New Veterans Affairs policy pushes marijuana stocks down
Ottawa sets limits on price of pot, amounts, for which it will reimburse
Medical marijuana stocks fell as much as 20 per cent in heavy trading Tuesday after Veterans Affairs Minister Kent Hehr announced stricter limits on how much cannabis veterans can claim and how much licensed producers can charge.
The government will push back the limit for the amount it will reimburse, from 10 grams per day to three grams per day, Hehr said during his announcement in Vancouver. The average patient uses between one and three grams per day, according to Health Canada’s website.
Ottawa will also limit the dollar amount it will reimburse at $8.50 per gram, based on what it said was “fair market value.” The changes will also allow veterans to claim oil and fresh marijuana in addition to the dried product. Some 3,000 veterans now use the medical marijuana program.
The announcement comes after a Vice Canada report released last week suggested some medical marijuana companies were directing veterans toward higher priced marijuana, declining to show cheaper available strains on a site aimed specifically at vets.
The changes to veterans’ access to medical marijuana have long been expected after auditor general Michael Ferguson reported in May that medical marijuana cost Veterans Affairs more than $20 million for pot last year, up from $5 million a year earlier.
Canopy Growth Corp., the largest of the publicly-traded marijuana companies, was the top market mover Tuesday afternoon with some 13 million shares changing hands. Its stock was down 15 per cent at $8.89. That decline comes off after shares in the company reached a peak of more than $17 a share last week.
Though it was the most heavily traded Tuesday, a Canopy Growth spokesman said the changes will not have a material effect on the company, as less than two per cent of its clientele is composed of veterans.
“We do not operate separate websites for veterans. We do not oblige veterans to purchase higher-priced cannabis products, while hiding access to lower priced cannabis products,” it said in a statement.
Shares in Aphria, one of the licensed producers named in the Vice report last week, were down 16 per cent to $4.75 per share. Aphria could not be immediately reached for comment Tuesday.
Veterans are the only group of medical marijuana patients whose prescription costs are covered by the government. Most private insurers and health benefit plans do not subsidize the costs for patients as they do for pharmaceuticals.
Patients’ advocacy group Canadians for Fair Access to Medical Marijuana applauded the changes introduced Tuesday, saying the current rate of coverage was unsustainable and that the price limit will help curtail unethical pricing practices.
Trading in the sector has been extremely volatile in the weeks since the U.S. election when four more states voted to legalize recreational usage.
The volatility also comes ahead of a task force report on marijuana legalization and regulation expected to be turned over to the federal government at the end of the month.