The Morning Blunt

Volume 3| Issue 26

November 26, 2018

“The best way to predict the future is to create it.” –Peter Drucker

Stock Market

After Market Watch reported last month about potential warning flags, India Globalization Capital (OTC IGCC) plummeted more than 80% and was delisted from the New York Stock Exchange. Including fraud allegations, falsifying data for scientific journals, and lying about partnerships, FDA applications, and distribution agreements, Market Watch has again uncovered evidence raising even more concerns about the IGC’s integrity.

Friday National Access Cannabis Corp. (OTCMKTS: NACNF) announced the closure of its brokered private placement offering of 21,150 special warrants of the company at $1,000 per share for aggregate gross proceeds of $21,150,000 which entitles shareholders to receive 8% senior secured convertible debentures of National Access Cannabis Corp upon exercise or deemed exercise of the special warrants. The funding will help the company open over 200 cannabis retail stores in the next 18 months.

Motley Fool’s Sean Williams argues that production capacity is less effective of a metric to measure cannabis stocks than the company’s product diversification, established partnerships, and their position to enter into new markets to establish supply agreements.

Amplified by the August run-up where index stocks added nearly a third of their values, Cannabis Daily’s Eric Vengroff notes after cannabis legalization Canadian investors bailed, cutting stock prices for many Canadian firms. By way of comparison, the US Marijuana Index has mirrored the volatility of the Canadian market but has proven to be more robust and resilient.

Namaste Technologies Inc.’s (OTCMKTS: NXTTF) wholly owned subsidiary, Cannmart Inc., initiated a product acquisition agreement with Weed Me Inc. to purchase a variety of medical cannabis strains in the form of pre-rolled products to offer in its online platform.

Microcap Daily’s Dave Young gives an analysis of Terra Tech Corp (OTCMKTS: TRTC), a Nevada based, vertically integrated, cannabis agriculture firm who recently announced a merger with Golden Leaf Holdings. The new conglomerate will control 41 permits across cultivation, manufacturing, distribution, and retail in Nevada, California, and Oregon.

Due to federal regulations preventing US cannabis companies from listing on US exchanges, and TMX Group’s (OTCMKTS: TMXXF) decision to exclude US operations from its listings, US cannabis firms looking to raise capital are flocking to the Canadian Securities Exchange. This trend could be offset if the States Act, a bill that would remove the federal ban at the state level, is passed.

Aleafia Health Inc (TSXV: ALEF) (OTCQX: ALEAF) announced the finalization of the previously announced joint venture and financing transactions with Serruya Private Equities. The two companies will build and scale an immediate national reach with global expansion plans.

Terry Howlett CEO of Ovation Science Inc. (CSE: OVAT) explains the path that led to Ovation choosing to list on the CSE. Ovation’s expertise in skincare is leading the company to explore medicinal CBD products delivered through the skin via Invisicare a patented topical and transdermal delivery system.

According to Motley Fool’s Todd Campbell, production capacity puts Aurora Cannabis (NYSE: ACB) far ahead of Tilray (NASDAQ: TLRY) in terms of inventory and cannabis sales. Assuming Aurora Cannabis delivers on its growth target timeline, the company will ramp-up to 150K kilos annually by 2019.

Trulieve’s (CSE: TRUL) (OTC: TCNNF) CEO Kim Rivers reports the vertically integrated cannabis firm generated $28.3M of revenue for the company’s third quarter all from the state of Florida. The company recently announced entry into the Massachusetts and California markets and projects Trulieve will rake in $214M in 2019.

Global News

Friday Thailand’s National Legislative Assembly unanimously accepted an amendment bill to legalize the production, import, and export of cannabis and kratom for medicinal purposes. The Office of Narcotics Control Board will regulate where cannabis can be cultivated and used under the draft amendment.

North Sydney based Highlanders Cannabis Corp. purchased a Cape Breton pharmaceutical plant along with its assets with the intention of turning the site into a cannabis processing facility. Soon to be certified by Health Canada, the pharmaceutical plant aims to become the largest and most advanced legal manufacturer of cannabinoid-based products in the world.

India’s Council of Scientific and Industrial Research received a license from the Jammu and Kashmir government to conduct research on cannabis derived drugs for the treatment of diseases like cancer, epilepsy, and sickle cell anemia. The council will meet with the Drug Controller General of India for approval for a human trial.

Following consultations with Rastafarian communities, Antigua and Barbuda is set to legalize and regulate the production and supply of cannabis for religious and medical purposes. Though the Cannabis Bill of 2018 will regulate the production and supply of medical marijuana for patients and for religious purposes, the bill falls short of legalizing recreational cannabis.

The head of the Mexican federal commission Cofepris, Julio Sanchez, has approved the first legal cannabidiol products for recreational use and sale at retailers and pharmacies across the country. The products made available include teas, drinks, and edibles with THC levels below 1%.

US News

Sen. Diane Savino (D-SI/Brooklyn) and Assemblyman Richard Gottfried (D-Manhattan) have introduced a bill that would require government health insurance programs such as Medicaid, Child Health Plus, and Workers Compensation to cover medical marijuana as they would any other prescription.

Leicester’s Cultivate and Northampton’s New England Treatment Access, Massachusetts’ first recreational adult use cannabis stores, opened for business last Tuesday. Both stores had a busy weekend with New England Treatment Access seeing over 2,000 customers daily.

Shaleen Title, a commissioner of the Massachusetts Cannabis Control Commission recently voiced her position on drug policy reform, calling for the legalization and regulation of all drugs. Title argues that prevention, treatment, and regulation are better for public health and safety than prohibition and criminalization.

With the price per gram of cannabis dropping in Oregon from $10 to $4 at the retail level, tax revenues might be expected to drop with the price, however economists say consumers are taking advantage of the lower prices and the state is seeing an increase in sales and tax revenues. During the current budget cycle which ends mid-2019, consumers are expected to pay $176M in state marijuana taxes.

2019 will be a defining moment for the Colorado cannabis industry, as lawmakers will review the current regulations for the industry to weed out ineffective legislation as the industry grows. Governor-elect Jared Polis is notably friendly toward the cannabis industry and is likely to continue supporting the state cannabis economy.

California News

While Northern California’s Humboldt County produces more cannabis by tonnage than Santa Barbara, it comes in second for number of legal cannabis licenses. With easy access to Southern California, strategically placed between Los Angeles and San Francisco, Santa Barbara is positioned to become the state’s leading legal cannabis producer. Further the county touts a friendly zoning and political atmosphere encouraging growth in the cannabis industry. Take a look for a deeper analysis on why Santa Barbara embraced cannabis farms and may become a cannabis appellation county.

Leading North American cannabis products and branding company Origin House (CSE: OH) (OTCQX: ORHOF) announced it has entered into a strategic partnership with Heritage Holding of California Inc. d/b/a Artifact Henry’s Original, a boutique cannabis producer. As part of brand acceleration, Origin House will finance the purchase of premium flower from Mendocino County and Henry’s will process and package the flower into jars and pre-rolls to be distributed exclusively by Origin House distribution subsidiaries under the Henry brand.

The Cannabis Business Tax, implemented in January after recreational marijuana became legal, has brought in $3.6M in revenue to San Diego over the last three quarters. Currently the Cannabis Business Tax is a 5% tax on recreational cannabis sales, however that number will increase to 8% in July 2019.

The Marin Alliance of Medical Marijuana was given initial approval by the Fairfax Town Council to authorize medical cannabis deliveries to its patients. Like many California communities battling with enacting Proposition 64, Fairfax’s approval to allow medical cannabis deliveries will not only help patients but will also combat black market activity.

Tuesday November 20th over 400 protesters jammed into Milpitas City Hall to express their moral outrage against the cannabis industry. As a result, the city council unanimously approved a complete ban on commercial marijuana in Milpitas City.

Licensed cannabis testing lab Sonoma Lab Works hired Tesla Motors executive Daniel Witt as the company’s new president and COO. Sonoma Lab also announced it has formed a board of directors.

Canadian News

Ontario cannabis producer RedeCan Pharm is voluntarily recalling over 7,400 3.5-gram bottles of Redecan’s “BEC” strain, amounting to over 900 ounces of product recalled from the Ontario Cannabis Store after receiving customer complaints about mold and bugs found in their products.

In the next year Health Canada will begin regulating the sale of edible cannabis products and concentrates, incentivizing companies to develop new consumables over the coming months. CEO of Indiva (OTCMKTS: NDVAF), Niel Marotta, a cannabis grower in London Ont., established a licensing agreement with Ruby Edibles to manufacture cannabis infused sugar and salt.

In a $3M professorship, M. J. Milloy was named the inaugural Canopy Growth Professor of Cannabis Science at the University of British Columbia. Canopy Growth offered funding up to $2.5M while the BC government funded the additional $500K. The position will carry the branding of Canopy Growth however Milloy will remain at arms-length and independent from the company, according to officials at the university. Milloy’s focus will be conducting research on cannabis’ potential to treat substance abuse, especially opioid addiction.

A Canadian cannabis investor traveling to the Las Vegas for the MJ BizCon and to tour a cannabis facility received a lifetime entry ban to the US after disclosing his plans to US Customs and Boarder officials. At least 12 other Canadians en route to the same conference were detained for hours

Manitoba’s legal cannabis retailers will now pay a 6% levy to assist the province with the social costs of legalization including public education, safety, health, and addiction. The province announced last Thursday it will begin collecting the social responsibility fee in January

Science

Though the cannabis genome was sequenced in 2011, teams of US and Canadian researchers have finally located the genes responsible for THC and CBD levels. The genes were found amid DNA deposited in the plant’s genome by viruses during its evolution, leaving researchers to conclude that these genes were possibly evolutionarily created as a result of viral exposure.

Advanced Extraction Systems Inc., a firm focused on manufacturing and selling oil extraction equipment to the cannabis and hemp industry, is expanding to meet the needs of the growing industry. Advanced Extraction Systems is designing a two-by-1,000 liter system that is expandable to four-by-1,000 liters and can process 3,500 kilograms of cannabis per day.

The endocannabinoid system is one of many biological methods the body employs to trigger hunger or fullness. The endocannabinoid system interacts with marijuana and often gives the consumer the munchies. According to Lab Roots’ Amy Loriaux if a substance, like marijuana, can affect physiological systems like appetite, it points to a system that regulates appetite. Take a closer look at how cannabis impacts appetite and the endocannabinoid system.

The National Center for Complementary and Integrative Health, at the National Institutes of Health, is sponsoring a workshop on Dec. 8, 2018 to discuss the issues related to conducting research on cannabinoids under the current regulatory framework. The event will bring together researchers, government officials, and industry representatives to foster collaborations for future research opportunities.

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