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Akanda CEO discusses ESG and disruption in European cannabis market

Tej Virk is appointed as CEO of Akanda as Halo Collective reorganises its international assets into the newly formed company

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Cannabis and corporate finance and banking industry executive Tej Virk recently joined African medical cannabis company Akanda as CEO, where he will be leveraging his wealth of experience to disrupt the UK and European cannabis market.

Tej Virk has joined Akanda as CEO from Khiron Life Sciences, where he was President and Managing Director for Europe, establishing Khiron’s medical and consumer packaged goods business in the European cannabis market. Prior to this, Virk was Managing Director for Europe at Canopy Growth Corporation, where he was responsible for driving the multinational expansion of Canopy’s European operations.

Although not currently involved, Virk is also one of the first executives to push for and fund Europe’s largest medical cannabis patient registry, Project Twenty21, for which he was an advisor – driving the opening of the medical flower market in the UK.

The appointment of Virk comes as vertically integrated multinational cannabis company, Halo Collective recently announced the reorganisation of its international assets, Bophelo Bioscience & Wellness Pty. Ltd, and Canmart Ltd., into the newly formed Akanda Corp. 

Scaling potential

Akanda is currently a 100% owned subsidiary but, as Virk highlights, is independent within Halo. The first assets pulled into the company in the UK is its distribution business, Canmart, which is fully licensed by UK regulators and working with multiple LPs in order to import EU GMP medicines, as well as distribute them to clinics and patients in the UK. It will also be utilising the scaled production capabilities of Bophelo, Halo’s Lesotho-based cultivation and processing site, which is located in the world’s first Special Economic Zone (SEZ) containing a cannabis growth operation.

“That is a rare business within the UK, and has so much potential to scale. With my unique capabilities I’m in a position to do so,” says Virk. “Pair that with the absolutely massive grow in Lesotho – which has the potential to be the world’s largest cannabis grow as it is currently licensed for 200 hectares, which is a massive amount of land – over 700 football pitches. Lesotho is a beautiful, pristine country with all the natural sunlight needed to bring quality medical cannabis to the market at a very attractive cost point.”

By utilising Halo Collective’s ecosystem, Akanda has positioned itself to disrupt the UK, European, African, and other international markets. Virk highlights that as a combined company, the focus was split on two markets – recreational and medical.

“I think the focus was split on two markets which shared a similar product – they are sort of the same thing at the end of the day, but with some very important differences when it comes to regulations within international markets – Europe and Asia Pacific medical markets are highly regulated.

“Europe must follow and comply with all of the same types of regulations that you would see with any sort of over-the-counter medicine in a pharmacy or behind-the-counter medicine. This includes safety standards and testing, it is about creating an incredible consistent product within a very tight range of variables –  they must be shelf life stable and almost the same quality you would attribute to box of paracetamol. So, while products have these regulations attached to them, in the US and other markets, where you have adult use recreation, it is a different business, probably closer to consumer packaged goods business.

“Lesotho will provide the start of the supply chain and provide high-quality dry flower for inhalation and flower for extraction to create medicines, then we have the distribution business in the UK. So, we are going to be taking flower from Lesotho and importing it to the UK. We have already seen the first medical cannabis coming from Lesotho from a competitor about a month ago, so this pathway of bringing cannabis from Lesotho to Europe is open, which is a massive de-risking for us. In terms of expansion we will be focusing on distributors in other markets that would help us get to market faster, and looking for distributor partnerships in the near term.”

Leveraging HALO’s heritage to disrupt European cannabis market

Akanda will be providing medical cannabis products for patients worldwide by leveraging award-winning genetic strains from Halo, DNA. Combining this with ideal conditions for outdoor and greenhouse-based cultivation in Lesotho, and the country’s low energy cost and competitive labor market, Akanda will be able to produce high-quality medical cannabis with ultra-low production costs.

“We are leveraging our heritage of being part of the Halo collective and what Halo has done is incredibly well is grow cannabis for the recreational market at scale. I think they have won the war of attrition on the US West Coast – there was a big pricing war from which Halo has emerged victorious, and, in doing so, has established relationships with some of the top brands in California and West Coast markets.

“Those brands and strains are the ones that have survived really difficult markets with some of the most discerning consumers and patients in the world – so, we are actually leveraging those relationships and growing those strains in Lesotho,” commented Virk.

“The ones we are starting with are DNA Genetics – which has won over 200 awards and is the same company that Canopy Growth partnered with in Canada when they launched into the adult use markets. What I like about DNA Genetics is that these are well known strains that have well observed outcomes – yes they are recreational market position, but a lot of the outcomes are medical, which we can see from self reporting of patients and consumers citing same sort of the effects for patient.

“Anxiety and pain relief two are indications in the medical market, so we are taking the data and well known strains and bringing that to the European market as you cannot export to international or European markets because of the federal legality, so we have bridged that gap. We have leveraged the incredible climate which is really like California but with little to no pollution, and we are growing those strains at scale and delivering that at a great price point.

“Europe and Asia Pacific are the first two core regions we will disturb, and really, any market which does medical cannabis which is in our remit. We are trying to narrow our focus on those two, but if we were to sum up all medical cannabis markets we would have an addressable market of over $70bn, so there is quite a lot of potential – including the UK.”

Committed to ESG practices

Akanda’s commitment to environmental, social, and governance practices broadens its potential investor base, while advancing Lesotho’s and the UN’s Sustainable Development Goals.

“We are committed to ESG principals – if there were three things to hone in on, it would be the medical focus within international markets, the high quality that comes with scale, and the way we are defining quality through those trusted brands,” said Virk.

“I think we are uniquely positioned to take some of the best practice in the cannabis space and wrap them in ESG, so part of it starts with our social equity initiative in Lesotho, which is a developing country with a small population. This industry has the chance to bring massive change to the community there in the Mafateng province. We are helping to uplift and install resilience in that local community and this is partly thanks to the initiative of executive chairman, Louisa Mojela, who is a most accomplished business woman having sat on the board of Southern Africa’s top companies, and really brings with her a background of working with charitable organisations.

“We are bringing this industry to people in a region where there is a lot of unskilled labour and teaching them skills in cultivation of cannabis and taking that through to advance roles. We are seeing some people go from working as a grower to working in more complex roles such a regulatory compliance – there are real success stories there.

“The environment is another impact area we are really focussed on such as having neutral carbon footprint, so we have some initiatives around that and zero-carbon cannabis is something that we think is is within our grasp. We are also trying to achieve as many of the UN Sustainability Goals as we can which includes everything from ending hunger to improving education. As a company, we are probably able to achieve 12 of the 17 of the goals, and we are at eight right now. We cannot do all 17 as some depend on government, but as a single company I think we are doing an amazing job.

“We have a charitable trust attached to our subsidiary in Lesotho which is dedicated to donating 10% of our profits to the Mophuthi Matsoso Development Trust which goes towards uplifting the community, building schools, providing education and helping to develop proper programmes. We have already built one school which is incredible to see and it is having a real impact on peoples lives – it is really a driving force for change and a win-win situation for all, benefiting the community, the patients with constant quality medical products and the shareholder because the returns are there.”

Virk added: “I’m really excited to join Akanda – it is probably one of the most exciting companies to be a part of in the space, which I say with some objectivity as I am still new to the role – with this particular company there is so much potential.”

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California must bin cannabis cultivation tax to compete with black market

A new study has concluded that the State’s cannabis tax must be eliminated to move consumers away from illicit products.

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https://reason.org/policy-study/the-impact-of-california-cannabis-taxes-on-participation-within-the-legal-market/
Home » News » International » Akanda CEO discusses ESG and disruption in European cannabis market

California could increase legal cannabis sales and bring in 123 per cent more in total monthly cannabis-related tax revenue by 2024 by eliminating its cultivation tax.

California’s high cannabis taxes are high – as much as USE$90 per ounce, or $1,441 per pound. These taxes are hurting farmers and businesses while the illicit market captures two-thirds of cannabis sales, according to a new study carried out by Reason Foundation, Good Farmers Great Neighbors, and Precision Advocacy.

These taxes mean that California’s legal cannabis market has failed to meet expectations and is just one-third the size expected based on its population and adult usage rates. Additionally, the study estimates that nearly two-thirds of cannabis sales in California are still taking place on the illicit market.

Cannabis taxes average $340 per pound in Oregon and $526 a pound in Colorado, and, due to these lower taxes and greater access to legal products, the report shows that residents in Oregon spend 378 per cent more per capita on legal cannabis. Residents of Colorado spend 335 per cent more per capita on legal cannabis than Californians spend.

Director of drug policy at Reason Foundation, Geoffrey Lawrence, commented: “High taxes are undermining California’s legal cannabis market. California could double monthly cannabis tax revenues by 2024 by eliminating the cultivation tax. 

“Without the cultivation tax, our data show lower cannabis prices would increase sales of legal products, increasing the state government’s general sales tax revenue and more than replacing losses from the eliminated cultivation tax.”

President of Precision Advocacy and legislative advocate of the California Cannabis Industry Association, Amy O’Gorman Jenkins, commented: “We are experiencing first-hand a serious price compression in the California supply-chain in part as a result of the illegal market, high taxes and fees and a patchwork of inconsistent local taxes driving legal operators to the brink of a financial cliff.

“We cannot allow the largest cannabis market in the world to fail. This study provides a roadmap of tax policy solutions for the governor and state legislative leaders to consider immediately.”

The study also recommends reducing retail excise taxes and encourages policies that could incentivise California’s local governments to stop banning the sale of legal cannabis products. It also found that Oregon has one legal cannabis retailer for every 6,145 residents and Colorado has one legal retailer for every 13,838 residents while California has just one legal cannabis retailer for every 29,292 residents.

Policy director of Good Farmers Great Neighbors, Sam Rodriguez, stated: “California’s cannabis farmers are experiencing the biggest challenges of their time. Many farmers are considering going fallow this year. 

“Busy Bee Organics, one of the first woman-owned, sun-grown farmers in Santa Barbara, has already declared she’s not planting this year.

”California’s cultivation tax is regressive and has only contributed to uncertainty about the future of the state’s cannabis farmland economy and whether it can survive. The immediate elimination of the cultivation tax would be a first step in addressing critical issues impacting the state’s legal cannabis market from seed to sale.”

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The problem with “copycat” cannabis edibles

With the rise in popularity of cannabis edibles, the problem with “copycat” products that look like popular snacks should be a major concern for the industry.

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The problem with “copycat” cannabis edibles
Home » News » International » Akanda CEO discusses ESG and disruption in European cannabis market

A recent study has shown that high-THC copycat cannabis edibles that look like well-known snacks increase the risk of ingestion by children.

Edibles are an increasingly popular segment of the cannabis market in the US, with up to 56 per cent of cannabis consumers buying them. Many of these products often use branding and imagery very similar to popular foods, which is raising public health concerns in the country – with nearly 2,000 cases of young children ages 0 to 9 consuming edibles from 2017 to 2019.

The study, carried out by the NYU School of Global Public Health, and published in Drug and Alcohol Dependence, collected hundreds of photos of cannabis products and analysed packaging, finding that out of 267 edibles, 8 per cent closely resembled 13 different snack products.

Read more: CBD gummies market projected to reach £12.1bn by 2028

These findings highlight the risk that these copycat products could be attractive to children. 

Lead author, Danielle Ompad, associate professor of epidemiology at NYU School of Global Public Health, said: “At first glance, most of the packages look almost exactly like familiar snacks. 

“If these copycat cannabis products are not stored safely, there is the potential for accidental ingestion by children or adults.”

Twelve of the products were candies or sweet snacks and one was a salty snack. Eight of the 13 packages used the exact brand or product name of the original product; the remaining five used names that were similar, for example “Stoner Patch Dummies” instead of “Sour Patch Kids”. Seven of the packages used the same cartoon or brand character as the original product.

Read more: Snoop Dogg venture capital firm invests in savoury cannabis edibles

“While each package is likely intended to include multiple doses, few packages indicate the serving size or number of servings,” said Ompad. “Moreover, if we’re considering 10 mg a standard dose, these products could contain an alarming 30 to 60 doses per package.

“Policies to prevent cannabis packaging from appealing to children haven’t stopped copycat products from entering the market — nor have food brands taken legal action against cannabis companies for copyright infringement.

“People who purchase edibles that look like snack foods should store them separately from regular snacks and out of reach of children.”

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New platform aims to transform US cannabis supply chain

The platform aims to provide information sharing, reduce costs, and increase transparency and trust. 

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New platform aims to transform US cannabis supply chain
Home » News » International » Akanda CEO discusses ESG and disruption in European cannabis market

Lucid Green has announced it has raised $10m (~£7.88m) for its UPC platform in a series B funding round. The company is aiming to transform the cannabis supply chain through its LucidIDs, the industry’s first intelligent QR code.

The cannabis supply chain in the US is riddled with challenges for businesses. There are problems with inaccurate product information, inefficient cycle counting, sporadic Certificate of Analysis (COA) compliance and secondary stickering. 

Manual inventory management is also time consuming, expensive and prone to errors. Brands experience increased costs and lower profit margins as a result of compliance and supply chain inefficiencies, and lack the mechanisms to communicate directly with consumers and dispensaries. Distributors face reducing retailer order fulfilment time and turnaround – resulting in higher working capital requirements for their customers.

Read more: Exploring California’s cannabis supply chain

Lucid Green is aiming to solve these problems with its intelligent UPC through its $10m, funding round led by Gron Ventures, with participation by Gotham Green Partners.

Co-founder and CEO of Lucid Green, Larry Levy, commented: “It’s clear that the cannabis supply chain’s status quo is holding the industry back, and Lucid Green is proud to have pioneered the first solutions to benefit all stakeholders.

“We are laser-focused on developing the leading solutions to strengthen our industry. Lucid Green benefits brands, distributors and retailers while delivering a much needed educational experience for consumers that helps to further normalise the industry.”

The new funding will support the recruitment of top tier talent, raise awareness of its technology, and accelerate adoption of its solution.

LucidIDs

LucidIDs utilise QR codes to allowing for true truck-to-shelf inventory intake, reducing manual labor and human errors, and virtually eliminating data cleanliness issues. 

The QR codes permit dynamic information flow which empowers stakeholders to continue adding information about a product through its lifecycle, unlike the status quo of secondary stickering. The IDs have already been used for more than 17 million products.

Read more: Innovating the cannabis supply chain in Europe

The IDs offer brands, retailers and distributors a solution to reduce costs, increase transparency, and drive more sales, delivering data insights and COA management.

Wilder Ramsey, managing partner of Gron Ventures, commented: “Inefficiencies and outdated methods in the supply chain are holding the cannabis industry back from reaching its full potential.

“We are proud to have invested in Lucid Green because the power and promise of their technology and solutions can save all stakeholders time and money, while increasing education and trust among consumers.”

“Our core ethos is quality, consistency and value, and part of our mission is to provide retailers and consumers with the best cannabis products at the best price,” added Skip Motsenbocker, CEO at Pacific Stone.

“Lucid Green is a critical partner for us, and with their LucidIDs, we’re able to directly communicate with budtenders and consumers, increasing education, loyalty and trust. Lucid Green is creating higher profit margins for us thanks to more efficient truck-to-shelf processing, and we think the whole industry would benefit from their solutions.”

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