Possibilities grow for pot link-ups
If this week’s link- up — a $245 million investment by Constellation Brands, a beverage alcohol supplier, into Canopy Growth, a diversified cannabis company — is any indication, then there will be a veritable smorgasbord of opportunities to mix pleasures between now and next July 1, the date when it’s expected pot will become legal in Canada.
It would seem the only limitation is the creativity of the people in the industry that has captured the attention of slews of entrepreneurs, has made many investors wealthy, has improved the performance of the handful of underwriters who financed the issuers — and raised all sorts of expectations that the good times will continue.
“Everybody is talking about big alcohol, big pharma and big tobacco. None of those three big players have really entered the space until this week. But you know they are looking around. And we hope they do,” said one executive who requested anonymity.
One example of that creativity was on display Wednesday when CannTrust Holdings, a licensed producer of medicinal cannabis, announced a $ 15 million deal: 3 million shares at $5 a share.
The financing is not the most striking part of the company, which in August filed a prospectus to qualify the distribution of 12.6 million special warrants ( each priced at $ 2) placed earlier in the year.
What’ s novel about CannTrust, which received its Health Canada licence in mid- 2014, is how it has tried to diversify its product range. And the big breakthrough occurred two years back when it formed a partnership with Toronto- based Club Coffee LP, which has been around since 1906.
That partnership is known as the Cannabis Coffee & Tea Pod Company Ltd., and it produces a product called BrewBudz, which it planned to launch in the U.S, and elsewhere, but not in Canada. In its recent MD&A, the company said BrewBudz “is a U.S. patented unit dose pod formulation allowing the administration of cannabis using single- serve brewing pods for use in Keurig, Nespresso, and Tassimo type brewers.”
In other words, to quote the waiter, “would you like a little tonic with your morning Java?”
And who could resist if it also cures a little hangover.
The company is not there yet — but t he potential exists.
Through the partnership, CannTrust will receive royalty income from a licensing agreement that currently covers six states ( Washington, Oregon, California, Nevada, Arizona and Colorado.) Initial sales are expected to start shortly in Nevada. Calls to CannTrust were not returned.
But CannTrust hasn’t just set its targets south of the border: the partnership has also submitted patent applications in the European Union, Australia and China.
Why put the marijuana in coffee/ tea/ hot chocolate pods given the environmental damages that result? For starters, coffee is already a popular drink, and the market for single servings is big and presumably will continue to grow.
So what else is possible given that marijuana, at least in Canada, can only be sold in oil or bud form?
Richard Goldstein, cofounder of privately held Canntab Therapeutics, said his company’s tag line is “to bring the medical into medicinal cannabis.” His company, which he cofounded with Jeff Renwick, recently signed a licensing deal with Ontario- based Emblem Corp., a licensed producer.
Goldstein believes the medical community “will be much happier” with what we are doing because it allows “proper dosage,” meaning the doctors and their patients know what they are getting.
“Our pills are extended release, so they last 12- 18 hours. It’s made to keep you in a mid-point zone for pain treatment,” he said.
Another possibility is marijuana- laced patches, a technique that has helped cigarette smokers give up the habit.