Grower-seller pot firms part of expanding trend

When doctors at the Solace Health Network of cannabis clinics prescribe their patients medical marijuana, one government-licensed producer of the drug might come quickly to mind.

The clinics’ parent company, after all, is Terrascend, which also owns a cannabis grower and seller.

A direct ownership link between doctor-staffed clinics and the manufacturer of their main treatment tool would be unheard of if it involved a pharmaceutical firm.

But in the fast-evolving cannabis industry, Terrascend’s arrangement is far from unique — and quite legal.

The National Post has found close to a dozen companies across the country have combined pot-producing operations and marijuana-treatment clinics under the same corporate umbrella, in what seems to be a growing trend.

Some insist they isolate the two functions from each other, but others are frank about the benefits of vertical integration. The Leaf Wise clinics in Alberta, for instance, will provide “a direct channel to Invictus-owned licensed producers,” said parent-company Invictus MD Strategies in a recent news release.

“If you have clinics, then you have patients, right? And if you have patients, you can capture a portion of that,” said Chris Churchill-smith, CEO of Canada House Wellness Group, which owns both a producer and clinics.

The trend has alarmed some health-policy experts and regulators, who warn it blurs the lines between health professionals who are supposed to be independent of commercial interests and businesses that sell the therapies they prescribe.

“It’s an unbelievable conflict of interest,” charged Dr. Mel Kahan, head of substance-use services at Toronto’s Women’s College Hospital. “It’s reprehensible … There’s this tremendous motive for doctors to prescribe marijuana in high doses for all sorts of conditions because (their clinics) are owned by a company that’s profiting from it.”

Controversy has long swirled around the financial links between pharmaceutical companies and doctors, with drug reps providing gifts and meals to physicians, and firms hiring specialists as advisers or educators of other doctors. Studies suggest such connections can adversely affect medical decision-making.

But the cannabis crossownership phenomenon represents a new species of medical-industrial entanglement.

“With the corporate sector and the explosive growth of this industry, it’s gone to another level,” said Dr. Galt Wilson, deputy registrar of the B.C. College of Physicians and Surgeons. “It raises issues of conflict of interest, of messaging.”

Cannabis entrepreneurs, though, argue that dedicated clinics provide doctors and other health professionals with the support they need to give patients the best marijuana-aided care, when many other MDS eschew the drug entirely. The ownership link, they say, lets producers better gear their products to what patients need and want, while customers remain free to have their prescriptions filled by any Health-canada licensed firm.

“If you want to service the medical market, you actually have to provide a comprehensive service that navigates the patient through the process, so they can access their medicine without a lot of headaches,” said Michael Nashat, Terrascend’s CEO.

At Terrascend’s Solace clinics, the doctors are not company employees and patients choose their cannabis producer, meaning less than 50 per cent of the prescriptions are filled with the company’s own products, he noted.

The cannabis “authorizations” that clinic doctors or nurse practitioners issue do not specify a particular company, but the facilities often help patients register those prescriptions with a particular producer.

The recent legalization of recreational marijuana has, at the same time, opened up almost unlimited access to the drug.

But doctors and industry representatives say the medical cannabis system seems more popular than ever, as many Canadians still want a medical expert involved in their pot treatment.

Dozens of dedicated clinics have opened across the country, and increasingly they are either being bought by cannabis producers, or are themselves acquiring growers. The Post identified at least 11 such integrated firms, all of them publicly traded, from industry giant Aurora and Canopy Growth to the lesser-known Delta 9.

Aurora’s Canvasrx chain of 28 clinics in B.C., Alberta and Ontario “plays an important role in supporting the medical cannabis segment domestically and internationally,” it said in a document filed with regulators in September. Canopy owns 25 Bodystream and three Apollo clinics. Delta 9 controls 49 per cent of a Winnipeg clinic, indicating in a September filing that it “helps market the Delta 9 brand to patients.”

Aleafia Inc. bought the Ontario-based producer Aleafia Farms in March “to directly support its clinic operations,” said a document filed in September. But for now it is licensed only to supply other companies with marijuana, and even when it is able to market its own brands, the 22 Canabo clinics will not push company-made product, said Aleafia spokesman Nick Bergamini.

Others, though, have been candid about the business synergies they see in owning both health-care facilities and producers of the facilities’ featured treatment.

Recreational users make up a much bigger pool of customers than medical ones, but they buy through provincially regulated retailers, noted Churchill-smith of Canada House Wellness Group. Medical cannabis is sold directly to patients and, without a middleman and commanding generally higher prices, offers producers bigger margins, he said. Owning clinics creates a ready, potential market of those morelucrative customers.

“That’s our business model. Our expectation is that we would sell a portion of Abba product to our own patients and capture the entire margin,” said Churchill-smith.

But he said his company’s Abbamedix cannabis will be offered at its 10 clinics in Atlantic Canada, Ontario and Alberta only together with choices from other producers, “to avoid the perception of double-dealing.”

Ascent, whose Agrima production operation is currently under a Health Canada suspension, acquired Winnipeg’s First Circle Medical Clinic in June and said in a document filed this year it wants to build a nationwide network of clinics and a digital portal “to provide patients across Canada with easy, seamless and direct access … to medical professionals and Agrima’s extensive product range.”

At least one company has addressed the conflict-of-interest question directly with a regulator.

Ontario-based Vivo Cannabis, which owns both the Harvest Medicine and Trauma Healing Centres clinic groups, said in a November filing it had promised the Ontario Securities Commission it will not give doctors or patient “educators” incentives to tout its own products, and that clinic staff will recommend the company’s brands only alongside alternatives from other producers.

The idea of a medical clinic dedicated to treating a range of conditions with one type of therapy is unusual to begin with, not least because the evidence of marijuana’s health benefits is limited, said Dr. Nav Persaud, a family physician and health-policy professor at the University of Toronto.

The added element of cross-ownership with actual cannabis producers is more troubling, he said.

“I can’t think of a situation where there is such a serious conflict of interest,” said Persaud.

Some physicians do own “pulmonary-function” labs that test people for breathing problems, he noted, but are required to make that fact clear to patients. Crossowned cannabis clinics should at least have to be explicit to patients about their corporate ties, Persaud said.

Despite the critics’ concerns, it’s unclear if the professionals who work in crossowned clinics are violating any ethics regulations.

Under conflict of interest rules in Ontario, similar to those in other provinces, doctors cannot personally accept referral fees or kickbacks, or limit patients’ choice of treatments, said Shae Greenfield, a spokesman for the province’s College of Physicians and Surgeons.

But if a potential conflict involves the owners of the clinics and cannabis producers, that’s a matter for government regulators, said a spokeswoman for the Alberta college.

Andre Gagnon, a Health Canada spokesman, said nothing in the new Cannabis Act prohibits companies owning both clinics and licensed producers.

Still, deputy registrar Wilson of the B.C. college is concerned by the crossownership trend, and other examples he’s seen of the intimate ties between cannabis medicine and commerce. He recently investigated a telemedicine doctor who “disturbingly” appeared on his patient video link with a marijuana-producing company’s representative next to him.

“As you can imagine, we were critical of that physician and told him he must cease and desist.”