ABcann’s Pesticide-Free Approach is a Breath of Fresh Air
May 23rd, 2017
News, Top News
Canada’s cannabis industry is expected to surpass $20 billion over the coming years, as recreational legalization comes into effect. However, the industry continues to struggle with safety concerns, such as the use of banned pesticides. Many licensed producers have been caught using these banned pesticides in the past, while Health Canada has only recent stepped up to the plate to introduce new regulations and testing requirements.
In this article, we will take a look at ABcann Global Corp. (TSX.V: ABCN) (OTC: ABCCF) and why its pesticide-free approach sets a gold standard for the industry.
Canada’s Pesticide Issues
Canada’s cannabis industry may be rapidly growing, but the growth hasn’t come without some growing pains.
Three licensed producers recalled products in December 2016 and January 2017 after finding that they contained myclobutanil – a pesticide banned for cannabis cultivation. A Globe and Mail report found that one of the LPs had been spraying cannabis plants with the pesticide as early as 2014 and hid the chemical when Health Canada inspectors visited. Two of the LPs have also been hit with class-action lawsuits by consumers in response to the recalls.
These licensed producers have since taken corrective actions to avoid future problems, but it’s much harder to convince consumers that the changes are permanent.
“People are frustrated by the hypocrisy, by the demonization of dispensaries by [licensed producers], when they are clearly cutting corners and not following the rules,” said a Nanaimo-based lawyer, Kirk Tousaw, to the Globe & Mail. “And by the failure of the government to really regulate the dispensary industry in and honest and above-board manner so that all consumers can benefit from whatever standards are out there.”
New Regulations on Pesticides
The Access to Cannabis for Medical Purposes (ACMPR) permit 17 pesticides for use on cannabis crops at any point during production. Health Canada has made it clear that there are no exceptions to these requirements and no situations where using an unauthorized pesticide would be acceptable – even at very low concentrations. Despite these warnings, several licensed producers have already been forced to recall contaminated products.
Health Canada began addressing these pesticide issues with a series of unannounced inspects in February that culminated in two of seven licensed producers having at least some levels of unauthorized pesticides. In May, the organization announced that it would require all licensed producers to conduct mandatory testing of all cannabis products destined for sale for the presence of unauthorized pesticides, as well as other contaminants under the ACMPR.
In addition to the new requirements, Health Canada will continue to conduct random testing of product samples during regular and surprise inspections to help ensure the safety of the country’s medical cannabis supplies. The results of these inspections can be found on the organization’s website where it lists recalls and safety alerts. The organization will also continue to take actions – such as the revoking of licenses – against those violating pesticide rules.
Health Canada will provide guidance to licensed producers over the coming weeks on how to implement mandatory testing and how to report the results.
ABcann’s Unique Approach
ABcann Global is a licensed producer that uses clean, strictly-controlled indoor environments, which eliminate the need for pesticides and ensure natural and safe products. This approach helps ensure high-quality and standardized products for maximum therapeutic benefit, while simultaneously maximizing yields and minimizing costs. Patients access safe and effective medicine while investors benefit from higher margins and cash-flow.
The company’s Phase 1 Van Luven facility is a 14,500 square foot facility with production capacity of approximately 1,000 kilograms per year. Expansion is underway to double capacity there with completion expected this year. During Phase 2, the company plans to build a 150,000 square foot facility with annual production of 40,000 kilograms. This new facility is expected to be completed next year. ABcann currently has the cash on hand to complete both phases. The company also owns 65 acres of land that can accommodate 1.2 million square feet of production in the future, which represents one of the largest growth potentials in the industry.
Despite the company’s unique approach and expansion plans, the stock trades with a market capitalization of just C$50 million, which is substantially less than many other licensed producers. Investors may want to take a closer look at the stock given its valuation, particularly given its cost and quality advantages relative to others.
ABcann Global Corp. (TSX.V: ABCN) (OTC: ABCCF) represents a compelling investment opportunity in Canada’s burgeoning cannabis industry. While many other licensed producers have struggled with product recalls, the company’s cost-effective and pesticide-free approach to cultivating cannabis sets it apart in the industry. Investors may want to take a closer look at the stock given these attributes and its modest market capitalization.
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