Read Next Article →

News on cannabis stocks and on developments in the industry haven’t let up in today’s volatile markets. Here are this week’s stories that we believe will mean most to you as a Canadian investor.

1. A building inventory of unsold cannabis could lead to industry-wide writedowns, according to analysts from BMO Capital Markets.

In a note to clients this week, analysts Tamy Chen and Peter Sklar highlight the growing amount of “unfinished inventory” since recreational marijuana was legalized in October.

According to the most recent Health Canada figures, as of March 2019, there were more than 150,000 kilograms of unfinished inventory (defined by regulators as cannabis that is not packaged, labelled or ready for sale) held by Canadian pot companies. That’s up from about 101,000 kilograms on the first day of legalization, on Oct. 17, 2018,

The analysts write that a sizeable amount of that pot may fall short of quality requirements for recreational sales, although some will be converted to cannabis extracts for the upcoming edibles market.

“If some of the dated ‘unfinished inventory’ is ultimately determined to not be extraction-grade, then there would be a need for inventory writedowns,” say the analysts, adding it remains difficult to pinpoint how much of that cannabis would be affected by writedowns.

2. Dozens of cannabis industry executives have endorsed a set of standards meant to limit the industry’s environmental impact and sustain its social responsibility.

The newly-established Global Cannabis Partnership has now released a corporate social responsibility framework that seeks to positively influence the industry’s impact on the environment and society.

The group of 45 cannabis industry leaders sees those guidelines as key to the long-term sustainability of the business.

Minimum requirements include, among others, minimizing greenhouse gas emissions, promoting responsible use, and reinforcing ethical conduct. The formal certification process will be submitted to an independent evaluation panel.

The partnership expects members to make improvements when Framework standards are not met and to develop mechanisms to ensure ongoing compliance and continuous improvement.

3. Shoppers Drug Mart is set to use blockchain technology as a way of ensuring the quality of medical cannabis.

Ken Weisbrod, vice-president of business development, says the company has signed a deal with TruTrace Technologies to provide the software to track medical cannabis from seed to final product for a pilot program.

“About 6,000 to 7,000 clinicians in the country are prescribing on a regular basis,” said Weisbrod. “There are about 85,000 physicians in the country. The majority have not embraced this drug yet.”

Pharmacists are also eager for reassurances about the quality of the cannabis many are now preparing for clients. Shoppers ultimately wants to be able to scan a bottle of medical cannabis and get full information on the product.

“I want a genetic confirmation of the same product, month over month, harvest over harvest. I’m in a good place there because I have consistent medicine,” Weisbrod said.

Shoppers Drug Mart currently facilitates the sale of medical cannabis, but only online to patients with a valid medical document in Ontario and Alberta. The company says it plans to expand sales to other provinces in the coming months.

4. Canada’s final regulations on edibles and other “next-generation” cannabis products include prohibiting the mixing of pot with tobacco or alcohol and the advertising of cannabis products; however, at the same time, the law will allow for multiple cannabis-infused offerings to be packaged together.

The new regulations will come into force on Oct. 17, 2019, one year after cannabis was first legalized in Canada. Ottawa says it expects a “limited selection of products” to be available for sale in Canada by mid-December 2019.

The government released the regulations Friday, confirming key elements of earlier drafts shared with both the industry and the public.

Bill Blair, the minister of border security and organized crime reduction, who is also responsible for enacting the government’s cannabis policy, told BNN Bloomberg in an interview that the final regulations for cannabis edibles and alternative products are aimed at minimizing the public health impact. Part of that is restricting youth access to the legal pot market.

The final regulations come after a recent report from Deloitte, which found the Canadian market for edibles and extracts is worth an estimated $2.7 billion annually. That’s on top of the roughly $6 billion estimated domestic market for recreational and medical cannabis, the consultancy said in its report.

In draft regulations released in December, Health Canada says it expects cannabis products other than dried cannabis to account for just under half of the total market. That would mirror sales in Colorado, California and Oregon.

5. A new study suggests pregnant users of cannabis are at greater risk of delivering their baby early.

While researchers say more work is needed to establish a direct link between cannabis and pre-term births, their findings point to a higher risk of pre-term births among cannabis users.

In the study, 9,427 women, or 1.45% of the group, reported using cannabis while pregnant. Of those, the rate of pre-term births was 12% compared to 6% among non-users.

Even when trying to isolate for the impact of cannabis alone, researchers found the rate for premature babies was 7.2% among non-users, but jumped to 10.2% for women admitting to cannabis use during pregnancy.

The work comes from researchers at the Ottawa Hospital, the Children’s Hospital of Eastern Ontario, the provincial birth registry BORN Ontario and the University of Ottawa. They looked at 661,617 women who gave birth between 2012 and 2017 in Ontario. The time period is before recreational cannabis became legal.