Navigating the challenges and opportunities in the world’s two biggest medical cannabis markets – California and Canada
Cannabis legalization seems like a radical public policy and economic shift – and while it certainly is recreationally, states like California first legalized medical cannabis in 1996. In Canada, where recreational cannabis will become legal across the country next summer, patients have had legal access since 2001. With a shared element of first-to-market advantage, California and Canada have since emerged as the two largest medical cannabis markets in the world – although they differ greatly in both market and scale of supply. For instance, Canada’s highly regulated medical cannabis industry has approximately 200,000 patients registered to receive medical cannabis products from fewer than 100 licensed producers. In contrast, estimates in California peg the number of medical cannabis users at more than 2.5 million, with tens of thousands of small producers and dispensaries spread throughout the state. But there are challenges with such a large number of small producers in California. A study conducted last September by Steep Hill Labs found that 86 percent of medical cannabis currently available in California contains harmful pesticides. Similarly, Canada has seen a banned-pesticide scare within the medical cannabis industry, resulting in major product recalls and the threat of fines of up to $1 million. Business of Cannabis sat down with Leith Pedersen, President and Co-Founder of Sunniva Inc. (C-SNN) to learn more about his experience and advice on navigating between the two markets. Sunniva is a vertically integrated medical cannabis company committed to cultivation, production and distribution in Canada and California. Business of Cannabis: Tell us a bit about your current focus.Leith Pedersen:
Well, at Sunniva, we’re taking a unique approach. For starters, we’re entering the California market first. We have started construction of a state-of-the-art, 500,000-square-foot facility in Cathedral City, CA, that will not only be pesticide-free, but reduce the energy and water requirements of commercial-scale marijuana growing by up to 90 per cent. We’re also confident enough in the promise of pesticide-free, sustainable cannabis production that we’re planning a 700,000-square-foot facility in Oliver, BC, which will adhere to the same strict standards. BofC: A medical angle underlies your growth plan – tell us a bit more about this.LP:
Sunniva is focused on two streams – ensuring safe and consistent medical cannabis products and formulations that are free from pesticides, and better patient and doctor access to cannabis education. Sunniva’s wholly-owned Natural Health Services (NHS) is Canada’s largest referral network of medical cannabis patients to licensed producers in Canada and operates eight clinics throughout western Canada and Ontario with more than 76,000 active patients. NHS connects patients with safe and effective medical cannabis products through licensed producers and gives them the ability to walk in and talk freely and openly with medical staff about the potential benefits of medical cannabis. BofC: Once they become your patients, how do you continue to educate them on what might be the best medicine for them? LP: We proactively follow up with our patients every 90 days to ensure that prescribed products are meeting their needs. We look for unintended side effects, review dosage, and answer any questions or concerns they may have. As one of the largest players in the medical cannabis space in this country, we have significant experience with patient care in real clinical settings – frankly experience that has been lacking due to legal restrictions over the past many decades.
BofC: What is behind your approach?LP: We are entirely focused on solving what we see as the industry’s biggest challenges: the lack of low cost, high quality, safe medical cannabis in the marketplace; access to educated and informed physicians who understand medical cannabis; and, just as importantly, bringing credibility to a stigmatized and misunderstood medical cannabis market. Addressing these challenges is critical to a healthy industry and marketplace.
BofC: What is your advice for Canadian companies looking to engage in California?LP:
The medical cannabis market in California is a complex ecosystem. Anyone interested in doing business there not only needs to understand pre-existing stakeholder relationships, but they must invest their time in building trusted public and private sector relationships. We are constructing what is the largest production facility in the state. We have taken our time during development to ensure everyone – from community members to state legislators – fully understands our intentions. It has been an intelligent and measured approach. This is how we have been successful. BofC: What about advice for California companies looking to engage in Canada? LP: First, there are fewer players with less experience. While governments are still sorting through a full range of considerations for the opening up of the recreational market, Canada is a progressive society with majority public opinion in favour of legal cannabis – quite similar in these respects to California. We expect the opening of the market in Canada will have its bumps, but on balance it should be a rapid and smooth transition. Expectations are that there will be a significant shortfall in quality supply after legalization in July of this year. That is in part why we are developing a large-scale facility in Oliver, BC. Such opportunities will not always be there, so time is of the essence.
BofC: Looking at the year ahead, what is the most exciting thing about the Canadian market?LP: As a medical cannabis company, we look forward to the opening up of attitudes – the removal of the stigma that has held back medical research and science. We are excited about expanding our clinic network and playing an ever-greater role in patient and physician education. And, of course, we are excited about breaking ground on our 700,000 square foot production facility in British Columbia. It promises to be quite a year for all of us!
This interview has been edited for brevity and clarity.