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Will mega marijuana deal get approval in New York?

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Will mega marijuana deal get approval in New York?

ALBANY — The planned merger of two of the nation’s largest cannabis companies is being closely watched by industry insiders in New York who are wondering just how state regulators are going to handle an acquisition that, on its face, seems to violate state law.

MedMen Enterprises and PharmaCann announced the $682 million deal to stockholders last week, noting that the acquisition would create the nation’s largest cannabis company with licenses to operate 79 facilities across a dozen states, including two cultivation facilities and eight medical marijuana dispensaries in New York.

The only catch?

New York Public Health Law, which allows marijuana for medical use only, prohibits a registered marijuana organization from owning and operating more than four dispensaries in the state. The provision was designed to prevent market domination, even as some argue it limits access for patients who must travel to far-flung destinations to get their medicine.

In response to that concern, the state last year doubled the number of medical marijuana organizations allowed to operate statewide from five to 10 — a move that also doubled the number of allowed dispensaries statewide from 20 to 40.

The four-dispensary-per-company limit remains, however.

MedMen, a Los Angeles-based company known for its high-end marijuana stores, would acquire the assets and licenses of Illinois-based PharmaCann in the stock deal, though it must gain regulatory approval from local and state authorities in each of the markets where those assets are held.

“We are in talks with the regulators in all of the jurisdictions impacted by this acquisition, including New York,” said MedMen spokesman Daniel Yi. “The first step in any acquisition is for the two parties to agree to the terms and enter into a binding contract. Then you go seek approvals from all the relevant regulators. We have begun that process now.”

New York’s Department of Health, which oversees the state’s still-nascent medical marijuana program, said Monday that any merger proposal submitted to the agency for approval must be in compliance with state law. There are also requirements regarding ownership changes, said department spokeswoman Jill Montag.

“Regulations prohibit a registered organization from changing the composition of its ownership without prior written approval of the Department of Health,” she said. “MedMen and PharmaCann do not have approval from the department to conduct this transaction, and at this time the department has insufficient information to determine if approval can be granted.”

MedMen said it expects the transaction to close within six months to a year. It declined to speculate on its plans should New York reject the deal.

“It would not be proper for us to get ahead of the process,” Yi said. “We are currently in talks with regulators and we feel confident about the outcomes.”

In a news release issued Monday, MedMen said that it will use “commercially reasonable efforts” to transition licenses to a third party if it is unable to gain regulatory approvals within a two-year time span, with proceeds going to the company and its investors.

Founded in 2014 in Oak Park, Ill., PharmaCann was one of the five original organizations registered to operate grow sites and retail stores in New York, which went live with its medical marijuana program in January 2016.

The firm quickly became a major player in the industry, and today is considered one of the nation’s leading providers of medical cannabis with operations in Illinois, New York, Maryland and Massachusetts, and planned expansions in Michigan, Ohio, Pennsylvania and Virginia.

Its facilities in New York include a cultivation center in Orange County and dispensaries in Albany, the Bronx, and Central and Western New York.

MedMen, meanwhile, had become a major player of its own, primarily out west, selling both recreational and medical marijuana. It entered the New York market last year when it bought out Bloomfield Industries, one of five original organizations licensed to operate in the state.

But it didn’t garner much attention until this past spring, when MedMen opened its first dispensary in Manhattan on pricey Fifth Avenue. The move appeared to be a gamble that New York would soon legalize recreational marijuana, since the state’s tightly regulated medical marijuana program is small by industry standards and unlikely to generate sizable revenues without significant expansion.

Indeed, New York appears poised to jump on the recreational bandwagon. Gov. Andrew M. Cuomo in January ordered a study into a regulated, adult-use program, and by June the Department of Health concluded such a program would have more positives than negatives.

A task force is currently researching and crafting legislation for consideration in the upcoming 2019 legislative session, and public hearings on the matter are being held statewide.

MedMen said Monday that it has consistently advocated for full legalization of marijuana, as well as an increase in the number of licenses and dispensaries.

“We believe that legal, regulated cannabis leads to safer, healthier and happier communities,” Yi said.

Original Article at https://www.timesunion.com/news/article/Will-mega-marijuana-deal-get-approval-in-New-York-13311377.php

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[Winner] November 1, 2018 Giveaway (Episode 2)

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Automatic Weapons to host November CannaMaps Giveaway!

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Marijuana stocks to watch: Meet the drugmaker making cannabis-based medicines for autism, cancer and more

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Marijuana stocks to watch: Meet the drugmaker making cannabis-based medicines for autism, cancer and more

The following article is part of a package of stories that MarketWatch is publishing to mark the start of full legalization of cannabis for adult use in Canada on Wednesday.

The cannabis sector has been making waves lately, from plans for full legalization in Canada this week to companies seeing the potential for CBD-infused drinks.

But cannabis is expected to have many medical applications. One of the major players in the space is the Cambridge, U.K.-based GW Pharmaceuticals PLC GWPH, +2.66% which has been working to develop and sell cannabinoid medications for the last 20 years.

Epidiolex, the company’s lead therapy, became the first cannabis-derived drug in the U.S. in June, when it was approved for seizures associated with two rare types of childhood epilepsy. The drug is expected to come on the market in the next month.

Drugmakers commonly make their medicines synthetically — think a lab, not a greenhouse. But because its medications employ cannabinoids, GW Pharma is also involved in agriculture, growing cannabis plants both in partnership with another company, British Sugar, and on its own.

Epidiolex, for example, is made from cannabis plants that have a very high percentage of cannabidiol (CBD), a component of cannabis that is distinct from the psychoactive component, THC.

GW Pharma then extracts a purified substance with a high concentration of CBD and mixes it with sesame oil to make a syrup. Patients with the two diseases it was approved for, Lennox-Gastaut syndrome and Dravet syndrome, can consume Epidiolex on its own or mix with food.

So does Epidiolex’s U.S. approval merely mean that CBD helps those with these diseases — and potentially more down the road?

In other words, patients could buy CBD from other sources, especially since GW Pharma plans to charge about $32,500 a year for Epidiolex. (Notably, though, Epidiolex “comes at a slight discount” relative to a common anticonvulsant taken by Lennox-Gastaut patients, Eisai’s Banzel ESALY, +1.62% according to Stifel analyst Paul Matteis.)

Stephen Schultz, vice president of investor relations, says: “not exactly.”

“Our position on the matter is we do what we do because we believe physicians and patients desire a FDA-approved medicine. And they do that because they prefer that and believe there are specific things that come with a FDA-approved medicine,” he said, including consistency in the product, health insurance coverage, dosing instructions, and information for physicians about side effects and potential interactions with other drugs.

Epidiolex, “even though it has what, relatively speaking, seems like a fairly high price, actually the cost to the patient is much lower than any reasonably high-quality, artisanal CBD product at clinically-meaningful doses,” because Epidiolex would be covered by insurance, Schultz said.

Drug pipeline and intellectual property

GW Pharma is developing Epidiolex for two other medical conditions, and has other products in clinical trials for autism spectrum disorders, the aggressive cancer glioblastoma, schizophrenia and more.

CBD is also thought to have potential in more broad-based conditions like anxiety and depression.

Asked about these, spokesperson Schultz said that the company’s list of drugs in development represents “only a fraction of the work we’ve done.”

“We have a treasure trove of evidence of how cannabinoids can be utilized in the therapeutic market, beyond what we described in our current pipeline,” he told MarketWatch.

GW Pharma also differs from other biopharmaceutical companies in that it can’t obtain a composition of matter patent on cannabinoid itself, or the cannabis plants it grows, because they are naturally-occurring.

But the company does patent the process it uses to make its CBD medicines and the use of those medicines in specific medical categories, Schultz told MarketWatch, “and we believe those patents are very defensible.”

Because Epidiolex is considered an “orphan drug” in the U.S., it has a market exclusivity period of seven-and-a-half years, as well as 12 patents either granted or allowed by the U.S. Patent and Trademark Office.

GW Pharma is also studying Epidiolex in other conditions — including an ongoing phase 3 trial in tuberous sclerosis, for which results are expected next year — and is working on a capsule version, two strategies commonly employed to increase patent protections on a product.

GW Pharma also has patents on another product, Sativex, a more complex compound that includes both CBD and THC and has already been approved in many other countries.

What business is GW Pharma in: recreational or medical?

GW Pharma is entirely focused on cannabinoid medications, and is not involved in recreational cannabis.

Supply agreements

GW Pharma breeds cannabis plants “to have a specific fingerprint, to meet a specific need,” Schultz said, then clones them so each generation is exactly the same.

The company works with British Sugar to grow cannabis plants, leasing glasshouses at a location that Vice called “Britain’s biggest weed greenhouse,” as well as growing its own cannabis plants, including for its Sativex product.

How much does it grow and what are the costs?

GW Pharma’s Schultz declined to discuss quantities and costs, except to say “we grow a lot,” all in the United Kingdom.

How much can it eventually grow?

GW Pharma has invested in expanding its manufacturing capacity in recent years, Schultz told MarketWatch, expecting high demand for its Epidiolex upon the U.S. launch.

“As we need to expand growing and formulation capacity in other areas, we should be able to do that quite effectively,” Schultz said, describing the process of growing cannabis as “straightforward.”

“We are quite experienced in sophisticated growing techniques. But in the end it’s an agricultural process — we can grow as much cannabis product as we need to.”

GW Pharmak’s U.S.-listed shares have gained 11% in 2018, while the S&P 500 SPX, +1.98%  has gained 4% and the Dow Jones Industrial Average DJIA, +1.92%  has gained 3%.

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Original Article at https://www.marketwatch.com/story/marijuana-stocks-to-watch-gw-pharma-is-a-drugmaker-that-grows-its-own-cannabis-plants-2018-10-16

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