CanniMed signs deal with PharmaChoice to distribute medical marijuana — when it’s legal

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CanniMed announced Thursday it has signed a letter of intent with PharmaChoice, a member-owned cooperative, that gives CanniMed exclusive distribution privileges at PharmaChoice stores in exchange for CanniMed’s provision of training. Educational training will start soon, but the distribution agreement is on hold indefinitely. It will be completed within 60 days of the first legislation change that allows for pharmacy distribution of marijuana.

Currently, mail order is the only legal distribution method for medical marijuana but a federal task force report on the legalization of marijuana recommended the government also consider allowing sales at storefront locations. Legislation on marijuana reform, including a legal recreational market, is expected this year. Provincial laws would also need to be changed to allow for pharmacy distribution.

“Our sense of this is that distribution within pharmacies is imminent,” said Brent Zettl, President and CEO of CanniMed.

“We think it’s not an ‘if’ it’s a ‘when’ question and to get ahead of that we need to start helping to educate the pharmacists.”

Zettl is confident that governments will have to open medical marijuana distribution channels due to the sheer number of medical marijuana patients in Canada, totalling more than 100,000, will require more options. Canaccord Genuity analysts have projected the medical marijuana market will grow to some 160,000 patients and be worth $1.8 billion by 2021.

Zettl said it’s important to have the deal in place ahead of any legislative changes so they’re not playing catch up both in production and education once pharmacy sales are legal.

Many doctors are reluctant to grant medical authorizations to patients seeking medical marijuana because they are unfamiliar with dosing, side effects and treatment types.

Meanwhile, illegal dispensaries have cropped up to fill a face-to-face experience void — arguing they are necessary because patients who receive authorization from a doctor to use marijuana are otherwise left on their own to figure out their treatment plan and dosing.

“We have to get health-care professionals woven into the process,” he said.

“There’s this pent-up need, patients are left without the professional guidance. We need more people educating the patients on what to do, how to use it, or what to watch for.”

Zettl hopes the agreement with PharmaChoice, which has about 700 independently-owned stores under its umbrella, is just the beginning of its partnerships with pharmacies; the company is in discussions with a “vast majority” of Canadian pharmacies, he said.

Canada’s largest pharmacy chain, Shoppers Drug Mart, applied to Health Canada to become a medical marijuana distributor last fall, but if approved would require a supplier for its more than 1,200 locations. Its parent company Loblaw Companies Ltd. has been lobbying the government on policies related to the Controlled Drugs and Substances Act and how they impact pharmacists.

CanniMed, which went public at the end of 2016 was one of the first medical marijuana companies to be granted a Health Canada licence to produce in 2013. Prior to that, under its previous name Prairie Plant Systems, it had been the government’s official marijuana provider on the earlier program enacted in 2000.

Vahan Ajamian, a marijuana sector analyst at Beacon Securities Ltd., said CanniMed’s pre-emptive strike on the market not only makes sense, but is a strategy many licensed producers and applicants are pursuing.

“The current licensed producers definitely are going to have an advantage, they already have a licence a product out there and a name brand to a certain extent. Most of them are increasing capacity over the next year or two, getting ready for recreational.”

However, he added, once the recreational market opens up, pharmacies will be just a small piece of the overall revenue pie, given that recreational sales are expected to be about triple those in medical at about $6 billion by 2021.