Government, industry must work together to define cannabis promotions

… that Health Canada would investigate the sponsorship of a charitable fundraiser by two cannabis companies (Canopy Growth Corp. and Halo Labs), …

Part of cannabis laws and regulations

The promotion of cannabis has always been polarizing – should it be as restrictive as possible in order to not attract youth, or be more permissive in recognition of the importance of brand distinction? The federal Cannabis Act adopted the former approach, but cannabis is big business, and big business calls for marketing. As a result, the industry has been wrestling with what activities are allowed under the law and, often, the lines can get blurry.

Recently, it was reported that Health Canada would investigate the sponsorship of a charitable fundraiser by two cannabis companies (Canopy Growth Corp. and Halo Labs), triggering a national discussion as to what is and is not allowed to be sponsored by cannabis companies under the act.

Notably, the act does not actually prohibit sponsorships of events or activities by cannabis companies. Rather, it is the promotion of a sponsorship by a cannabis company that is prohibited (by “cannabis company,” I am broadly referring to any person that produces, sells, distributes or provides a cannabis product, accessory or related service).

Story continues below advertisement

That distinction is not intuitively clear. After all, what is a sponsorship if not a promotional opportunity? Sure, some companies are naturally charitable, but sponsorships promise brand placement and engagement. Promotion is arguably inseparable from every sponsorship.

I suppose a sponsor could request anonymity for its financial support, but if the object of the act was to prohibit sponsorships to the point that that was necessary, why wouldn’t the legislation just outright ban sponsorships by cannabis companies? Donations can remain anonymous. That would have been easier to draft and to understand.

As a result, I have to believe that Canada’s legislators must have intended for some degree of sponsorship by a cannabis company to be allowed. So, where could that daylight possibly exist?

Maybe there are some forms of sponsorships that do not rise to the level of promotion after all. The act contains a fairly broad definition of what constitutes a “promotion,” namely making a representation about a thing or service that is “likely to influence and shape attitudes, beliefs and behaviours” about that thing or service. That’s a useful starting point. If a sponsorship involved nothing more than a cannabis company’s logo placement on event materials, could that logo be considered likely to shape or influence anything?

Take away the conventional benefits that are used to attract large sponsors – no opportunity to make remarks or introductions about a brand, no commercials, no giveaways, no activations. If a cannabis company does not express its brand in that way, I have a hard time seeing where the influencing and shaping might occur.

The stakes are high. If found liable for non-compliance, the cannabis company could face penalties ranging from warning letters to licence suspensions or revocations to massive fines. Compounding the challenges for cannabis brands and the events seeking their sponsorship dollars, the act also prohibits the publication or dissemination by any person of a prohibited promotion on behalf of a cannabis company. So the charities, event organizers and advertisers all need to ensure they are clear on whether the proposed sponsorship is offside the act.

Within days of the sponsorship investigation being announced, Health Canada released a notice to all licensed cannabis producers reminding them of the restrictions on promotional activities, including sponsorships. The letter stated that promotion prohibitions are included in the act “in support of its objectives, including … protecting young persons and others from inducements to use cannabis. Promotion can have a significant impact on the appeal, social acceptance and ‘normalization’ of a particular product, and in turn its level of use.”

Story continues below advertisement

There is a lot to unpack in that excerpt.

It is beyond the scope of this column to explore the benefits and ills associated with normalizing cannabis. But, as an adviser to companies trying to navigate the legalities of sponsorship, there are some important takeaways here. Compare the words above with the definition of “promote” from the act – “influence,” “shape,” “appeal,” “acceptance.” There is consistency.

Sponsorship, in and of itself, is not the issue. Impact is. The old playbook for sponsorships does not apply to cannabis companies. Sponsorship benefits, brand placement and the advertisement of those sponsorships must all be scrutinized. Be bland. Be distant. If brands are trying to engage with their customers, cannabis brands must actively disengage. Don’t tell a story. At least not in the usual way.

The restrictions are understandable. Cannabis is a unique product, with health and societal risks and attributes that are not completely analogous to any one of tobacco, alcohol or pharmaceuticals.

But a prohibition in absolute terms presupposes that the aims of the act cannot be balanced with the realities of traditional corporate sponsorship. Sponsorship raises money for worthy causes, and there is now a risk of a deprivation of those funds from certain potential supporters. Young persons can be restricted entry to an event, eliminating the risk that they would access the sponsorship placements. Pharmaceutical companies engage in sponsorship, but it appears that equating pharmaceuticals with medical cannabis would be tantamount to normalization, and normalization is apparently to be avoided.

I feel as though we are all stakeholders in this cannabis experiment together. There is a coast-to-coast conversation under way about what these laws mean and why, and I believe good corporate citizenry among cannabis companies exists to help the government realize its policy objectives. But it will take time to get it right, so I hope the dialogue between government and industry remains open and that undue sanction can be avoided in the meantime.

Story continues below advertisement

Chad Finkelstein is a partner at the law firm of Dale & Lessmann LLP (www.dalelessmann.com) in Toronto. He can be reached at cfinkelstein@dalelessmann.comor followed on Twitter at @ChadFinkelstein.

Available now: Cannabis Professional, the authoritative e-mail newsletter tailored specifically for professionals in the rapidly evolving cannabis industry. Subscribe now.

Related Posts:

  • No Related Posts

Hexo Corp. was a bright spot in a lackluster marijuana sector Thursday

Aurora Cannabis Inc. shares ACB, -1.16% ACB, -0.75% fell 1.4%, shedding some of their prior-day gains made on the news that it has hired billionaire …

Quebec-based Hexo’s U.S.-listed shares HEXO, +2.52% rose 2.2%, while its Toronto Stock Exchange-listed shares HEXO, +3.07% rose about 3.6%, as most of its rivals fell.

The company said it had a net loss of C$4.33 million ($3.25 million) in its fiscal second quarter to Jan. 31, narrower than the C$8.95 million loss posted in the year-earlier period.

Revenue rose to C$13.4 million from C$1.2 million. The company sold 2,537 kg of adult-use cannabis, up from 952 kg in the previous quarter, at an average price of C$5.83 a gram, up from C$5.45 in the previous quarter. Medical cannabis revenue came to C$1.171 million, down from C$1.182 million a year ago and C$1.391 million in the prior quarter. The price per gram of medical cannabis rose slightly to C$9.15 from C$9.12.

Hexo produced about 4,938 kg of dried cannabis in the quarter, up from 3,550 kg in the October quarter. Headcount rose by 32% to 374 employees as the company ramped up production and new facilities came online.

Also in the black Thursday were shares of cannabis real-estate investment trust Innovative Industrial Properties Inc. IIPR, -0.80% which climbed 3.2% after the company posted a 111% increase in revenue in its latest quarter.

The company said it had fourth-quarter net income of $2.3 million, or 23 cents a share, compared with $284,000, or 7 cents a share, in the year-ago period. Revenue rose to $4.8 million from $2.3 million in the year-ago period.

Aurora Cannabis Inc. shares ACB, -1.16%ACB, -0.75% fell 1.4%, shedding some of their prior-day gains made on the news that it has hired billionaire hedge-fund manager and activist Nelson Peltz as an adviser.

Tilray Inc. shares TLRY, +0.38% reversed early losses to trade up 0.6%. Tilray said Wednesday it has hired former Goldman Sachs Managing Director Andrew Pucher as chief corporate development officer, tasked with leading the team responsible for mergers and acquisitions and corporate investments. Pucher was most recently Goldman’s head of Canadian Diversified Investment Banking, which included coverage of the cannabis industry.

Tilray’s most recent deals included a 50/50 joint venture with AB InBevBUD, -1.10% to develop THC and CBD beverages, and a global tie-up with Sandoz, a part of Swiss drug company Novartis AG NVS, +0.62%NOVN, +1.18% to distribute its medical products. Last month, the company announced a $317 million cash-and-stock deal for Manitoba Harvest, a company that claims to be the world’s biggest hemp food maker. Tilray said it expects to use the deal to launch CBD-derived products in the U.S. as early as this summer.

MedMen Enterprises Inc. MMNFF, +0.36% was up 0.4%. MedMen was expelled from the New York Medical Cannabis Association on Wednesday, according to MJBizdaily.com. The association had said it might cut ties with California-based MedMen in February, in response to a lawsuit filed by the company’s former finance head, alleging that he was exposed to racial, homophobic and misogynistic epithets and slurs, drug and alcohol abuse and personal humiliation, while at the company.

Elsewhere in the sector, Canopy Growth Corp. CGC, -1.67%WEED, -1.69% was down 1.9% and Cronos Group Inc. CRON, -2.55% was down 3.0%.

Green Organic Dutchman Holdings Inc. TGODF, -1.52%TGOD, -0.69% was down 1%, CannTrust Holdings Inc. CTST, -1.69%TRST, -1.82% was down 2%, Aleafia Heath Inc. ALEF, +1.36%ALEF, +1.36% was up 2.4% and OrganiGram Holdings Inc. OGRMF, -0.67% was down 0.8%.

The Horizons Marijuana Life Sciences ETF HMMJ, -0.81% was down 0.8% and the ETFMG Alternative Harvest ETF MJ, -0.67% was down 0.6%.

The S&P 500 SPX, -0.13% was down 0.1% and the Dow Jones Industrial AverageDJIA, -0.05% was down 0.01%.

Additional reporting by Max A. Cherney in San Francisco


The ETFMG Alternative Harvest ETF (MJ) was trading at $36.65 per share on Thursday afternoon, down $0.25 (-0.68%). Year-to-date, MJ has gained 12.68%, versus a 5.73% rise in the benchmark S&P 500 index during the same period.

MJ currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #59 of 75 ETFs in the Global Equities ETFs category.


This article is brought to you courtesy of MarketWatch.

Related Posts:

  • No Related Posts

On Mar 14, 2019 GMP FirstEnergy Gives Aurora Cannabis (TSE:ACB) $15 Target.

6 are the (TSE:ACB)’s ratings reports on Mar 14, 2019 according to StockzIntelligence Inc. On Monday, February 25 the stock of Aurora Cannabis Inc.

GMP FirstEnergy Increased Aurora Cannabis (TSE:ACB)’s Stock Rating to “Buy”.

Aurora Cannabis (TSE:ACB)‘s stock was upgraded to “Buy” at GMP FirstEnergy. Professional analysts have a $15 TP and would suggest a potential upside of 26.05 % on Wednesday morning.

Aurora Cannabis Inc. (TSE:ACB) Ratings Coverage

In total 3 analysts cover Aurora Cannabis (TSE:ACB). “Buy” rating has 3, “Sell” are 0, while 0 are “Hold”. (TSE:ACB) has 100% bullish analysts. 6 are the (TSE:ACB)’s ratings reports on Mar 14, 2019 according to StockzIntelligence Inc. On Monday, February 25 the stock of Aurora Cannabis Inc. (TSE:ACB) has “Buy” rating given by Jefferies. On Tuesday, March 5 the rating was initiated by Cowen & Co with “Buy”. On Wednesday, March 13 the stock of Aurora Cannabis Inc. (TSE:ACB) earned “Buy” rating by GMP Securities. On Wednesday, March 13 the stock of Aurora Cannabis Inc. (TSE:ACB) earned “Buy” rating by Cowen & Co.

ACB hit $11.9 during the last trading session after $0.12 change.Aurora Cannabis Inc. has 17.79M shares volume, 2.16% up from normal. ACB is and has moved 0.00% since March 14, 2018. The stock underperformed the S&P500 by 4.37%.

Aurora Cannabis Inc. (TSE:ACB)’s earnings report is anticipated by WallStreet on May, 14, according to Zacks. Analysts have anticipation on stock’s earnings per share of $-0.05. That’s down 25.00 % from last year’s $-0.04 earnings per share. 25.00 % negative EPS growth is what Wall Street’s predicts after $-0.04 reported EPS last quarter.

Aurora Cannabis Inc. produces and distributes medical cannabis products.The firm is valued at $12.05 billion. It is vertically integrated and horizontally diversified across various divisions of the cannabis value chain, from facility engineering and design to cannabis breeding, genetics research, production, derivatives, high value-add product development, home cultivation, wholesale, and retail distribution.Currently it has negative earnings. The company’s products consist of dried cannabis and cannabis oil; CanniMed vegan capsules; and hemp products, as well as sells vaporizers, consumable vaporizer accessories, and herb mills for using herbal cannabis products.

For more Aurora Cannabis Inc. (TSE:ACB) news brought out briefly go to: Midasletter.com, Forbes.com, Midasletter.com, Midasletter.com or Midasletter.com. The titles are as follows: “VIDEO: Aurora Cannabis Inc (TSE:ACB) Launches Best-in-Class Aurora Sky Facility (Site Visit) – Midas Letter” brought out on October 18, 2018, “Why A High Valuation For Aurora Cannabis Makes Sense – Forbes” on July 12, 2018, “Aurora Cannabis Inc (TSE:ACB | NYSE:ACB) Positive EBITDA in Q2 2019 – Midas Letter” with a publish date: January 08, 2019, “VIDEO: Aurora Cannabis Inc (TSE:ACB) US Uplisting and Leadership in Europe – Midas Letter” and the last “Investors Buy Aurora Cannabis Inc (TSE:ACB) Gap Down Post-Earnings – Midas Letter” with publication date: February 12, 2019.

Receive News & Ratings Via Email – Enter your email address below to receive a concise daily summary of the latest news and analysts’ ratings with our FREE daily email newsletter.

Related Posts:

  • No Related Posts

Billionaire Nelson Peltz is Getting Into the Cannabis Business

He will join Aurora Cannabis as a strategic adviser, working with the company to “explore potential partnerships” and help with the company’s global …

Now that it is legal at a federal level to grow hemp with the passage of a federal farm bill last year, California and its counties are struggling to write rules regulating production.

But one of the most pressing issues could be keeping fields that grow hemp, a type of cannabis, separate from stands of marijuana, also cannabis and known for its mind-altering qualities unlike hemp.

Last month the Mendocino County Board of Supervisors voted to implement a temporary moratorium on hemp cultivation, citing among other issues concerns about the cross pollination with marijuana, cannabis plants containing the psychoactive compound THC.

Read more

Related Posts:

  • No Related Posts

Canadian Cannabis Company Hexo Posts 135% Q2 Revenue Growth

Hexo’s results are more or less in line with industry peers Aurora Cannabis Inc. (NYSE: ACB) and Canopy Growth Corp (NYSE: CGC), both of which …

Canadian cannabis producer Hexo Corp (NYSE: HEXO) reported its financial results Thursday for the fiscal second quarter ended Jan. 31. For the first quarter since the full legalization of cannabis in Canada, the company recorded revenue growth of 135 percent on the quarter and nearly 1,300 percent on the year.

The Cannabis Capital Conference returns to Toronto April 17-18!

What Happened

HEXO posted fiscal second-quarter gross revenue of CA$16.18 million ($12.14 million), while the net revenue excluding excise taxes amounted to CA$13.38 million. The bulk of the revenue came from the recreational market (CA$12.21 million net).

The large revenue growth helped HEXO narrow its net loss by 52 percent on the year and by 66 percent sequentially to CA$4.33 million.

During the fiscal second quarter, HEXO sold 2,689 kilograms of dried cannabis products, up by 142 percent on the quarter. The company also produced 4,938 kilograms of cannabis, an increase of 39 percent compared to the previous quarter.

In addition to larger volume of cannabis sold, HEXO’s revenue growth was aided by slight increases in prices. In this way, the company reported an average selling price for the adult market of CA$5.83 per gram versus CA$5.45 a quarter earlier, while for the medical market the price increased from CA$9.12 to CA$9.15 per gram.

Why It’s Important

Hexo’s results are more or less in line with industry peersAurora Cannabis Inc. (NYSE: ACB) and Canopy Growth Corp (NYSE: CGC), both of which reported last month. The legalization of adult use is having a beneficial impact on the companies’ top-line growth while also helping them reduce their losses.

What’s Next

During the second quarter, Hexo’s 1-million-square-foot facility in Belleville, Ontario reached construction and licensing milestones, and the company said it expects first harvests in the next two quarters. It also plans to open its product transformation center in the fiscal fourth quarter.

On the back of these two and other developments, HEXO said it expects its net revenue in the fiscal fourth quarter to double compared to the second quarter.

However, in a trend with revenue growth, HEXO also anticipated higher marketing, administrative and R&D expenses.

Related Links:

HEXO Corp Agrees To Buy Newstrike In $200M Stock Deal

Employees At Ontario Cannabis Store’s Call Center Vote To Unionize

Related Posts:

  • No Related Posts