Canada’s cannabis industry is shedding its wild adolescence and maturing into adulthood as it prepares for the legalization of recreational marijuana this summer. Companies are bulking up, knowing the promise of billions of dollars will draw bigger players and more competition.
That path to adulthood though is expensive and fraught with risk. So, it’s perhaps inevitable that Canada’s cannabis players are looking to mergers to scale up and stave off competition.
Consultancy Ernst & Young surveyed nearly a dozen licensed producers about the state of the industry and where things are headed.
“Many believe that consolidation is inevitable, leaving a few large players post-legalization,” Ernst & Young said in a report this week.
Bulk up and diversify
Evidence of that strategy is everywhere right now. A marijuana company from Alberta called Aurora Cannabis has launched a hostile takeover bid for Saskatchewan-based CanniMed Therapeutics.
Pot is now big businesses, dominating labs and Bay Street boardrooms. (Mason Trinca/Yakima Herald-Republic/Associated Press)
CanniMed would rather hunt than be hunted. So it launched its own bid and announced a plan to buy an Ontario-based company called Newstrike Resources. They say that merger would result in single entity worth more than half a billion dollars. (You may have heard of Newstrike. It’s the company that partnered with the Tragically Hip earlier this year — one more sign that everyone’s trying to get a piece of the market.)
Aurora is pushing ahead with the hostile bid. But it’s also looking at ways of making these deals less costly and less painful. It issued a statement last week indicating it has ways of nudging unwilling participants into making a deal. That’s because Aurora just bought a greenhouse design firm and the company says it will use that firm as a way of pressuring rival producers into those “partnerships.”
An offer you can’t refuse
Chuck Rifici is one of Canada’s leading investors in the cannabis space. (He helped found Tweed and is the company’s former CEO. He was until recently on the board of Aurora.) He says these deals make sense at this stage because pot companies can use their sky-high stock values to throw weight around and buy up smaller players in all-stock deals.
“It makes sense to do deals where you’re buying optionality in a future market for not much in stock,” he told CBC News. “These smaller companies are in a position to fill in gaps and get a nice premium on their stock and the larger guys are essentially printing cheap paper to do those deals.
Marijuana companies have seen their stocks soar, giving them more weight to throw around when buying out smaller companies. (Alessandro Bianchi/Reuters)
The proposed CanniMed and Aurora deal is a great example of that, he said. CanniMed is well established as a medical player looking to diversify into the lifestyle side of the sector. On the opposite side of the coin, Aurora wants to broaden by acquiring something more medically focused.
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In the Ernst & Young report, Canada’s licensed producers said that sort of consolidation is bound to continue.
“The majority of respondents believe that the cannabis industry will continue to consolidate,” the report said. “Inorganic growth is expected to persist, leaving a few large players.”
And no one, it seems, is immune. Even the country’s largest publicly traded cannabis producer is trying to navigate a quickly changing landscape.
Bruce Linton, the CEO Canopy Growth (formerly known as Tweed) told Ernst & Young he expects the field to narrow considerably.
Experts say the industry will consolidate to a few big growers and a bunch of “craft” producers making smaller amounts. (Seth Perlman/Associated Press)
“Over the long term, I see an industry with two or three major, relevant players and bunch of craft producers,” he was quoted as saying in the report.
This is all happening against the backdrop of a quickly changing regulatory landscape. Rules are being written on the fly and the provinces aren’t necessarily all moving in the same direction or on the same timeline.
Another X factor is new players that haven’t jumped in yet but are no doubt readying to behind the scenes. Existing companies have carved out a toe-hold from which they can build a business. But those unknowns have forced them to guess how regulations will come down.
There are no sure bets, but when it comes to survival, size matters. Hence the mergers.
“It’s still a craft industry, even though you have people that have non-craft valuations.” Rifici says.
Canada’s next cash crop has pushed the industry into a mergers and acquistions phase. (Robert F. Bukaty/Canadian Press/Associated Press)
With the floodgates about to open, many firms are facing a looming capacity crunch. So producers who are licensed now are spending money hand over foot trying to maximize production. Canopy doubled its revenues in its second-quarter results but still lost more than $1 million. Linton told Ernst & Young that’s just part of the process at this stage.
Growing up fast
“You’re spending four times as much as you would normally in order to be ready for a year from now,” he said.
Many of these companies are likely just trying to stick around long enough to get bought out once the new laws are in place.
Much like adolescents , all companies grow up eventually. With a marijuana industry that Deloitte recently pegged as being worth almost $23 billion, perhaps we shouldn’t be surprised to see these recalcitrant teenagers don a suit and tie and start acting like grown-ups.
Qatar rejects Amnesty’s assertion that labour reforms have not translated on ground
thepeninsulaqatar– The Ministry of Labour has issued a statement in response to Amnesty’s report “Reality Check 2021: A Year to the 2022 WorldCup”, stating that Qatar rejects its assertion that labour reforms have not translated into changes on the ground for hundreds of thousands of migrant workers.
The statement is as follows:
Qatar rejects Amnesty’s assertion that labour reforms have not translated into changes on the ground for hundreds of thousands of migrant workers.
Amnesty fails to document a single story from among the 242,870 workers who have successfully changed jobs since barriers were removed in September 2020, or from the more than 400,000 workers who have directly benefitted from the new minimum wage through salary increases and other financial incentives.
Since exit permits were removed in 2018, hundreds of thousands of workers have left Qatar and returned without permission from their employer; improvements to the Wage Protection System now protect more than 96 percent of eligible workers from wage abuse; new visa centres in labour-sending countries have significantly reduced exploitative practices before workers arrive in Qatar; and new rules extend the ban on summer working to minimise the effects of heat stress.
Qatar has also strengthened its enforcement measures to safeguard workers and prosecute employers who fail to comply with the law. The number of inspectors employed by the Ministry of Labour has increased year on year, as has their capacity to thoroughly investigate working conditions and refer violators for sentencing in the labour courts.
In the first half of 35,280,2021 accommodation and worksite inspections were carried out and 13,724 penalties were issued to violating companies, including worksite closures, fines and prison sentences. A further 4,840 site visits were made by labour inspectors to raise awareness of the new laws among employers and employees.
Every year, more companies are held accountable for violating the law. Systemic reform is a long-term process and shifting the behaviour of every company takes time. Through its actions, the government is sending a strong message to companies that violations will not be tolerated.
Qatar has never shied away from acknowledging that its labour system is still a work in progress. The government is committed to engaging collaboratively and constructively with international partners and critics to further improve standards for all migrant workers in Qatar
Qatar will therefore continue to consult with international experts including the ILO and trade unions. International NGOs will also be routinely consulted to provide their recommendations.
The reality is that no other country has come so far in such a short amount of time. Following Qatar’s lead, and as a sign of the programme’s wider impact, other countries in the region have now taken steps to introduce their own labour reforms.
Labour reform is a complex task, and Qatar believes that solutions are best found through dialogue and engagement. For this reason, and despite Amnesty’s criticism, Qatar will continue to work constructively with a range of labour experts and practitioners to build on the progress that has been made.
Myanmar election body charges Suu Kyi with electoral fraud
independent– Myanmar’s state election commission announced it is prosecuting the country’s ousted leader, Aung San Suu Kyi and 15 other senior political figures for alleged fraud in last November’s general election.
The announcement was published Tuesday in the state-run Global New Light of Myanmar newspaper and other official media.
Allegations of widespread electoral fraud were the main reason cited by the military for its Feb. 1 seizure of power that toppled Suu Kyi’s government. Her National League for Democracy party was about to begin a second five-year term in office after its landslide victory in the polls. The army-backed Union Solidarity and Development Party suffered unexpectedly heavy losses.
Independent observers, such as the Asian Network for Free Elections, found no evidence of substantive irregularities in the polls, though they criticized some aspects.
The action by the Union Election Commission could potentially result in Suu Kyi’s party being dissolved and unable to participate in a new election the military has promised will take place within two years of its takeover. However, the commission’s notice, dated Monday, did not specify which laws would be used to prosecute the accused.
In May, the military-appointed new head of the election commission said his agency would consider dissolving Suu Kyi’s former governing party for alleged involvement in electoral fraud and have its leaders charged with treason. Commission Chairman Thein Soe said an investigation had determined that the party had worked illegally with the government to give itself an advantage at the polls.
After taking power, the military dismissed the members of the election commission that had certified the results of last year’s poll and appointed new ones. It also detained members of the old commission, and, according to reports in independent Myanmar media, pressured them to state there had been election fraud.
The new commission declared last year’s election’s results invalid.
The new notice from the commission said Suu Kyi, former President Win Myint, other leading figures in her party and the commission’s former chairman were “involved in electoral processes, election fraud and lawless actions” related to the polls.
It accused 16 people of carrying out illegal actions, including compelling local election officials to obstruct military polling booths, threatening such officials in connection with advance voting for voters over 60 years old, forcing local officials to approve voting lists that included ineligible voters and interfering in campaigning to favor Suu Kyi’s party.
Suu Kyi is already on trial or charged in about a dozen criminal cases in which a conviction would almost certainly bar her from running for office again. Several of her top political allies also have been tried or are facing charges. Suu Kyi’s supporters as well as independent rights organizations contend that the cases are spurious and meant to discredit Suu Kyi and her party while legitimizing military rule.
Dissolving Suu Kyi’s party would follow a regional trend of dissolving popular political parties seen as a threat to governments in power.
Cambodia’s high court in 2017 dissolved the Cambodia National Rescue Party the sole credible opposition force, ahead of a 2018 general election.
Thailand’s Constitutional Court in 2020 dissolved the newly formed Future Forward Party, which had won the third highest number of seats in the lower house in the 2019 general election.
In both the Cambodian and Thai cases, the courts cited specific violations of the law for their rulings, but their actions were widely seen as reflecting political pressures.
More than 20 killed in attack on Kabul military hospital
bbc– More than 20 people have been killed and at least 16 injured in a gun and bomb assault on a military hospital in the Afghan capital Kabul.
Attackers targeted the 400-bed Sardar Daud Khan hospital starting with two massive explosions outside the building, officials said.
Gunmen then broke into the hospital grounds, witnesses said.
An affiliate of the Islamic State group, IS-K, later said it had carried out the attack.
Photographs and video footage from Kabul showed a plume of smoke over the area and recorded the sounds of gunfire. A doctor in the building told the AFP news agency he had been sent to seek shelter in a safe room during the attack and could hear guns being fired.
Sayed Ahad told broadcaster EVN that one of the blasts was a suicide attack.
“As an Afghan citizen, I am really tired of this war, suicide and explosions,” he said. “How long do we have to endure this misery?”
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The Taliban spokesman, Bilal Karimi, told the BBC that fighters from IS-K had entered the compound after detonating the first explosion at the entrance gate.
Mr Karimi said Taliban fighters shot and killed four IS-K attackers and captured one alive.
Taliban spokesman Zabihullah Mujahid meanwhile told Reuters news agency that Taliban special forces dropped by helicopter had stopped the attackers from entering the hospital itself, killing them at the entrance or in the building’s courtyard. All the assailants were killed in 15 minutes, he said.
Witnesses quoted by Reuters said they saw two helicopters over the area during the assault. The news agency reports that this would be one of the first times Taliban forces have used aircraft captured from the previous, Western-backed government during an operation.
The attack is the latest to hit Afghanistan since the Taliban seized control in August, after the US withdrew its last troops from the country.
IS-K, which stands for Islamic State Khorasan, has claimed responsibility for a number of attacks targeting civilians and Taliban fighters.
In August, a bombing by IS-K at Kabul international airport in August killed more than 150 civilians and 13 US soldiers.
The Sardar Daud Khan hospital has been targeted before. More than 30 people were killed and 50 others wounded in 2017 when gunmen dressed as doctors stormed the building. That attack was also claimed by the Islamic State group.