By Eric Vengroff, Financial Analyst, Cannabis Daily
Multiple news sources have reported that Tilray (NASDAQ:TLRY) has terminated its contract with Namaste, roughly 10 days after the announcement of the deal. Brandon A. Dorfman
of Potnetwork reported that the self-described “Amazon of Weed”, Namaste Technologies (OTCMKTS:NXTTF) held a stockholder pledge party and according to La Presse, Namaste is being investigated by the Minister of Health following their attempts to recruit medical cannabis patients at a party. It appears as though the two alleged incidents were enough to send shudders through Tilray executives, sufficient to cancel their deal. “We were not aware and we did not approve the recent promotional activities of Namaste,” a Tilray spokesperson told La Presse in an email. “We do not believe that these types of activities will further legitimize medical cannabis with the medical community.”
Namaste issued their own press release, both contradicting La Presse for their characterization of the issues, and confirming the cancellation. “We were very disappointed to see this article published on Lapresse.ca which was not only misleading but completely inaccurate in relation to many of the claims related to the Company,” said Sean Dollinger, President and CEO of Namaste. “Furthermore, it is with disappointment that Tilray chose to terminate the agreement, as Namaste was not in breach of any terms of the agreement.”
The news also underscores the increasing scrutiny and industry sensitivity to a wide range of issues that both Canadian and U.S.-listed companies that do business in Canada will have to pay attention to in the future, if this latest hasn’t brought them into sharp relief already. These issues relate not only to equity raises and the various tactics that companies will employ to retain early-stage investors who may have visions of cashing out as everyone else is buying in, but also to the promotional tactics that licensed producers, accessory sellers, and retailers will be able to employ to attract and retain medical users and recreational-use customers. Cannabis growers and sellers face a complex and evolving system of regulations and restrictions relating to the marketing of cannabis as set out in Bill C-45 and the ensuing federal, provincial, and municipal regulation, guidance and enforcement regarding virtually all aspects of the business.