Many years ago, a Malaysian herb was touted as a remedy for all types of aliments common among Malaysians. The entrepreneur who promoted the herb made a lot of monies for quite a while.
Now, a similar herb (weed) is being marketed as medicines and wellness products to remedy various types of ailments common among Europeans, Americans and Canadians. The herb (weed) is cannabis.
An interesting article by John Arlidge in the Sunday Times on November 17th, 2019 noted that cannabis-based products are getting a lot of consumers’ attention.
It was reported Mike Abbott used to be a north London policeman who arrested people for smoking marijuana, but at 3.00 pm on a warm Tuesday afternoon he takes me to buy cannabis in Camden Town. “I know it’s legal, but it still feels a bit odd,” he says as he examines the cannabis oils in the LDN CBD store, before recommending I buy the 5% strength bottle. At £35 for just 10 ml, it had better be good.
Abbott is not just there to help me. He is checking out the competition. He has had something of a career change after leaving the London Metropolitan police, and is now in the marijuana business himself. He joined a Manhattan-based medical cannabis start-up called Columbia Care and has risen to be chairman. The firm makes and sells cannabis-based medicines, which, under doctors’ orders, can be used to treat conditions such as epilepsy. Separately, it makes over-the-counter wellness products — oils and creams — that users say help with everything from anxiety to irritable bowel syndrome.
It’s tempting to dismiss men like Abbott as potheads with a dream — but that could be a big mistake. Marijuana-based prescription drugs and wellness products are growing like weeds. About one in 10 British adults have tried them, according to surveys conducted this summer by Dynata and YouGov. Some analysts reckon the products are more popular than vitamin C supplements. The consultancy Prohibition Partners claims the sector as a whole could be worth up to £100 billion in Europe within the next 10 years. That would put it on a par with the brewing industry.
Britain is emerging as a cannabis research and development hub, thanks to its strong medical research and pharmaceutical sectors. One Cambridge-based firm, GW Pharmaceuticals, is the world leader in licensed prescription cannabis medicines. It has created two drugs that have been approved for use to treat multiple sclerosis and two severe forms of childhood epilepsy, earning it a market capitalization of more than £3.5 billion. Chris Tovey, its chief operating officer, describes the medical marijuana sector as “amazingly exciting for the UK”.
So what exactly are the new marijuana products that are generating such high hopes? First, it’s perhaps best to say what they are not. They are not about smoking weed. Indeed, most people in the medical and wellness cannabis business are at pains to distance themselves from bongs and Rizlas because most argue that the superstrong “skunk” sold illegally by many dealers contains dangerously high levels of delta-9-tetrahydrocannabinol (THC). That’s the psychoactive compound in the cannabis plant that gets you high, but which can also lead to mental health problems such as anxiety and paranoia, and may increase the risk of schizophrenia and bipolar disorders. For these reasons, cannabis remains a class B drug in Britain, possession of which can lead to a jail term of up to five years.
There are two main types of cannabis product that can be consumed legally in various countries. At the formal end of the sector are licensed cannabis-based drugs — usually solutions or oils — that can only be prescribed by specialist doctors. These contain strictly controlled amounts of THC as well as cannabidiol (CBD), which is one of more than 100 active chemical compounds found in the cannabis plant.
Two of the most important cannabis-derived drugs, made by GW Pharma, are Epidiolex, for epilepsy, and Sativex, for multiple sclerosis. Epidiolex is licensed for use in America and, since September, in Europe, including the UK. Sativex is also licensed for use here. Before other cannabis-based drugs can be formally approved in Britain, the Medicines and Healthcare products Regulatory Agency and the National Institute for Health and Care Excellence say more evidence of their safety and effectiveness is needed. Nevertheless, some families can obtain a special licence to use them. Charlotte Caldwell, the mother of Billy Caldwell, a 13-year-old boy with severe epilepsy, became a test case last year when she tried to bring cannabis oil from Canada through Heathrow airport to treat her son’s seizures. She was prevented from doing so. But when Billy’s seizures worsened and he was hospitalized, Sajid Javid, then home secretary, granted his family an emergency licence to use the drug.
At the other end of the scale are cannabis wellness products. They contain CBD but zero or minuscule amounts of THC. That makes it legal to sell them over the counter here, in America and in many other countries. They include vape pens, pills, chocolates, truffles, gummies (chewable sweets), marshmallows, beers, lotions, oils, coffee, cosmetics, blemish creams, juices, bath bombs and spring water. There’s even a cannabis hot dog. These products took off in America after the legalization of recreational cannabis in some states created a consumer appetite for all manner of new products and the craze soon crossed the Atlantic.
Their manufacturers and retailers claim the products are non-toxic, non-addictive and have few or no side effects. Many retailers — even though the lack of scientific proof of their effectiveness means they are not supposed to — suggest to buyers when they visit CBD shops that these products can treat a large number of ailments including pain, anxiety, depression, diabetic complications, Crohn’s disease, insomnia, irritable bowel syndrome, skin complaints, menstrual pain, arthritis, post-traumatic stress and migraines.
It’s the idea that extracts from a single plant can create both prescription drugs that can treat something as life-threatening as epilepsy and also freely available wellness products for everything from period pain to restless leg syndrome that is getting everyone so excited. “Cannabis is the most broadly therapeutically useful substance, more even than aspirin,” argues Cam Battley, chief corporate officer of Canada-based Aurora Cannabis, the world’s largest medicinal cannabis company, which has 2,800 employees in 24 countries.
Can this be possible? Even cannabis evangelists concede much more research is needed. However, it is beyond doubt that we are biologically primed to respond to cannabis. We have native cannabinoid receptors in our body, forming something doctors call the endocannabinoid system. It’s one of the mechanisms our body uses to regulate how and what we feel — everything from anxiety to physical pain. Get the balance of THC and CBD right in a powerful prescription drug and it can be used to treat serious illness. Get the right amount of CBD in a wellness oil or cream and it can help to create a “full body and mind effect” to help ease everyday aches and pains. Or so the cannabis enthusiasts say.
Anthony Atterbury, 51, is one. He was a senior firefighter in the West Midlands, but had to quit when he contracted multiple sclerosis. “The chronic back and leg pain was unbelievable,” he frowns. “I had to use a wheelchair. I used to go out and save people’s lives!” Doctors prescribed antidepressants and painkillers, “but they left me tired and weak”. Then a friend suggested he try CBD. He started taking one gummy a day infused with 25mg of CBD. Within three days, “the pain reduced by 70%. I could stand unaided for the first time in a year.”
It’s not hard to see why such sufferers, who will try almost anything to relieve chronic pain, might become cannabis converts. It’s less obvious why cannabis-based products should have taken off so rapidly in wider society. The answers emerge when I attend Cannabis Europa, a conference for anyone in the marijuana game — prescription drug or wellness product — that was held in London this summer for the second time. Talking to delegates and attending lectures and business pitches, it soon becomes clear that cannabis combines three of the most powerful forces in consumer society and modern business.
The first is disruptive technology. The conference hall on the South Bank was crammed with scrappy young entrepreneurs dreaming of getting rich by creating the perfect “cure all”. That’s the reverse of the norm. The drugs market tends to be the preserve of giants such as GlaxoSmithKline and AstraZeneca because it usually takes years and billions of pounds to develop, test and patent drugs. Cannabis is more of a level playing field because the plant occurs naturally, which means almost anyone can get a licence to extract oil from its leaves and create a CBD product without infringing patent law. Finding backers is easy, especially in London, where venture capitalists are always looking to invest in “the new, new thing”. There’s big money to be made. The mark-up on CBD-infused products over “normal” ones — CBD water versus mineral water, for instance — can be tenfold.
The second force the cannabis sector is harnessing is women. They drive three-quarters of health and wellness spending and anecdotal evidence suggests that rises to 80% when it comes to CBD. Women are also behind two-thirds of wellness marijuana retail start-ups. Outside the conference I meet Floriane von der Forst and Marisa Schwab, who set up a CBD retail brand called the Chillery in London last year after getting bored of working for big corporations. “Women find the most uses for cannabis products because they help with problems many think conventional companies have failed to solve,” Schwab says. She lists some of them: stress, sleep issues, chronic pain and skincare. “It also aids relaxation, which can help with sex,” von der Forst adds with a smile.
The third force is the growing consumer desire for “natural” products. Makers and retailers at the conference stress the earthy properties of cannabis, especially in wellness products. They boast of “single origin”, “small batch” treatments. This plays well with younger consumers who increasingly crave “clean”, environmentally friendly wellness and are turning away from the traditional “toxic” products that many older consumers use to take the edge off the stresses and strains of modern life — alcohol, tobacco and sleeping pills. “Plants not pills is the oft-heard mantra,” says George McBride, founder and CEO of Hanway Associates, a consultancy that advises entrepreneurs in the medical and wellness cannabis sectors.
All the hype, the notion that prescription and wellness marijuana products are right for now, raises a tricky question, however. Could all these products — apart from the most rigorously tested cannabis medicines — merely be the latest fad imported from America: the new avocado toast? Do they — can they — really do all the things their proponents claim?
Philip McGuire at King’s College London has some of the answers. The professor of psychiatry and cognitive neuroscience works in the perfect spot for his studies. The nearest Tube station to KCL is Brixton, where the concourse smells like a 1960s student party. He has been conducting clinical trials on the effect of CBD on patients with psychosis, or people who are vulnerable to psychosis, for more than a decade. He describes the results as very encouraging. “We’ve done two phase II trials and in both we found that CBD reduced psychotic symptoms,” he says. Better yet, there were none of the common side effects of mental health treatments, such as weight gain or loss of libido. “That’s a big deal.” He adds that there’s evidence that CBD-based prescription drugs may be useful for treating anxiety. “One of my colleagues, Professor Jose Crippa, did this sadistic experiment where he told people, ‘OK, you have to give a lecture that will be videotaped and then analysed by a psychologist.’ Very stressful. Giving people CBD beforehand reduced their anxiety.” Other studies suggest CBD reduces drug-seeking behaviour. A breakthrough drug here could be hugely significant in tackling the opioid abuse epidemic.
So far, so exciting. But there are many issues to resolve before anyone can be sure that cannabis products deliver what their backers claim. Product standards and consistency in the wellness sector are woeful to non-existent. The Centre for Medicinal Cannabis, a trade body, suggests that more than half of the most popular CBD oils sold at high-street chemists, in health shops and online in Britain do not contain the level of CBD promised on the label. One product sold at a high-street shop was found to contain no CBD at all.
Some scientists worry that consumers may confuse low- or no-dose products with high-dose pharmaceutical ones. “The promise of new drugs could be spoilt by people trying high-street treatments that contain a minuscule amount of CBD and saying, ‘I tried cannabis products. They’re useless. Forget it,’ ” McGuire says.
Other scientists take a tougher line: they argue further research will show that the trumpeted benefits of CBD, outside of government-approved medicines, are merely hot air. Dr Andrew Moore, who has spent 40 years researching pain and pain management at Oxford University, warns that the studies conducted on cannabis wellness products so far are limited, poor quality, unreliable and fail to prove that CBD can do what people claim. “I devoutly want it to be a silver bullet, but I think it is snake oil,” he says. “The science isn’t there and the higher quality the research is, the more it demonstrates that these things do not cure people’s ills. It doesn’t work.”
Moore dismisses conferences such as Cannabis Europa as “more like religious events than medical conventions” that “generate appalling froth”. He goes on to issue a telling warning: “We don’t know what the long-term effects of using these treatments may be. Look how long it took us to work out how bad tobacco is for us — three generations. We could be making the same mistake.” Worryingly, the US regulator, the Food and Drug Administration, warned recently that CBD could cause liver damage and has ruled that it is illegal to sell any food or drink to which CBD has been added. An Australian study published last month found some positive results for pharmaceutical THC/CBD products, but overall “little evidence” that they were effective for treating mental disorders. If Moore’s fears are realised, a large number of entrepreneurs and investors might find out the hard way that cannabis is another speculative bubble: the wellness version of Bitcoin.
With so much uncertainty, what does the future hold? One thing is clear: the hype is unlikely to abate. Indeed, the cannabis industry is attracting some powerful new backers. The investment arm of the Church of England recently relaxed a self-imposed ban and is investing in medical marijuana. Edward Mason, head of responsible investment for the Church Commissioners’ fund, which is part of the church’s £12.6bn investment portfolio, says: “We are content with it being used for proper medicinal purposes.” That sounds like approval, of sorts, from on high.
The language of Cannabis
CBD: Cannabidiol is one of 100-plus active chemical compounds found in the cannabis plant. By itself it does not cause a “high”. It may help treat conditions such as chronic pain, insomnia and anxiety, although scientists say more evidence is needed. It is found in wellness products, mainly oils and creams, plus some licensed prescription drugs that can help treat epilepsy and multiple sclerosis
THC: Delta-9-tetrahydro-cannabinol is the principal psychoactive compound found in cannabis leaves. It creates a high, but if consumed in large quantities can also cause anxiety or more serious mental health problems. Barring some licensed prescription drugs, products containing more than 0.2% are illegal in the UK
Bog: Bog is a filtration device generally used for smoking cannabis, tobaccos or other herbal substances.
Rizla: Rizla is a brand of rolling papers and other related paraphernalia in which tobacco or cannabis is rolled to make handmade joints or cigarettes.
Skunk: Skunk is a selection of selectively bred cannabis strains, which scent comes from naturally occurring acids that are reminiscent of barnyard animals. It also acts as natural insecticide.
Business Overview of Aurora Cannabis Inc. (extracted from its annual report)
Aurora was incorporated under the Business Corporations Act (British Columbia) on December 21, 2006 as Milk Capital Corp. Effective October 2, 2014, the Company changed its name to Aurora Cannabis Inc. The Company’s shares are listed on the New York Stock Exchange (“NYSE”) and the Toronto Stock Exchange (“TSX”) under the trading symbol “ACB”, and on the Frankfurt Stock Exchange (“FSE”) under the trading symbol “21P”. The Company’s head office and principal address is Suite 500 – 10355 Jasper Avenue, Edmonton, Alberta, Canada, T5J 1Y6. The Company’s registered and records office address is Suite 1500 – 1055 West Georgia Street, Vancouver, BC.
Aurora is one of the world’s largest and fastest growing cannabis companies. The Company has grown both organically and via strategic acquisitions with the vision of creating a world-class cultivation platform producing consistent high-quality cannabis for both the global medical and the Canadian consumer use markets. Underpinning this vision is Aurora’s differentiated, purpose-built growing facilities, which we believe are the most technologically advanced indoor agricultural growing facilities in the world. These facilities consistently produce high-quality cannabis at scale, with lower risk of crop failure which allows the Company to achieve industry-leading cash costs to produce per gram. We also recognize the need for robust research into the myriad of potential medical uses of cannabis, and as such, have built a leading plant and human science team. With leadership established in the Canadian market, the Company is rapidly growing its international footprint to address the growing number of jurisdictions legalizing medical cannabis use and, to a lesser extent thus far, for adult consumer use around the world. Aurora has established operations in 25 countries around the globe and expects to increase this international footprint as government legislation permits.
The Company’s principal strategic business lines are focused on the production, distribution and sale of cannabis and hemp products in Canada and internationally. Aurora currently views its primary market opportunities as follows:
• Global Medical Cannabis Market:
Production, distribution and sale of pharmaceutical-grade cannabis products in countries around the world where permitted by government legislation. Currently, there are 50 countries around the world which have implemented some form of access to cannabis for medical purposes, and Aurora’s current principal markets include Canada, Germany, Denmark, Italy, Poland and Australia;
• Global Consumer Use Cannabis Market:
Currently, only Canada and Uruguay have approved regulated consumer use of cannabis. Aurora has established operations in both countries. However, the Company believes that the increasing popularity of medical cannabis globally will eventually lead to increased legalization of adult-use consumer markets. Aurora believes its investment in international infrastructure and leading global market position today uniquely positions the Company to capture these opportunities as legalization evolves globally; and
• Global Hemp and Hemp-Derived Cannabidiol (“CBD”) Market:
The Company expects consumer demand for products including hemp or CBD derived from hemp plants to be an exciting growth opportunity in the coming years. In order to capitalize on this market potential, the Company has begun to establish Aurora Hemp – an integrated business unit to execute the global hemp strategy. Aurora Hemp will address both food-based hemp opportunities as well as hemp-derived CBD market opportunities. At the core of this CBD strategy is a commitment to scientific research to examine the use of CBD-derived from hemp as an effective treatment for pain, inflammation, wound-healing and recovery driven by the Company’s partnership with the Ultimate Fighting Championship (“UFC”). The Company believes that the most important near-term market opportunity for hemp and hemp-derived CBD is in the U.S. The Company expects to invest in growing its hemp-market infrastructure in the U.S. both organically and via acquisition as market opportunities develop.
Global Hemp and Hemp-Derived Cannabidiol (“CBD”) Market: The Company expects consumer demand for products including hemp or CBD derived from hemp plants to be an exciting growth opportunity in the coming years. In order to capitalize on this market potential, the Company has begun to establish Aurora Hemp – an integrated business unit to execute the global hemp strategy. Aurora Hemp will address both food-based hemp opportunities as well as hemp-derived CBD market opportunities. At the core of this CBD strategy is a commitment to scientific research to examine the use of CBD-derived from hemp as an effective treatment for pain, inflammation, wound-healing and recovery driven by the Company’s partnership with the Ultimate Fighting Championship (“UFC”). The Company believes that the most important near-term market opportunity for hemp and hemp-derived CBD is in the U.S. The Company expects to invest in growing its hemp-market infrastructure in the U.S. both organically and via acquisition as market opportunities develop.
The U.S. represents the largest cannabis and hemp-derived CBD market globally and as such, Aurora is committed to establishing a substantial operating footprint in the U.S. As part of the U.S. market strategy, we are considering how various state and federal regulations will affect the Company’s business prospects. A number of alternatives to grow our presence in the U.S. market are under evaluation and the Company is committed to only engage in activities which are permissible under both state and federal laws. We believe there are currently market opportunities that are legal at both state and federal levels that can add operating cash flows and become critical pillars of Aurora’s strategy and long-term success.
Market Capitalization of the Four Largest Cannabis Companies
| Companies | Market capitalization in US$ billion |
| Canopy Growth | 5.38 |
| Aurora Cannabis | 2.72 |
| Cronos Group | 2.18 |
| Tilray | 2.00 |
Source: Yahoo Finance as at November 15th, 2019