Investor Ideas #Potcasts 642, #Cannabis News and #Stocks on the Move-(TSXV: $KHRN.V) (OTCQX: $KHRNF) (NASDAQ: $VFF)
Delta, Kelowna, BC, January 6th, 2023 (Investorideas.com
Newswire), investorideas.com, a global news
source covering leading sectors including marijuana and hemp stocks and its potcast site
release today’s podcast edition of cannabis news and stocks to watch plus insight
from thought leaders and experts.
Listen to the podcast:
https://www.investorideas.com/Audio/Podcasts/2023/010623-Cannabis.mp3
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Today’s podcast overview/transcript:
In today’s podcast we look at a few
public company announcements, how the overall price of cannabis is becoming an
issue for the industry as well as how legalisation continues to impact cannabis
culture.
Khiron Life
Sciences Corp. (TSXV: KHRN) (OTCQX: KHRNF) announced that the new Colombian Government
has included plant-based medical cannabis products (i.e., Khiron products) in
the list of mandatory insurance-covered medications starting January 1st, 2023,
as well as the signing of a first-of-its-kind medical cannabis contract with
one of Colombia's largest insurance companies based in the city of Bogota.
Resolution
2808 of 2022 was signed by the Ministry of Health on December 30, 2022. This
revision was necessary to remove unintended ambiguities that had arisen whether
plant-based magistral preparations from medical cannabis (i.e., Khiron
products) were also included in the insurance coverage. This is now once and
for all clearly confirmed. The new government is fully committed with the use
of medical cannabis as a covered treatment under the Colombian health system.
The
Government used this iteration to also validate medical conditions where they
find moderate to strong evidence that cannabis is an effective treatment. These
medical conditions evaluated by the IETS (Technical Institute of the health
Sector) include chronic and neuropathic pain, oncology pain, sleep disorders,
epilepsy, and fibromyalgia, which represent the primary conditions treated with
Khiron products.
During
the first half of 2022, insurance-covered prescriptions represented more than
90% of the Company´s cannabis sales in Colombia. With a patient base of more
than 25,000 patients, Khiron will immediately resume filling insurance-covered
prescriptions through its Zerenia clinic network.
In
addition, Zerenia™ Colombia (Khiron´s wholly owned medical cannabis clinic
network), has entered into a contract to provide "Integrative Health
Services and Pharmacotherapeutic Treatment with Medical Cannabis" with the
largest Government-owned insurance company in the city of Bogota, with more
than 1.2 million insured individuals. This is the first time an insurance
company in Latin America is contracting medical cannabis specific services and
products. This represents an opportunity for Khiron and Zerenia to expand its
client and patient base within Colombia, while continuing to differentiate
itself with its unparalleled expertise in medical cannabis and proprietary
scientific evidence.
Alvaro
Torres, CEO of Khiron, comments: "Today is a great day for patients in
Colombia and Khiron. We welcome the decision from the new Colombian government
to categorically mandate insurance coverage for our medical cannabis products.
With this decision, Khiron will immediately tackle the backlog of covered
medical cannabis products to our patients. In parallel, we have also secured a
first-of-its-kind contractual relationship with one of Colombia´s largest
government-owned insurance companies for medical cannabis specific healthcare
services and dispensation. These two achievements, will allow us to revert to predictable
recurring revenues, shorter collection periods and improved cash flow."
Village Farms
International, Inc. (NASDAQ: VFF) announced further progress on its
international cannabis strategy, and commented that the lack of cannabis
legislative action by the United States Senate (in direct contrast to the 39
States / the District of Columbia with legally sanctioned medical-use and/or
adult-use THC, as well as the vast majority of United States' citizens) while
disappointing, does not impact Village Farms' plans to leverage its
considerable success in Canada into other cannabis markets with greater
regulatory support. Recently, the Company's Canadian Cannabis business, through
its subsidiary, Pure Sunfarms, commenced shipping cannabis products for the
Israeli medical market under an exclusive three-year supply agreement with
Israel-based Dr. Samuelov Importing and Marketing Ltd., doing business as Better Pharma.
Founded
in the early 1990s, Better Pharma is a highly respected importer of
pharmaceuticals and related products for the Israeli market with longstanding
relationships with Israel's retail pharmacies and an extensive sales force and
distribution capabilities, covering over 95% of Israeli independent pharmacies,
as well as retail drug stores.
"Commencing
shipments to Israel is another milestone in our global cannabis strategy,
building on our successes in Canada and Australia," said Michael DeGiglio,
Chief Executive Officer, Village Farms. "We are proud and privileged to
partner exclusively with Better Pharma for the significant medical cannabis
opportunity in Israel and are confident that Pure Sunfarms unique
"Everyday Premium" positioning, which has proven so successful in
Canada and Australia, will be differentiated in the Israeli market, and
well-received by patients."
"Our
agreement with Better Pharma marks the first time Pure Sunfarms branded flower,
inclusive of Canada's top-selling Pink Kush, makes its way to consumers
internationally," said Mandesh Dosanjh, President and CEO, Pure Sunfarms.
"We're confident that Better Pharma, an organisation that shares our
belief in a brand-led consumer approach, will help patients in Israel come to
know and appreciate Pure Sunfarms high-quality, BC grown strains as much as
Canadians have."
"We
are proud and honoured to exclusively partner with Pure Sunfarms, Canada's No.1
flower brand and market leader, for medical cannabis products," said Ran
Samuelov, Chief Executive Officer, Better Pharma. "We are confident we
will be able to leverage our knowledge and expertise in international brand
management for Pure Sunfarms to become one of the leading medical cannabis
brands in Israel. We are looking forward to delivering Pure Sunfarms unique and
differentiated "Everyday Premium" brand proposition to Israeli
medical patients and pharmacists."
Sales
of Pure Sunfarms product to patients in Israel are expected to commence later
this month. Initial strains offered will include Pink Kush, Jet Fuel Gelato,
and Sakura Punch (sold as Black Cherry Punch in Canada).
Village
Farms continues to execute on its global cannabis strategy, which includes
accelerated sales to the Australian medical market and plans to launch in the
German medical market.
In
a recent Bloomberg article titled, Cheap Weed Has
Become a Big Problem in the Pot Industry, the overall price of
cannabis is implied to be a growing issue for both the legal and legacy markets
as the two cannibalise one another over price.
The
article states that “If you thought regulatory issues were the cannabis
industry’s biggest challenges going into 2023, take a closer look at the price
of raw marijuana flower. Retail and wholesale prices have fallen as competition
with the black market puts pressure on legal retailers to keep prices low, and
this is making it hard for growers to get the supply-demand balance right.”
“The
industry today is facing a number of headwinds. The most existential is
pricing,” said Rick Maturo, director of insights and intelligence for
cannabis-data firm BDSA,
during a webinar last week.
The
retail price of a gram of marijuana dropped 13% to $9.43 in the third quarter
of 2022 from $10.83 in the same period a year earlier — the steepest fall ever
seen for marijuana in a 12-month period, according to BDSA. Wholesale price
declines were even more dramatic, especially in more “mature” markets that have
had legal programs for longer, BDSA data shows. In Colorado, the average price
per pound has declined 51% since the fourth quarter of 2020. In Oregon, it’s
down 36%.
While
there is heavy competition for lower priced products in the legal market, and
yes this is heavily influenced by the existence of the legacy market, the
underlying cause for concern is still primarily cost of operations and
licensing.
One
also has to consider what the implications could be of an eventual globalised
market where products from South America could be in play, where production can
get as low as $0.50 a gram.
This
also ignores the fact that in many established markets, high priced
concentrates and true “premium bud” have continued to grow their overall market
share and are slowly taking more and more sales away from low-cost bulk
products. This is also an area of the legal market where the legacy market has
difficulty competing due to the high quality nature of the extraction and grow
facilities where these products are made which cannot be replicated or properly
established in the legacy market.
A
recent CBC article discussed how cannabis
counter-culture has been impacted as “one of the oldest stores selling smoking
paraphernalia in Ottawa, will be closing its doors for good in the spring.”
Mike
Foster opened the head shop in Westboro in 1992 before moving to its location
in the Glebe in 1997. The iconic cannabis counterculture store has been seen as
an institution in the city.
Foster
was involved in efforts to legalise cannabis because he said he didn't want to
see people getting arrested for using the drug, but its legislation also led to
the growth of larger retail operations catering to cannabis aficionados.
"The
proliferation of cannabis shops certainly affected our sales on smoking
accessories," he said.
"Once
legalisation happened, our sales plummeted. There's so many stores out there
now, like every few blocks there's a cannabis shop and you can buy your papers
or pipes there. So that aspect of our business suffered."
Despite
the challenges, Foster doesn't have any regrets about supporting legalisation
efforts.
"I
was still happy to see progress being made in that regard."
David
Soberman, a professor of marketing at the Rotman School of Management at the
University of Toronto, said stores like Crosstown Traffic have lost the
"forbidden fruit appeal" they had when cannabis was prohibited.
Head
shops had a "rebellious" nature that drew people in, Soberman said,
working in the margins between legal and illegal.
"Legalisation
kind of takes a bit of a romance out of the whole cannabis counter culture
rebellion," Foster agreed.
What
this article does not take into account however is that competition also
exposes flaws. One of the aspects many legacy consumers have come to realise is
that now that there are more options available, when it comes to aspects like
inventory management, quality control, proper staffing, proper staff training
and overall business functionality, many legacy stores and growers were
underdelivering due to the lack of competition.
While
legalisation has certainly changed the culture, if you want to maintain some of
the counterculture aspects you can easily find examples of this aspect alive
and well when you look at the heady glass scene in the US and Canada or the
resurgence of psychedelics.
In
order for cannabis to be able to compete with prescription medications as a
medicine, which have lead to a corrupt medical system and a health epidemic in
North America, or with alcohol as a social lubricant, which is one of the
leading causes of domestic violence, emergency room calls and driving
accidents, the culture has to change.
Cannabis
for everyone, is in every way a positive move for the world. If you find
yourself disheartened by the “taboo” factor of this plant being removed, then
you have to ask yourself what was the culture you were really endorsing to
begin with? Was it simply rebellion and uniqueness for their own sake, or was
the goal from the start to get to a point where society returns to seeing
cannabis as what it is, a plant that is extremely beneficial to humanity?
We
all get upset when that obscure band we love suddenly has a hit that everyone
knows and your secret club is ruined by a mass audience, but with cannabis, more
access and a wider audience has the ability to change the overall culture in a
positive way.
With
both cannabis and psychedelics, once you have a truly potent experience, a part
of you is changed, and changed mostly in a positive way. These plants still
have the ability to teach all of us how to move into a less disastrous future,
and so if we have to lose some of the “cool” factor, then that is a small price
to pay for overall evolution.
Investor ideas reminds all listeners to read our disclaimers and
disclosures on the Investorideas.com website and that this podcast is not an
endorsement to buy products or services or securities. Investors are reminded
all investment involves risk and possible loss of investment.
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