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Bogner Report: Start of hemp production in Europe

Stephan Bogner, Rockstone Research

0 Comments| September 2, 2016

Today, True Leaf Medicine International Ltd. announced a significant purchase order from PetsCorner, the second largest pet store chain in the UK, which will sell the True Hemp product line in all its 174 stores and has plans to expand by another 70 stores by late 2017. As PetsCorner is a leading pet brand in the UK, other brands may now follow, more of such orders could be on the horizon.

For True Leaf, today’s purchase order officially marks the start of production, sales and marketing in Europe. On August 2, True Leaf Pet Europe LLC SARL, a subsidiary based in Luxembourg, was established in order to work in close proximity to European clients and markets, build networks, as well as develop sales (in European currency) and distribution performance. Test runs have been completed and production runs are now scheduled to build inventory for today’s order. Production and sales of the True Hemp product line are already underway in Canada and the US, whereas the company has recently added an online shop on its TrueLeaf.com site. With revenues now being generated on two continents, True Leaf emerges as a global brand, while also showing increased engagement in becoming one of Canada’s next licenced medical marijuana producers.

Above store in Dorking, 35 km from London, is one of PetsCorner‘s most successful stores in the UK:

True Leaf‘s CEO, Darcy Bomford, who owns around 50% of all company shares, commented in today‘s press-release:

“We’re on our way to becoming a truly global brand. Our product was the only hemp-focused pet treat at Interzoo® [the world’s largest bi-annual exhibition of supplies for pets with 40,000 attendees, held May 26-29 in Nuremburg, Germany], and it drew a lot of interest. PetsCorner® was one of those companies. The PetsCorner® order is a great start to our sales in Europe; they are true innovators in the UK market and we look forward to working with them to grow our brand.”

Rockstone is impressed by the speed and dedication that the entire True Leaf team puts together to establish its innovative product line as a globally thriving brand. While not resting on their laurels, following the remarkable feedback they have been receiving from pet owners and pet foods specialists worldwide, the company announced on August 11 to launch 2 new hemp-based products for pets:

“The innovative True Hemp™ soft chews for pets that are generating a buzz in the pet food industry will soon be joined by two new companion products that will give consumers new ways to deliver the benefits of hemp to their pets. True Leaf Pet, the producer of True Hemp™ soft chews, chose the SuperZoo mega pet show in Las Vegas last week to launch True Hemp™ ‘Sticks’ and True Hemp™ ‘Oil’, adding to its popular hemp-based functional product line.

Says True Leaf Pet CEO Darcy Bomford, “The entire product line will offer the powerful True Hemp™ Hip + Joint, Calming and Health formulations in the same ratio for all three delivery formats: chews, sticks and oil.”

Hemp is the main functional ingredient in each product, which provides a source of Omega 3, 6, 9 and also GLA - a substance known to support the body’s response to inflammation. Other active ingredients are added to support the functionality of the hemp in each formula, including innovative ingredients like green lipped mussel from New Zealand, DHA from algae and an amino acid from green tea for a calming effect.

True Hemp™ ‘Sticks’ contain the same levels of hemp and other active ingredients as True Hemp™ Chews. They are grain-free with salmon for added omega 3s and are formed into a rigid ‘stick’ shape that is popular with consumers.

True Hemp™ ‘Oil’ is an innovative blend of hemp, coconut and salmon oil that can be added directly onto a pet’s daily food. Through a patented process, the active ingredients are suspended in the oil blend to achieve the same ratio of active ingredients per measure as a True Hemp™ chew. The unique formulation provides beneficial omega 3 from both plant and ocean sources, plus MCTs (medium chain triglycerides) from liquid coconut oil.

“We now have a full range of products that provide support for joint function, calming and overall good health in a variety of formats,” said Mr. Bomford. “Soft chews for picky or older dogs that are easy to chew and digest, hard sticks for more active dogs in a popular ‘dental stick’ style format, an oil blend with all of our active ingredients, plus healthy coconut and salmon oils. Additional product formats not only increase our retail shelf presence and order sizes, but also appeals to a wider consumer audience which ultimately strengthens our brand,” explained Mr. Bomford.

Independent retailers attending SuperZoo underscored that analysis, responding enthusiastically to the extensions to the True Hemp™ product line. According to Mr. Bomford, True Hemp™ Sticks and Oil will be available throughout North America later this year via True Pet’s established distribution channels to the specialty pet marketplace.“

Rockstone is also impressed by the dedication of True Leaf‘s Chairman, Michael Harcourt (former Premier of British Columbia and Mayor of Vancouver), who sent a letter to all stakeholders on July 25 providing an update on True Leaf‘s recent transformation and remarkable milestones. Shortly thereafter, he sent a formal letter to the Cannabis Legalization & Regulation Secretariat on August 18, making recommendations on the future production and distribution of legalized marijuana in Canada.

Justice Minister Jody Wilson-Raybould has established a task force to advise the Canadian government on how best to move forward with its plan to legalize marijuana. Chaired by Anne McLellan, former deputy prime minister and health and justice minister, the task force is seeking public input and will advise the government on the design of the legislation and the regulatory framework for a new system of marijuana sales and distribution.

True Leaf Medicine International Ltd. is one of 400-plus companies in the process of applying for a licence to produce and distribute medical marijuana under the previous government’s Marijuana for Medical Purposes Regulations (MMPR) program. The new plan to legalize marijuana will replace the MMPR process.

True Leaf Chair Michael Harcourt, the former Premier of British Columbia, has written a letter to the task force outlining the company’s vision for a new plan, calling for both recreational and medical marijuana to be produced and distributed via the same system. Mr. Harcourt’s case and supporting points are as follows:

As the federal government contemplates the means by which it will implement its laudable commitment to legalize marijuana, a task force has been created to advise on the design of a new system. The Task Force is seeking the views of Canadians on issues that are key to that design. They will then provide the federal government with a final report.

This letter represents True Leaf Medicine International Inc.’s response to the call for public input.

PRODUCTION

Among the Canadians most knowledgeable about the safe and secure production and distribution of marijuana are those companies, including our own, which have applied to become licensed producers of marijuana for medical purposes. As one of the 416 applicants in the queue as of June 28, 2016, we agree with the government’s discussion paper that this current regime could be effectively adapted for the full-scale production of marijuana in Canada.

Of course, this process was established to produce marijuana for medical purposes under regulation (MMPR), but it has also generated a repository of knowledge, expertise and skill that can be seen as a formidable asset as the government contemplates wider legalization.

There are currently 33 licensed producers who have been through an exhaustive seven-part process, and as mentioned above, another 416 who are currently working their way through the rigors of the process, which include screening, security clearance, review, pre-licence inspection and, finally, licensing.

Along the way, attrition has been extensive. Hundreds have been refused, rejected, or withdrawn. In a number of cases, products have been recalled to protect client safety. This is a comprehensively and carefully regulated sector, unlike the ad hoc blossom of illegal dispensaries around the country, which have sprouted up to be in position for legalization. Whatever the ultimate fate of those dispensaries, the quality and safety of the product has to remain paramount – and the MMPR companies provide a ready-made source of supply that will comply with the strictest safety standards.

The discussion paper points out that the relatively small numbers of medical marijuana users suggests that adopting the current model would not be in the public interest in the context of the larger number of users expected in a legalized market. Yet in addition to the licenced producers, there are more than 400 applicants at various stages in the queue, and prior to the change in government, movement through the process was characteristically slow. An intensified focus on resolving partially-completed applications will serve to increase supply, while ensuring the quality of that supply. As well, companies with licences have untapped capacity allowing for production increases.

While using an adapted version of the current model may lead to a limitation in the supply at the outset, starting from scratch or instituting a parallel process will undoubtedly introduce troubling uncertainty in quality and security of the supply (at least), as has been the case in the US states legalizing marijuana for the public. The current model, which the discussion paper calls the market-driven competitive model, offers the best start, with a large number of qualified, screened and cleared sources of supply ready to scale up and address the demand.

DISTRIBUTION

Turning to distribution: A number of options have been outlined in the discussion paper, including the through-the-mail system currently used in the distribution of marijuana for medical purposes. Another possibility is modeling the distribution system after the alcohol or cigarette distribution system. One of the key considerations is protecting young Canadians by keeping marijuana out of the hands of children and youth.

While these systems have merit, it is time to acknowledge that marijuana is a unique substance that is sought for its medicinal as well as its recreational benefits, unlike other controlled substances. There is an outside-the-box argument to be made that marijuana distribution should be controlled by or grounded in a coalition of health care professionals, including doctors, naturopathic doctors and pharmacists.

Today, even the illegal dispensaries often go through the formality of requiring the approval of a licensed health professional as a condition of purchase. While this may amount to window dressing, the idea of a licensed dispensary, for both medical and recreational marijuana, is worth further consideration. A network of licensed dispensaries already exists – pharmacies. A licenced system including some of the more professionally run dispensaries and alternative health care practices, carefully integrating health care considerations into the recreational marijuana narrative, may prove surprisingly beneficial immediately and in the long run.

RECOMMENDATIONS

Production of the medicinal and recreational supply, other than plants grown for personal use, can be most effectively, safely and securely supplied by commerciallicenced producers. Now that the MMPR process is scheduled for change, we see this as an opportune time to licence more of the already screened, qualified and cleared applicants in anticipation of increased demand.

Distribution of medical and recreational supply should be worked out co-operatively between Ottawa and the provinces. In BC, it will likely occur through a combination of Liquor Control Board outlets and private facilities. We recommend that pharmacies and alternative medical practices, as well as licenced existing dispensaries, be included in the distribution network for recreational as well as medical supply.

Naturopathic doctors are professionally trained practitioners and herbalists; they are experts in both the historical uses of plants as well as modern pharmacological mechanisms. Therefore, we recommend that prescription for medical marijuana should expand beyond medical doctors to include both naturopathic doctors and pharmacists.

Production and distribution issues aside, more research is needed on both recreational and medicinal use. True Leaf Medicine International Inc. sees the need for evidence-based research on the most effective dosages and strains required for the various applications of medicinal marijuana: pain management, nausea from cancer treatment, and epilepsy, among others.
We are prepared to work further with our contacts in the medical community, along with pain management centres and organizations such as the Canadian Arthritis Society.

If you are interested in discussing these ideas further, we would be pleased to do so.