VIDEO: Khiron Life Sciences (CVE:KHRN) Former DEA Chief on Compliance and International Expansion

Khiron Life Sciences (CVE:KHRN) (OTCMKTS:KHRNF) VP of Compliance and former U.S. Drug Enforcement Administration (DEA), Chief of Pharmaceutical Investigations Matt Murphy shares why the company’s compliance philosophy has advantageous benefit for international expansion. Murphy explains that Khiron applies the DEA regulations that US pharmaceutical companies are mandated to comply with to regulate the company’s cannabis production in Colombia. Murphy believes that Khiron’s compliance with the strictest regulations gives it an edge as it expands its international operations. Crucially, when cannabis is de-scheduled in the US, Khiron will already be compliant with the likely cannabis regulatory standards. Murphy predicts that the pharmaceutical industry will intervene in the cannabis market in ways similar to the liquor industry’s engagement, once cannabis is legalized federally in the US.

Transcript:

James West:   Hey, welcome back. My guest in this segment is Matt Murphy; he’s the VP of Compliance for Khiron Life Sciences Corp., trading on the TSX Venture under the symbol KHRN. Matt, welcome back to the show.

Matt Murphy:  Thanks, Jim. Pleasure to be here.

James West:   Matt, give us an update: what’s happening down there in Colombia?

Matt Murphy:  It’s evolving really quickly. At the cultivation site in Doima, we’re continuing to expand our operations. We’re also, as I’m sure you’re aware of, purchased some clinics that we’re going to be utilizing to expand our product line, and I think that’s scheduled for first quarter 2019, but don’t hold me to that; it could be earlier.

James West:   Sure, right.

Matt Murphy:  So yeah, we’re moving forward at a rapid pace. Here today, former President of Mexico, Vincente Fox, is in town; he’s a Khiron Board member, and he’s meeting with investors, and we had some investor meetings yesterday, and he’s meeting with others today, and we did some media. Having him on the board should play well for our expansion into Mexico after legalization occurs there. So yeah, we’re really excited. It’s an exciting time for Khiron, lots of things happening, and it’s evolving quickly.

James West:   Sure. So you’re the VP of Compliance, but it’s not compliance with securities laws, is it?

Matt Murphy:  No, no. Regulatory compliance as it pertains to our cultivation site, as it pertains to the security and record-keeping that the government of Colombia requires us to undertake and we’re mandated to undertake by the law. And my background of being a compliance expert with the DEA for many years, so what we’re doing with Khiron is, we are taking the DEA regulations and we’re utilizing them to regulate cannabis in Colombia. So the same regulations that the pharma companies in the US are mandated to adhere to, we’re taking to the cannabis space in Colombia with Khiron, and the feeling is that DEA regulations are the most stringent in the world as it pertains to regulating pharmaceuticals, controlled substances, and if it’s good enough for controlled substances and pharma companies, it should work well with the cannabis space.

James West:   Right, right. Interesting. So does that imply, then, that the rules are much more stringent in Colombia than they are in Canada?

Matt Murphy:  You know, I’m not so concerned about what country has more stringent rules, but I know the regulations in the US for controlled substances are very stringent. So if we uphold, if we task Khiron, which I am doing, to uphold the regulations that are utilized in the US, then it doesn’t matter if the regulations in Canada, Colombia, Mexico, Argentina – we will be three levels above whatever the rules that we have to adhere to, mandate.

James West:   Okay. And do you view that as a crucial issue for international expansion?

Matt Murphy:  Absolutely. Because as we expand, our goal would be, of course, when prohibition ends in the US, the Controlled Substances Act and the code of Federal regulations should be the same regulations that are mandated for cannabis when we have consistent regulatory standards. Right now, as you know, every state regulates cannabis differently, but in the US, C2 through 5 controlled substances are regulated with consistent standards if you’re in Boston or if you’re in LA, it’s the same standards apply.

James West:   So it’s regulated Federally?

Matt Murphy:  Right.

James West:   By the FDA?

Matt Murphy:  Well, the DEA for controlled substances, FDA for non-controlled substances.

James West:   I see.

Matt Murphy:  So those regulations will apply to cannabis industry – it’s my feeling, I believe – that when cannabis is de-scheduled, those same regulations will apply to cannabis federally, the same regulations that apply to C2 through 5 controlled substances. Right now cannabis is a C1, but when it’s a C2 or a C3, the same standards should apply.

So taking Khiron internationally, we take these same standards and now we’re providing consistent regulatory standards to our operations, whether we operate in Mexico, Colombia, Argentina, Brazil, Peru, or the US.

James West:   Interesting. Is there an added cost to such a high level of compliance?

Matt Murphy:  Not an added cost. I mean, effective compliance is not cheap, because with compliance comes security, and there have to be certain security mandates that are upheld as well. You know, when you’re dealing with a controlled substance, you have to make sure it’s secured through the supply chain from seed to sale. So it is, I mean, as it pertains to – I mean, being expensive is kind of a relative term. In this industry, compliance is paramount to be a successful company and to be effective and to work within the guidelines, the regulatory standards, that that country mandates. So it comes at a cost, but it’s not prohibitive.

James West:   Interesting. So is your – if you were formerly the head of Pharmaceutical Investigations for the Drug Enforcement Administration?

Matt Murphy:  I was.

James West:   And so you’ve got this broad scope on the pharmaceutical industry. Do you see anything in the pharmaceutical sort of approach towards cannabis that has you worried at all, or do you think it’s going to be a relatively effortless, smooth integration once Big Pharma moves into the space?

Matt Murphy:  You know, if I was a betting person, I would bet that the pharma industry is already planning its foray into the cannabis space. They’re there already in some instances, right? They’re not going to sit by and lose profits because people would rather take cannabis as a medicine rather than an opioid, for example, or any other kind of medicine. So I think that what we’ve seen in the liquor industry with Constellation, right, we’ll see the same in a big way in pharma when prohibition ends in the US, because I don’t think they’re willing to jump in if it’s not legal federally.

But when it is legal federally, medicinal cannabis at least, you’ll see the big pharma companies jump in; and I would bet that they’re already laying plans for what that’s going to look like. I have no idea what they’ll do, whether they’ll buy existing cannabis companies that have an infrastructure and they’ll just make it their own, or if they’ll start from scratch and build their own companies, build their own brands, build their own manufacturing facilities. Not sure what that will look like; maybe they can retrofit their existing facilities to grow cannabis. I just don’t know what it’s going to look like, but I’m sure they’re going to be there.

James West:   Right. Okay. What’s the sticking point in the whole US government infrastructure? Where is the bottleneck for getting cannabis to Federal de-prohibition, in your view?

Matt Murphy:  I just don’t think we’re there yet. I think that, if you look at polls and studies in the US, most people would vote to legalize cannabis. Most people want cannabis legalized. But there are people that don’t, right, and there are a lot of people who would argue we don’t need another substance to be abused like alcohol is now and other legal drugs. So I think that it’s like, things take time. Change doesn’t happen overnight, but I do believe that it will change. I can’t – people ask me all the time when will prohibition end, when will it change? I don’t think anybody knows that, you know? I mean, when Congress legalizes cannabis, it’ll change. But I know that there are plenty of states that would like to see it legal federally, and plenty of Senators and politicians that would vote to legalize it tomorrow, but there are some that won’t. So I think we’re getting there, and I think it will happen, but not yet.

James West:   Okay. Matt, we’re going to leave it there for now. Thank you very much for joining us today.

Matt Murphy:  Thanks, Jim. Appreciate it, thank you very much.

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Original article: VIDEO: Khiron Life Sciences (CVE:KHRN) Former DEA Chief on Compliance and International Expansion

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