Investor Ideas Potcasts #642, Cannabis News and Stocks on the Move - (TSXV: KHRN) (OTCQX: KHRNF) Village (NASDAQ: VFF)
Vancouver, Delta, Kelowna, BC - January 6, 2023 (Investorideas.com Newswire) www.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.
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Investor Ideas Potcasts #642, Cannabis News and Stocks on the Move - (TSXV: KHRN) (OTCQX: KHRNF) Village (NASDAQ: VFF)
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.
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