Brandon Colwell on BridgeMark Scandal and Shoppers Drug Mart Online Sales

FTMIG Co-founder, Director, and Consultant Brandon Colwell provides cannabis market analysis and an update on the BridgeMark scandal. Colwell points out that Canopy Growth Corp’s (TSE:WEED) recent surge tracks an earlier move by small cap names Eve & Co (CVE:EVE) and Australis Capital Inc (CNSX:AUSA) and shares why that might indicate a pending reversal to the negative for Canopy. Colwell updates viewers on the growing BridgeMark scandal, which now involves 11 companies and 26 firms. He discusses the recent launch of Shoppers Drug Mart’s online medical cannabis sales and suggests that while Shoppers’ likely won’t be a leader in terms of dried flower sales, he expects the company to thrive in terms of the health and wellness cannabis market.

Transcript:

ut doesn’t this feel like every other time where we’re just doom and gloom, everybody thinks cannabis done, and then we get a bit of a run, it keeps going, and then all of a sudden, what the trigger is the articles that are coming out. The news articles. The Globe and Mail, Financial Post, they’re all saying, Oh, you know, we hit our bottom, everything’s rosy, everything’s fine! It feels like a bull trap. It feels like they’re just trying to get retailers to get the last little bit, all the institutions have already been loading up when everyone was screaming that everything was done. I think we see a little bit of a sell. I don’t see enough – I personally think we’re going to have a little bit of pullback.

Is it going to be all of this is going to be gone? I don’t think so. I want to see higher lows put in, I want to see some support levels, you know, kept, and another leg. I’m not sold yet.

James West:   Okay, now switching gears a bit, you guys were sort of big-time leading canaries on the whole BridgeMark Scandal, and what’s the status of that? It seems like there’s been a bit of, you know, it’s starting to get a little bit more feisty over there.

Brandon Colwell:   Yeah. So funny this is a name I hadn’t heard before. So I actually have that up as well, the article, and I don’t know if you just want to put that on one of the back screens or something like that, but a business newspaper in Vancouver came out with another article, and it’s stating that they’re pushing forward with this investigation. There’s a certain name here, you have to always remember, you know, some of these are allegations, other things are facts, but at the end of the day, innocent till proven guilty, putting it out there, that’s why we have a judicial system.

But a man named Aly Babu Mawji has now been allegedly put in the middle of this BridgeMark scheme, where in Germany, back in 2012, he was sentenced to 38 months in jail for a scheme that had 25.7 million Euros, a pump and dump scheme that he was convicted for. So now they’re saying that he was part of this, but what’s interesting here is, there’s now 26 firms associated with this, according to this, and Preveceuticals, we’ve had them on the show before, Deventer, Mr. Deventer was on here, and they’re now suing them because they’re saying that we did not understand who you were. You came in and showed us all this whole persona of someone who was going to help them with marketing and promotion, and they feel they did not do that. Instead, they took these consulting shares like we’ve heard in all these other areas, and they unloaded on the stock. And they feel this is another scheme of that, and they’re saying they’ve been duped. So there’s actually a lawsuit out here.

What I found really, really interesting again – the same name comes back again, these are just facts from a newspaper that I’m reading off right now – is Anthony Kevin Jackson is in the story again. So you know, very interesting that mainstream media is catching a hold of this. Again, this investigation is still going, half of the investigation go through. But this is numerous cases now – 11 different companies are in this and 26 firms – allegedly stating that these consulting shares that they’re getting are being used to manipulate the market, manipulate the company, and they’re not doing actual consulting services allegedly, according to this lawsuit that’s going on.

James West:   So when you get shares for free as a consultant, and you aren’t genuinely performing any service for the issuer, then those shares are an invitation to short the stock.

Brandon Colwell:   Correct.

James West:   Because you’re basically being given shares for free to cover your short. So you can short and short and short and you’ve got this position against which you can cover until you get called to cover the trade, assuming you don’t have a broker who trades naked for you, which is probably one of the most rampant problems in capital markets.

Brandon Colwell:   I agree.

James West:   So, okay, so where is this all going to lead? Where is this all going to go? Are all those companies – so it listed, you know, among other, Preveceutical, but it listed a whole bunch of companies alongside these promoters, and is it over for all of these guys?

Brandon Colwell:   No way, no, no, no. This is the very tip of an iceberg. We just follow, because as a community we’re all doing our due diligence and trying to stay on top of these things; the vast majority of people in our community, Follow the Money, are retail investors. So we’re looking out for each other. I don’t’ think this is even remotely close to being done, I think this is actually going to really change the way promotion is done in capital markets, because for the longest time you can get away with it because, you know, you could hide it, or it’s not as easily accessible. With social media now, when something like this happens, it’s all over Twitter, it’s all over different chat rooms, it’s all over Facebook, it’s all over Instagram, YouTube, it’s everywhere. I think it’s going to change it.

But is this done? I don’t think so, even remotely. There’s something interesting names being attached to this that I didn’t even remotely know about before.

James West:   Okay. But yeah, so my question is are the issuers that are caught up in this scandal, is it lights out for them in terms of a future as an investment.

Brandon Colwell:   No, I don’t think so.

James West:   This is just a case of laying down with lions and waking up with fleas?

Brandon Colwell:   I think this is a case of some of the management, unfortunately, didn’t do proper due diligence. You’ll probably see that in Blockplay; I’ve actually spoken to people in that company, and they didn’t fully understand what they were getting involved in. Other companies, they just did a very – these were white collar criminals, allegedly, of course. They’re not stupid, they’re very smart. So I think some good companies were pulled into this, whereas I think some companies, I think it was from the very beginning they had no intentions of actually being a real company.

James West:   hmm. I also guess at the end of the day it’s going to be good news for investors that these guys are cleaned out of the market.

Brandon Colwell:   Yep, good news that they’re going to be cleaned up, but also good news because now anyone looking to do something – because you can do that still. You can still get shares in companies, you can do all those different things, but there’s doing it properly and dong it with the company and with good interests for everyone involved, and there’s completely reckless endangerment with these shares, and I think that’s what they’re trying to point out here.

James West:   Acting contrary to the public interest. Okay, so you also had some insight on the Shoppers Drug Mart beginning to sell weed online.

Brandon Colwell:   I love that.

James West:   I love that too. You know, I’m a little bit miffed that Shoppers Drug Mart can sell weed online, but Midas Letter can’t.

Brandon Colwell:   What’s going on here? What is going on?

James West:   You know, we’re going to lobby our elected officials and see what we can bring to change in that regard, but I just ordered and received delivery of a four-pod hydroponic growing system, which I’m going to now grow four plants in my house that I’m going to obtain legally through an LP here in Ontario.

Brandon Colwell:   Very nice. Yeah, there’s some clones going out.

James West:   there are some clones.

Brandon Colwell:   Who’s doing them? THC BioMed is doing clones…

James West:   Cronos Group…

Brandon Colwell:   Eve & Co, Cronos…

James West:   The Peace Naturals facility was offering clones through the medical program. I actually had a conversation with Mike Gorenstein, the CEO, earlier, who wasn’t sure whether that program was still running, but we’ll find out soon enough if it was.

Brandon Colwell:   Gotcha.

James West:   But yeah, so Shoppers Drug Mart – what is that going to do for – you know, here’s the interesting thing for me: I have acquired product from the Ontario Cannabis Store, I have acquired product from the medical regime. In both cases, I find that the companies are precluded by the rules from treating cannabis in a way that is most appropriate for the fact that this is a perishable product with very, very fine sort of, you know, terpenes and flavonoids and stuff that are easily damaged by things like irradiation and excessive desiccation, being too dry.

So that’s what drove me to grow my own, is that, you know, I have not been able to get marijuana at a sufficiently high level of quality from any registered LP in Canada or the United States for that matter, from either the medical regime or the recreational regime, and that’s, I’ve found, a result of the rules. They have to, you know, turn out product with these characteristics. So it’s not their fault, but that’s kind of one of the things where I look at Shoppers Drug Mart and say, here’s an enterprise that, yes, has deep experience in dispensing medicine on a prescription level, but do they have any experience in handling cannabis as a perishable product? And are they going to be able to sidestep the rules that make all of the LPs incapable of delivering cannabis at the highest level of quality because they’re not allowed to treat it appropriately as a perishable product, they have to do all these things to it, to jump through the Health Canada regulations.

So what do you think? Is Shoppers Drug Mart going to cut the grass, ultimately, of all the LPs? Or, is Shoppers Drug Mart going to be forever beholden to the LPs who supply them?

Brandon Colwell:   Yeah, lots packed in there. First off, I think it’s amazing that Shoppers Drug Mart is going through this, because that’s such a – we’ve gone through all these different steps along this legalization purchase of legitimacy. Legitimacy not only as cannabis should be legal, but legitimacy that cannabis should be a medicine, and Shoppers Drug Mart, when you think, of, oh, I’m going to go get my prescription. I’m going to go get, you know, cough medicine. I’m going to go see what – you think of medicine.

When it comes to flower, I have no experience dealing with Shoppers or how they’re going to deal with that. I just, you know, in the back of my head I think they’re not going to be huge flower sellers. I just don’t know why, I just don’t think, they’re not going to have, they’re not going to build the right stores for it, whatever it will be. We’ll see, they could wow me. I think they’re going to be very, very important, though, with cannabis pills, cannabis oils and different ointments that come out. So when you start getting, you’ll have cannabinoids sometimes THC cannabinoids, so it won’t be over the counter, it’ll be behind the counter – when it comes to pain medication, when that starts coming out.

James West:   Or like Epidiolex, the –

Brandon Colwell:   Exactly. Was that GW Pharma, I believe? I think that’s where Shoppers is going to thrive, and that way, if you have a liquid, there’s no difference or very little difference than storing other liquids that are all, they’ll tell you a temperature, and they’ll keep it to that temperature. I think that side of things, and not only what it does for Canada – if you’ve got people who are on, especially the Baby Boomers that still look at cannabis sometimes and think ‘oh no, that’s reefer madness!’ but if they can go to Shoppers and not only can they go to Shoppers to get that medicine, they can also get prescriptions and they can also be covered. A lot of these people are covering it now, too. I think that’s huge for Shoppers; I think that’s where they’re going to thrive. I don’t think they’re going to be huge flower sellers, what are they going to do, have a whole thing, come on over here, man, check out this purple kush, it’s amazing!

James West:   Yeah, yeah.

Brandon Colwell:   I don’t see that part.

James West:   Time will tell, time will tell. All right, Brandon, we’re going to leave it there for now.

Original article: Brandon Colwell on BridgeMark Scandal and Shoppers Drug Mart Online Sales

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