regulations in some countries doesn’t allow production to keep pace with demand.
He pointed to Poland and the United Kingdom as nations with potential.
Martin said regulatory certainty is an important factor.
“One of the things for us is we want to be in markets where the regulatory framework is predictable – even if it’s slow,” he said.
Citing the German opportunity, Martin said that “gearing up for that is a way bigger opportunity than hoping and praying that something is going to happen in the Netherlands.”
Most importing countries require European Union-Good Manufacturing Practice (EU-GMP) certification, or something similar, which is costly and takes time to achieve.
“One of the more finite resources that is really important out there is EU-GMP flower. That’s a very expensive, very hard thing to do, and not a lot of people are doing it at scale, and all of those markets require it,” Martin said.
“When you see new markets come online, it’s not just the size, it’s who (is capable) of addressing it.
“As these markets come online, you’re going to see the same winners, and they’re usually multinationals.”
Exports seen rising
Deepak Anand, principal of ASDA Consultancy Services in Surrey, British Columbia, suggested that Canadian exports are gaining momentum, in part, because some countries that allow medical cannabis sales still don’t have enough domestic production to match demand.
Australia, he said, is licensing more cultivators but not enough to meet domestic consumption in the regulated market, meaning imports will still be needed to fill the gap.
But Anand warned that recent regulatory changes are creating potential headwinds for prospective exporters to Australia.
Starting in July, all imported medical cannabis products in Australia were required to comply with stricter import requirements.
“I think that will result in a little bit of a limiting of how much product actually is going to continue to go into Australia,” Anand said.
Anand has his eye on Portugal, which he expects to increase imports.
“A lot of people are now exporting to Portugal, with the intended market being Germany,” he said.
“There is quite a bit of money on the table from a revenue standpoint from exports.”
Source: https://mjbizdaily.com/australia-israel-top-destinations-of-canadian-medical-cannabis-exports/
New Mexico regulators fined a cannabis operator nearly $300,000 and revoked its license after the company allegedly created fake reports in the state’s traceability software.
The New Mexico Cannabis Control Division (CCD) accused marijuana manufacturer and retailer Golden Roots of 11 violations, according to Albuquerque Business First.
Golden Roots operates the The Cannabis Revolution Dispensary.
The majority of the violations are related to the Albuquerque company’s improper use of BioTrack, which has been New Mexico’s track-and-trace vendor since 2015.
The CCD alleges Golden Roots reported marijuana production only two months after it had received its vertically integrated license, according to Albuquerque Business First.
Because cannabis takes longer than two months to be cultivated, the CCD was suspicious of the report.
After inspecting the company’s premises, the CCD alleged Golden Roots reported cultivation, transportation and sales in BioTrack but wasn’t able to provide officers who inspected the site evidence that the operator was cultivating cannabis.
In April, the CCD revoked Golden Roots’ license and issued a $10,000 fine, according to the news outlet.
The company requested a hearing, which the regulator scheduled for Sept. 1.
At the hearing, the CCD testified that the company’s dried-cannabis weights in BioTrack were suspicious because they didn’t seem to accurately reflect how much weight marijuana loses as it dries.
Company employees also poorly accounted for why they were making adjustments in the system of up to 24 pounds of cannabis, making comments such as “bad” or “mistake” in the software, Albuquerque Business First reported.
Golden Roots was fined $298,972.05 – the amount regulators allege the company made selling products that weren’t properly accounted for in BioTrack.
The CCD has been cracking down on cannabis operators accused of selling products procured from out-of-state or not grown legally:
- Regulators alleged in August that Albuquerque dispensary Sawmill Sweet Leaf sold out-of-state products and didn’t have a license for extraction.
- Paradise Exotics Distro lost its license in July after regulators alleged the company sold products made in California.
Golden Roots was the first alleged rulebreaker in New Mexico to be asked to pay a large fine.
Source: https://mjbizdaily.com/new-mexico-cannabis-operator-fined-loses-license-for-alleged-biotrack-fraud/
Four marijuana companies, including a multistate operator, have filed a lawsuit against U.S. Attorney General Merrick Garland in which they allege the federal MJ prohibition under the Controlled Substances Act is no longer constitutional.
According to the complaint, filed Thursday in U.S. District Court in Massachusetts, retailer Canna Provisions, Treevit delivery service CEO Gyasi Sellers, cultivator Wiseacre Farm and MSO Verano Holdings Corp. are all harmed by “the federal government’s unconstitutional ban on cultivating, manufacturing, distributing, or possessing intrastate marijuana.”
Verano is headquartered in Chicago but has operations in Massachusetts; the other three operators are based in Massachusetts.
The lawsuit seeks a ruling that the “Controlled Substances Act is unconstitutional as applied to the intrastate cultivation, manufacture, possession, and distribution of marijuana pursuant to state law.”
The companies want the case to go before the U.S. Supreme Court.
They hired prominent law firm Boies Schiller Flexner to represent them.
The New York-based firm’s principal is David Boies, whose former clients include Microsoft, former presidential candidate Al Gore and Elizabeth Holmes’ disgraced startup Theranos.
Similar challenges to the federal Controlled Substances Act (CSA) have failed.
One such challenge led to a landmark Supreme Court decision in 2005.
In Gonzalez vs. Raich, the highest court in the United States ruled in a 6-3 decision that the commerce clause of the U.S. Constitution gave Congress the power to outlaw marijuana federally, even though state laws allow the cultivation and sale of cannabis.
In the 18 years since that ruling, 23 states and the District of Columbia have legalized adult-use marijuana and the federal government has allowed a multibillion-dollar cannabis industry to thrive.
Since both Congress and the U.S. Department of Justice, currently headed by Garland, have declined to intervene in state-licensed marijuana markets, the key facts that led to the Supreme Court’s 2005 ruling “no longer apply,” Boies said in a statement Thursday.
“The Supreme Court has since made clear that the federal government lacks the authority to regulate purely intrastate commerce,” Boies said.
“Moreover, the facts on which those precedents are based are no longer true.”
Verano President Darren Weiss said in a statement the company is “prepared to bring this case all the way to the Supreme Court in order to align federal law with how Congress has acted for years.”
While the Biden administration’s push to reschedule marijuana would help solve marijuana operators’ federal tax woes, neither rescheduling nor modest Congressional reforms such as the SAFER Banking Act “solve the fundamental issue,” Weiss added.
“The application of the CSA to lawful state-run cannabis business is an unconstitutional overreach on state sovereignty that has led to decades of harm, failed businesses, lost jobs, and unsafe working conditions.”
Alabama regulators are targeting Dec. 1 to award the first batch of medical cannabis business licenses after the agency’s first two attempts were scrapped because of scoring errors and litigation.
The first licenses will be awarded to individual cultivators, delivery providers, processors, dispensaries and state testing labs, according to the Alabama Medical Cannabis Commission (AMCC).
Then, on Dec. 12, the AMCC will award licenses for vertically integrated operations, a designation set primarily for multistate operators.
Licenses are expected to be handed out 28 days after they have been awarded, so MMJ production could begin in early January, according to the Alabama Daily News.
That means MMJ products could be available for patients around early March, an AMCC spokesperson told the media outlet.
Regulators initially awarded 21 business licenses in June, only to void them after applicants alleged inconsistencies with how the applications were scored.
Then, in August, the state awarded 24 different licenses – 19 went to June recipients – only to reverse themselves again and scratch those licenses after spurned applicants filed lawsuits.
A state judge dismissed a lawsuit filed by Chicago-based MSO Verano Holdings Corp., but another lawsuit is pending.
Source: https://mjbizdaily.com/alabama-plans-to-award-medical-cannabis-licenses-dec-1/
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