By Eric Vengroff, Financial Analyst, Cannabis Daily
While Ontario goes to the polls this Thursday, another important voting session will be taking place in the Senate, as the bill, with all of its amendments and language changes, is expected to be voted upon.
Industry, consumers, regulators, and bureaucrats wait to see what law finally issues forth. Canada’s legislative body of sober second thought have ensured that matters of such high importance were given all due consideration. Observers have noted recent suggestions and proposed tweaks will be hard to regulate and enforce, others may provoke constitutional and court challenges, and others were, in the view of some, patently ridiculous.
It was after the CBC’s story on these latest tweaks that CD contacted Greg Engel, CEO and Director of OrganiGram, one of Canada’s leading producers of medical cannabis, to speak with us about his view of the current state of the legislation.
Mr. Engel, a senior executive with 30 years’ experience in pharmaceutical, biotech, cannabis and CPG industries, has most recently worked to become the first Canadian exporter of medical cannabis. The company’s facility is in Moncton, N.B. and employs 285 people.
“C-45 is a process”, Mr. Engel said, and in his opinion, even after the vote in the Senate, C-45 is likely to be kicked back to the house for some additional tweaks before the stated deadline for legalization of July 1, 2018.
A red flag for him is the proposed capping of THC levels, which to him makes no sense. “If someone is going to drink a 5.4% or 5% beer versus a 40% spirit, they are just going to have a different consumption level.”
This viewpoint appears to be logical and demonstrates Mr. Engel’s deeper understanding of the issue than some of the senators in favour of these restrictions. Further, unlike alcohol, it is virtually impossible to ingest a toxic amount of THC by smoking it. Since dried bud will be the only legal means that the product will be obtainable during the first year following the bill’s implementation, he argues that the concentration limitations are not required. Furthermore, and similar to alcohol, education about the product’s effects on cognitive and judgement skills is going to be required for both experienced medical and new recreational users. “I think [education] is going to be one of the keys for cannabis as well.”
Mr. Engel has seen examples of “cannabis-naïve” customers in dispensaries in Colorado, elsewhere, and even online being questioned about their cannabis consumption habits, be it daily, occasional or never, and counseled on what products, strains and concentrations would be beneficial. As many educated people in this industry would recommend, ‘low and slow’ is the way for the uninitiated or inexperienced consumers.
The standing Senate committee spent a good deal of time discussing growing at home. CD asked Mr. Engel whether, in light of documented evidence of underground production in markets such as Colorado, he is concerned about home-growing and any potential constitutional challenges that may arise from consumers. He likens home-growing to those that brew their own beer or ferment their own wine, and that this segment of the market will always be there, but be a small part of it. Furthermore, he points out that stated risks regarding inadvertent consumption of raw plants by children are over-stated, as only dried, processed product under carboxylation, a long journey from the raw plant, creates the psychoactive effect.
We then moved the discussion to activities related to OrganiGram itself. At present, Mr. Engel states, they are producing an annualized 22,000 kg/yr expected to jump to 36,000 kg/yr with the expected approvals, putting OrganiGram to what Mr. Engel believes to be #4 in Canada. A 22-month expansion program will take them to them up to an expected 113,000 kg/yr. Being all indoor-grown, their focus is on high-quality product and backed it up with Cannabis Cup awards for a Sativa strain and a blend.
With a Moncton locale, Mr. Engel believes they benefit from low-cost, efficient production, claiming production levels of 400g./sf of canopy per year, with reduced power, labour and occupancy costs of the Maritimes with the benefit of an educated, experienced workforce.
The information and opinions presented here are that of the analyst and do not represent the thoughts and opinions of this website. The analyst does not own or represent any of the companies listed in this article and receives no compensation from any party mentioned in this article. Readers are urged to do their own research and due diligence and should seek advice from an independent financial advisor before making any financial investment.