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US cannabis companies state that banking is the biggest issue facing industry

Banking access can be a huge issue for cannabis companies

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Cannabis companies cite lack of banking access as the biggest issue facing the industry according to a new survey.

Some of the other issues facing the industry were listed as difficulties accessing investment capital, the legacy market, market volatility, big business competition, and taxes.

Researchers conducted a survey of 396 licensed cannabis companies about challenges facing the US industry. Over 70 per cent of businesses said that the lack of access to banking or investment capital was their top challenge. A further 42 per cent said that state regulations were a huge problem with only 39 per cent referring to the influence of the legacy market.

The report also highlighted that fewer than half of those who responded are currently making a profit. In terms of profitability, women respondents and non-white respondents are faring much worse than white, male respondents. Only 40 per cent of those surveyed believe that the industry is ‘heading in the right direction.’

The banking difficulties are often caused by federal laws and regulations that discourage banks and financial institutions from working with cannabis companies. The Safe Banking Act aimed to amend federal banking laws although the senate refuses to debate this issue.

Beau Whitney, founder and chief economist at Whitney Economics said: “Operators are kept up at night worrying about how to survive in an environment where there is little support, extremely strong competition from illicit dealers from one side, and the existential threat of corporate competition on the other. The only solution for operators is to advocate for a level playing field and hope that reform will occur sooner, and not later,”

The ‘U.S. Cannabis Business Conditions Survey Report‘ was conducted by Whitney Economics. They collect data on hemp and cannabis cultivation, processing, investment, manufacturing, regulation and legislation to build insights into the industry.

The survey was conducted in October 2021 and collected responses from businesses in 20 states. It aimed to examine policy, regulations, success and the industry. It will be the first in a series of ongoing quarterly reports into economic conditions.

Medicinal

New agreement to fund Phase II trials for cannabis glaucoma treatment

Emerald Health Therapeutics has signed an agreement with Skye Bioscience.

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New agreement to fund Phase II trials for cannabis glaucoma treatment
Home » News » US cannabis companies state that banking is the biggest issue facing industry

A new agreement between Emerald Health Therapeutics and Skye Bioscience will enable Phase II studies exploring the use of Skye’s proprietary synthetic cannabinoid-derivative therapeutic initially targeting glaucoma.

Glaucoma is the globe’s leading cause of irreversible blindness – affecting nearly 80 million people across the globe – and has no cure.

Skye Bioscience‘s lead programme, SBI-100 Ophthalmic Emulsion, is focused on treating glaucoma. SBI-100 OE is designed to improve the ocular solubility and permeability of a cannabinoid receptor-type 1 agonist. 

So far, preclinical studies have demonstrated that topical application of the nanoemulsion results in enhanced therapeutic efficacy and duration of response, allowing for a potentially once-a-day application to the eye. The results showed superior lowering of intraocular pressure, a key risk factor in disease progression.

Read more: Positive results for cannabinoid targeting multi-billion pain market

Under the new agreement, which would see Skye acquire all of the issued and outstanding shares of Emerald in a share-for-share-transaction, Skye expects to have funding for a Phase II study which is expected to begin in the fourth quarter of 2022, following a Phase I study beginning in the second quarter of 2022.

Chair of the Skye’s special committee and president, CEO and board member of Invectys, Inc., Praveen Tyle, Ph.D., commented: “Skye’s proposed acquisition of Emerald stands to strengthen its balance sheet and ability to advance its well-positioned technology and development platform that has generated promising preclinical data in the past year and a half. 

“Despite the constraints of Covid on all facets of the life science industry, Skye has completed the preclinical preparation necessary to launch its first-in-human study of its lead drug, SBI-100 OE, in the second quarter of 2022. 

Read more: New partnership aims to transform global phytomedicine sector

“We expect regulatory approval to start our Phase I study and begin enrolling patients shortly. The transaction with Emerald is expected to provide funding into 2023 and, importantly, for our planned Phase II study starting in the fourth quarter of 2022.

“The shortcomings of today’s glaucoma drugs are significant for patients. Today we are focused on clinically validating what could potentially be an advantageous new class of therapeutic drug for glaucoma. 

“With this in mind, we are actively designing a Phase II efficacy study to deliver potentially meaningful data, yet optimised to minimise time and cost. We believe we can see preliminary data from this study in 2023, and the nature of this data could be transformational from a validation and value creation perspective. 

“Securing the capital to achieve these goals is vital. We believe that acquiring Emerald and its cash and non-cash assets would provide a more favourable capital cost for our shareholders compared to other alternatives in light of current investment market conditions. 

“In addition, Emerald possesses a research and development facility in the greater Vancouver area licensed to undertake cannabinoid-related research under applicable Canadian law, which could be beneficial to Skye as we continue to progress our R&D efforts.”

Chair of the board’s Special Committee of Emerald Health Therapeutics, Bobby Rai, commented: “We are excited to present this opportunity with Skye to our shareholders. Since announcing the strategic pivot of Emerald last November, we have been working to wind down our past operations, monetise our non-cash assets, and apply our capital to a new investment opportunity. We have searched for a company with differentiated positioning and a pedigree of expertise and experience. We believe we have found it in Skye Bioscience.

“Emerald has always recognised the therapeutic potential of cannabinoids based on our experience with the body’s endocannabinoid system and its modulating and balancing activities in the body. We also recognise that the goal to clinically and commercially capitalise on the potential therapeutic benefits of cannabinoid-derived drugs may benefit from advanced technology and drug products with mechanisms of action or formulations enhanced to realise effects superior to not only natural cannabinoids but to existing approved classes of drugs and those under development. 

“The beauty of this situation is that the underlying cannabinoid that Skye is working with has previously been shown through prior third-party research to have promising potential. And Skye’s recent preclinical work has shown improved delivery of the underlying cannabinoid to the back of the eye and notable effects in reducing intraocular pressure, which is a key risk factor of glaucoma.

“Skye Bioscience has proprietary technology, R&D initiatives to expand its therapeutic capabilities, a strong focus on IP, along with a management team, board, and advisory board with many decades of experience in pharmaceutical drug development and clinical practice, notably in ophthalmology and in fundamental cannabinoid research. This company is uniquely positioned to capitalise on the substantially untapped opportunities represented by the intersection of cannabinoids with modern science and traditional drug development.

“We believe this is an excellent opportunity for Emerald shareholders to potentially benefit from a new class of cannabinoid-derivative drug candidates.”

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Production

Discover Europe’s first registered cannabis seedbank

The bank is home to the seeds of 286 strains, including 19 Cannabis Cup winners.

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Discover Europe’s first registered cannabis seedbank
Home » News » US cannabis companies state that banking is the biggest issue facing industry

Europe now has its first ever legal and registered cannabis seedbank in Copenhagen, Denmark.

As countries across Europe begin adopting more open attitudes towards cannabis, the continent now has its first ever legal seed bank for the plant.

Franchise Global Health has confirmed that its Danish subsidiary, Rangers Pharmaceutical has successfully established the bank which it says is “arguably the largest in the world” with an audited value of more than C$9m (~€8.64m).

The seedbank houses more than 286 strains, including several world-class genetics and the winners of 19 Cannabis Cups.

Read more: Exploring cannabis yield optimisation with PharmaSeeds

Franchise Global executive chairman and CEO, Clifford Starke, commented: “Our goal is to become Europe’s most trusted source of high-quality EU-GMP cannabis. 

“This will be achieved in part by establishing our seedbank as a source for high-quality, Cannabis-Cup winning genetics. 

“Essentially this is 30 years worth of IP from land races all around the world with strong genetic heritage including from Thailand, Colombia and other highly sought after sources of origin.”

The company has stated the bank, which is licensed to store, sell and export cannabis seeds globally under legal international trade frameworks and import and export permits, is a key component to its IP strategy.

Read more: Germplasm selection – from seed culture to tissue culture

Franchise Global is offering a number of strains to the market and has subsequently signed numerous seed purchase orders and strategic agreements with emerging cannabis cultivators and wholesalers. The aim is to further expand global commercialisation opportunities and the orders will be fulfilled in the coming quarters, creating a new source of revenue for the Company and solidifying new global strategic alliances. 

However, Franchise Global will retain its most distinguished strains for its own internal flower production for global markets.

The company has strategically position itself in Germany which it says will act as a key gateway to Europe and beyond as its aims to provide international markets with high-quality medical cannabis products. It has a network of over 1,200 pharmacies in Europe as well as extensive distribution relationships across 18 countries.

To bolster its position in the country, the company has also announced it will acquire German pharmaceutical and medical cannabis products distributor.

Starke commented: “This acquisition will strengthen our position in Germany. The Target Company has significant experience with regulatory requirements, pharmaceuticals and medicinal cannabis.

“We expect it to be a solid addition to Franchise Global’s core position in Germany, providing deeper access to further pharmacies, wholesale distribution channels and advancing our business plan as Germany moves closer to full legalisation of recreational cannabis.

“We are focused on leading the pack in the medical cannabis market in Germany. By merging Franchise Global’s experience with the Target Company’s market presence, we are well on our way to be one of the premier German pharmaceutical and medical cannabis companies.”

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Politics & policy

What can Uruguay teach the UK about cannabis policy? 

Recreational cannabis has been legal in the country since 2013 – one think tank says Uruguay could help inform how to improve criminal and health outcomes in the UK.

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What can Uruguay teach the UK about cannabis policy? 
Home » News » US cannabis companies state that banking is the biggest issue facing industry

As the pressure mounts on the UK to assess its approach to cannabis policy – could policymakers look to Uruguay as an example of successful reform?

With news from Europe in 2021 of legalisation and cannabis reform, the UK’s current approach remains unaligned with citizen consensus. 

Polling in the UK has outlined that the majority of the UK public supports legislation reform, and the All Party Parliamentary Group (APPG) for CBD has recently called on the UK Government to establish a legal industry – highlighting it could create the equivalent number of jobs and income for the economy as the Scotch Whisky industry.

Following London’s launch of a new pilot to divert young people away from the criminal justice system for possession of cannabis, last week also saw an announcement from the Mayor of London, Sadiq Khan, that he is establishing a London Drugs Commission which will assess the UK approach to drug laws.

Read more: UK Government must seize cannabis opportunity, says parliamentary group

Khan has taken a fact-finding visit to LA to see what lessons could be learned in responding to the challenges of drugs. However, whilst the US is one example of how different approaches to cannabis policy could work, cross-party think tank The Social Market Foundation has suggested that the UK could draw lessons from Uruguay, which legalised the plant in 2013 and began commercial sales in 2017.

According to the think tank, the UK’s “outdated” laws are “not fit for purpose” and “mean that we suffer higher crime and worse health outcomes than would be expected under a more liberal regime”. 

Making cannabis illegal to cultivate, possess and sell results in a major loss of tax revenue for the government, with the money instead being funnelled into the black market which is controlled by “violent criminals” and can see consumers using products that may be unsafe for consumption.

Uruguay as an example of liberalisation

The Social Market Foundation (SMF) has conducted cross-country analysis which shows that Uruguay is a leader on cannabis policy. After initial legalisation, the country slowly rolled out its policies, adopting a “health over profit” model – which should be an inspiration for the UK, says the think tank.

SMF Researcher and report author, Jake Shepherd, commented: “Over the last 50 years, governments in the UK have hardly moved their anti-cannabis stance, even as evidence shows it to be less harmful than substances like alcohol, and public perception of the illicit substance has evolved. In contrast, countries across the world are reaping myriad benefits of progressive reforms.

“The need for cannabis policy reform is clear – public opinion on cannabis and demand for it is rapidly changing.

Read more: Brexit – the perfect opportunity for UK to be centre of European cannabis

“By learning from international examples such as Uruguay’s, the UK can put in place the right policy framework to navigate the current system, the unregulated commercial market and balance key priorities of safeguarding public health, reducing criminal activity and delivering economic gain – to ultimately benefit society.”

The think tank highlights that in Uruguay, cannabis can be bought from regulated pharmacies at subsidised prices – which prevents corporate interests from capturing the market, and that the Uruguay Government controls cannabis production to ensure safety and quality of the products on the market, with only a few allowed to produce cannabis.

Read more: Another 4/20 celebration, another year calling for cannabis reform in the UK

Bringing cannabis policy up to date could bring several benefits to the UK, such as legitimising the cannabis market, says the think tank, which is currently valued at £2bn.

A legitimate market could bring in higher tax revenues for the exchequer and improve criminal justice outcomes, as poorer and ethnic minority people are more likely to face criminal sanctions for cannabis-related offences.

Helping young people in the UK

Khan’s recent announcement and visit to LA has been met with some criticism – with Policing Minister Kit Malthouse describing the visit as “baffling”, stating Khan should focus on decreasing knife crime.

However, as Malthouse himself points out – more than 50 per cent of all murders in London are linked to drug use. The UK also has a major problem with young people being used as part of county lines operations to push drugs across the country.

One of the common arguments against the legalisation of cannabis is the dangers that they pose to young people, however, the Social Market Foundation points out that cannabis is the most used illicit drug “especially among people aged 30 and under, with 30 per cent of people having tried it at least once.” 

Legalising the plant would end the use of the black market and would provide the market with the opportunity to restrict sales to those under the age of 18 – a policy that Uruguay has implemented in its recreational sales. 

A recent study, published in the journal Addiction, assessing cannabis use in adolescents ages 12 to 21 found that Uruguay’s approach to cannabis has not further increased the use of cannabis in young people. 

The authors state: “The legalisation of recreational cannabis in Uruguay was not associated with overall increases in either past-year/past-month cannabis use or with multi-year changes in any risky and frequent cannabis use among young people.”

The Social Market Foundation has also suggested international examples that could hold key lessons for the UK including: Oregon, which has seen the State reap high profits and make billions in tax revenue with the rapid expansion of a legal retail market; Portugal, which has saved money on court cases on minor offences, all of which is being reinvested in treatment services; Cannabis social clubs in Spain, which have undermined the black market, though it has failed to tackle organised crime; and, the fact that public safety in Uruguay has improved, as cannabis users interact less with drug dealers.

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