Recent news from Canada reveals that Medical Marihuana Access Regulations (MMAR), which has allowed individuals to grow their own marijuana since 2001, will not come to an end on April 1st. As a result, 40,000 MMAR licensed producers will be able to continue to grow marijuana for personal use.
An injunction was brought by the law offices of Conroy & Conroy on behalf of four persons with Personal-Use Production licenses (PUPL) to stop Medical Marihuana Purposes Regulations (MMPR) from nullifying their right to grow for personal use. On March 21, 2014, a Federal Court judge granted the injunction, temporarily allowing PUPL growers who were already licensed as of September 30th of last year to continue to grow their own medical marijuana for personal use.
MMPR VS. MMAR?
Health Canada is determined to implement MMPR. But maybe not for the reasons we all like. If the goal is to allow greater access to marijuana for medicinal reasons, Health Canada is determined to treat marijuana as a drug with security and safety risks.
Perhaps we can look at MMAR and MMPR as two lobbying forces that have the power to push the Canadian government towards a paradigmatic shift that accepts marijuana as medicine, not as a drug.
Although their interests do conflict in the short term, it is in the interest of both MMPR firms and MMAR patients to have the government change its stance on marijuana. The current market of 40,000 patients is a pittance in comparison to the estimated 3 million users of marijuana in Canada, further excluding the exportation market.
MMPR has power in money. MMAR has power in numbers. If aligned, they could form the fulcrum to institute legalization in Canada.
Health Canada, A Common Enemy?
In a statement released immediately following the Federal Court's decision, Health Canada said it was determined to implement MMPR. It also warned that it is "important for Canadians to remember that marijuana is not an approved drug or medicine in Canada." This is a step backwards.
The government's decision to allow MMAR to continue temporarily means that the courts, unlike Health Canada, recognize that the MMAR patients need marijuana for medicinal purposes. This is a step forward.
While MMPR may seem like a step forward towards legalization, it actually redefines marijuana as a narcotic drug. The purpose of MMPR was to address the health, security, and safety risks that MMAR created. Ironically, it was the strict regulation of marijuana that has led to such risks and to the growth of the black market. MMPR was created in the interest of the health and safety of Canadian citizens. But treating marijuana as a drug has been the problem all along.
Medical Marijuana's Real Foe
Yes, I have written approvingly about MMPR. MMPR is a step in the right direction. But it is also becoming clear that this new legislation antagonizes MMPR's core market. In reality, MMPR's market is much wider than 40,000 patients that have been able to use medical marijuana in Canada since 2001. The real market is unknown. Government's fierce regulation over marijuana has allowed a black market to manifest. MMPR will allow us a glimpse into the real size and dollar power of this market.
Although it might be more profitable in the short-term for MMPR licensed producers if MMAR ends, the new program has the potential to create a schism that divides marijuana advocates rather than unites.
With MMAR allowed to continue, a more smooth transition can take place. Individual patients will have the option of either growing their own or accessing it from a private company.
We are forgetting that both MMAR and MMPR were created in the interests of the patients who need medicinal marijuana. Although short-term profits are nice, the move towards commercialization is about wider access and establishing a precedent that the US can soon follow.
The Real Canadian Market
The 40,000 patients licensed to grow their own marijuana represent a fraction of the total population that requires this herbal remedy. Under MMPR, Health Canada has estimated it will grow to 400,000 by 2024. One source from Modern Mobility Aids (OTCPK:MDRM) has suggested that the Canadian market may represent upwards of 1.9 million.
A report from Canada Drug Summary states that from 9.1% to 11.4% of Canadians use marijuana, representing between 2.68 million and 3.35 million of the population. Of those who reported using marijuana, "about 25% of Canadians aged 15 and older who used cannabis in the past three months reported that they used this drug every day." If these numbers are correct, I estimate that the core Canadian market represents 753,000 not 40,000.
MMPR is a new beast and has yet to be tested. The real market for is unknown. Under MMAR, there were more restrictions on who can and cannot access medical marijuana. This has led to an injurious black market.
Thomas Kuhn was famous for writing Structure of Scientific Revolutions. His main argument was that ideas do not accumulate. Rather society must accept new principles and logical understandings of the world in order to accept new ideas. Paradigmatic shifts must take place before new scientific principles are incorporated.
I believe we are seeing a historic paradigmatic shift for marijuana. It is a gradual process. But the historic reforms are leading the way.
Marijuana's logic for being regulated as a drug is a formed out of a tautology. Because it leads to crime therefore it should be regulated. But the underlying cause of it leading to crime is caused in the first place by treating it as a drug. Dr. Sanjay Gupta's two-part documentary series Weed-1 and Weed 2 has demonstrated to the wider public that we are not dealing with a drug. We are dealing with medicine.
Abattis Bioceuticals (OTCQB:ATTBF) has illustrated that marijuana contains Cannabanoids, or chemical components, that have varying medicinal properties: Cannabidiol (CBD), Tetrahydrocannabinol (THC), Cannabinol (CBN), Cannabigerol (CBG) and Cannabichromene (CBC) Tetrahydrocannabiuarin (THCU). These chemical compounds have demonstrated medicinal benefits that help with chronic pain, lupus, cancer epilepsy, crohn's disease, schizophrenia, PTSD, and many more conditions.
With new and different medicinal uses being found every day for marijuana, we are slowly seeing paradigmatic shift towards understanding marijuana as medicine.
When Marijuana Is Treated Like A Drug
Marijuana is not a drug. It is medicine. Sometimes those lines get blurred. Even though we use "drug" interchangeably to describe medicine, drugs hurt people. Under MMAR, marijuana is still a drug. Even under MMPR it is a drug. People get hurt, not by marijuana itself, but by the laws that criminalize it as a drug.
The Canadian Centre on Substance Abuse (CCSA), a moralist group that advocates for greater regulation over marijuana, ironically articulates the social damages regulation can cause as a schedule II controlled substance:
"Cannabis is a Schedule II drug under the Canadian Controlled Drugs and Substances Act, meaning that growing, possessing, distributing and selling cannabis are illegal. The possession of cannabis can result in less than five years' imprisonment; its production can result in seven years' imprisonment; and trafficking it can result in life imprisonment. A cannabis-related conviction results in a criminal record, which can affect education acceptance, employment and travel"
The amount of people whose lives are ruined every year from this gratuitous governmental regulation is astounding. Ironically, the CCSA sees the data but doesn't take responsibility for its complicity in that data. It uses this data to tautologically argue for more control:
"In 2011, police reported more than 113,100 drug crimes, of which more than half (54%) were for the possession of cannabis. There were a total of 61,406 arrests related to possession of cannabis and 16,548 arrests related to production, trafficking and distribution of cannabis during 2011. The 2011 arrests for cannabis possession rose by 7% from the previous year. However, the 2011 arrests for trafficking, production and distribution of cannabis decreased by 11% from the past year."
As a result of regulation, crime goes up and people are unfairly incarcerated, sometimes even killed by warring gangs or even police officers, for a plant that only heals.
The ingestion of marijuana has never directly caused a person to die. No one overdoses from marijuana. There are some statistics to suggest that marijuana increases the risk of driving fatalities. But even these numbers are skewed since alcohol was found in the driver's blood in nearly all fatalities where marijuana was detected.
Whereas Alcohol, Tobacco, Cocaine, and Heroine have proven track records for being lethal, marijuana has only been shown to be medicinal. The only negative effects it has on a population comes from its policing.
MMPR is a milestone for marijuana. Not just because it will enable marijuana to have a larger reach, it also creates a very powerful lobbying friend: money. "Cannabis Inc." knows of its demand and wants to play. MMPR lobbyists will eventually get their way. But they should be diligent not to damage marijuana's reputation in the process.
Don't forget, the market for Canadian licensed producers does not stop at the border. Don't forget about the new export laws. The market may be bigger than we fully grasp.
With Health Canada legalizing commercialization of medical marijuana, it has unwittingly created a powerful arsenal that will fight to capture that 800,000 to 4 million Canadian legal market:
- Bedrocan Canada Inc.
- Canna Farms Ltd.
- CanniMed Ltd.
- Delta 9 Bio-Tech Inc.
- GreenLeaf Medicinals Ltd.
- In The Zone Produce Ltd.
- Mettrum Ltd.
- MedReleaf Corp.
- The Peace Naturals Project Inc.
- ThunderBird Biomedical Inc.
- Tweed Inc.
- Whistler Medical Marijuana Corp.
As our governments realize the economic potential for this positive plant, they too will get high on the green. In the meantime, Canada will have to play moderator between MMPR producers and MMAR growers. But these two sides should realize that their goals do not conflict in the long-term. Both want this magical medicine to be accessible and deregulated.
Canada will be the model. As politicians realize that constituencies are happier with commercial marijuana, since they can access their medicine more readily and more safely, and that treasury is filling its coffers from taxes, it won't be long before more governments adopt this paradigmatic shift. Uruguay is set to do so come April 1st.
Investing In "Chronic" or "Schwag"
The injunction that was upheld on March 21, 2014 might give some investors reason to pause. The recent enthusiasm for medical marijuana might have a backlash on those fictitious or "schwag" companies posing as the real deal. But for the legitimate companies or "chronic," this is just the beginning. Tweed Inc. (TWD) is set to have its public offering sometime in April. It will be the first public company that legally sells marijuana.
For the contrarian investor, this injunction is a blessing. This presents a buying opportunity for those investors in it for the long-term. With so much enthusiasm for Canadian pot-stocks, investors have been jumping on the bandwagon for any company that mentions both "marijuana" and "Canada" in its bio. This Monday will be a "stress test" for investors to see whether they have been investing in "schwag" or the "chronic."
This is a high risk/high reward industry. So far we've been enjoying the rewards. Now we shall see what happens when investors realize the risks.
Disclosure: I am long ATTBF, MDRM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. And I will be long on TWD
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