Deepak Anand on Rescheduling Cannabis and Europe’s Sophisticated CBD Market
Materia Ventures Co-Founder and CEO Deepak Anand updates viewers about regulatory changes in the global cannabis industry. He discusses the likelihood of the WHO rescheduling cannabis and analyzes how international trade would be impacted. Anand reveals Europe already has a sophisticated CBD market and examines the impact of harmonized laws among European Union countries in the space. Anand talks about recent warnings sent by the FDA to companies manufacturing CBD products in the United States. However, he believes there will be a change in attitudes as cannabis legalization becomes an election issue in 2020. Anand was recently appointed to the board of Chemesis International Inc (CNSX:CSI) (OTCMKTS:CADMF) (FRA:CWAA). He discusses the company’s operations in Latin America and its plan to take advantage of the growing CBD market.
James West: Hey. Joining me now via Skype from Vancouver is Deepak Anand, who is now the CEO and co-founder of Materia Ventures. Deepak, how are you?
Deepak Anand: Good, thank you. How are you?
James West: I am great. So you’ve got a new corporate gig?
Deepak Anand: I do, yes.
James West: Tell us about that.
Deepak Anand: So Materia Ventures is a company set up to supply the distribution market in Europe. We’ve got a number of supply and distribution agreements in place in Germany, in the UK and Italy, and a variety of other countries.
James West: Really? So you’ve been traveling the world; you’re probably one of the most knowledgeable people when it comes to new rules in new places. Where do you see the most interesting stuff happening in terms of what new rules are coming out now? Like, where are there new rules happening?
Deepak Anand: A variety of different countries coming up, James, with, you know, a variety of countries coming online. Thailand, as you know, recently sort of said they’re going to allow for this to happen and be cultivated in Thailand. In addition to that, we’re paying very close attention to Luxembourg, that said they’re going to be legalizing not just medical but also recreational cannabis. Gibraltar, the island of Gibraltar, is looking at cannabis legalization quite seriously, and Laos is another country that seems to be moving forward. So, many new jurisdictions coming online soon, here.
James West: Very cool. Have you done anything in Peru? I hear Peru is coming online now.
Deepak Anand: Yes, Peru seems to be, you know, really getting some movement. You know, we’ve seen a couple of licensed producers set up a supply there; Fire and Flower, I think, recently made an announcement that they were doing something there. We’ve got our eyes on it, and we’ve got some agreements that we’ll be putting into place very shortly, here.
James West: Oh, very good. Okay, so you also are on now the Board of Chemesis International?
Deepak Anand: Yes, that’s correct.
James West: All right. So how did you land that gig, and what’s happening with Chemesis?
Deepak Anand: Chemesis is up to a variety of different things; I recently joined their Board last week. I’ve known a couple of the founders and sort of, you know, operators, really well. They seem to be doing a number of things in Colombia and Latin America; you know, many announcements to come soon. They’re obviously very involved on the CBD side. You know, I just looked at CBD, and you look at the opportunity globally, and this is something that, you know, is propelling at an insane rate. You know, whilst Canada has a number of restrictions around what you can do with CBD, the US market seems to be opening up.
You heard Bruce Linton recently talk about New York and the opportunities in New York for CBD; I look at this on a global scale, particularly Europe, where Materia is based, and that market, too, has tremendous potential. And I think what Chemesis is doing is setting up a number of Latin American assets to take advantage of the CBD market, and they’ve got some very interesting assets and announcements coming out in place.
James West: Okay, fantastic. Tell me: is the – what is the landscape going to look like for the international trade in cannabinoids, CBDs, dried flower? I mean, at this point it seems like, yes, Canada can export to Europe, and certain countries can import from anywhere; the United States is, for all intents and purposes, a closed border at this point except for research purposes. But what is that whole international trade going to look like in cannabis, and when is it going to evolve into something that more resembles normal international trade?
Deepak Anand: Yeah. Unfortunately, James, you know, you’re right, there’s not going to be much trade, at least within Canada and the US, anytime soon on medical cannabis. Recently, there was a couple of things that happened that seem to be moving in the right direction, although these things are going to take years before they actually develop.
The WHO, which is the World Health Organization, released a report and talked about amending the scheduling of cannabis. Right now, it’s in a very restrictive schedule, and the weird sort of part of this is, while CBD was never really on a ready schedule, most people assume that CBD was scheduled. It was actually never under a schedule; it was the up to 0.3 percent THC part that remained in schedules, and a number of countries were not permitted to trade in anything that had CBD because it contained either between 0.1 or 0.3 percent of THC. And so the World Health Organization has sort of, one of the thing that they’ve recommended is completely removing that element of up to 0.3 milligrams percentage of THC to be taken off the schedule.
In addition to that, they’ve looked at rescheduling of cannabis so that it can be dealt with, you know, differently, and especially on the THC side, that more research can happen. These things are going to take, you know, four or five years to figure out, if that. But nonetheless, these are steps in the right direction.
If you look at Europe, on the other hand, you know, that’s where – I mean, the reason we’ve set up Materia is, there’s a lot of opportunity in that market. CBD is a novel food in that jurisdiction. If you walk across, you know, pharmacies in the UK, you’ll see, you know, CBD-based products on shelves. They don’t make any sort of claims in terms of health claims, but you’ll see everything from creams to ointments to balms to tinctures in a variety of different forms available in the UK. In Germany, it’s even, sort of, you know, further than that. You see shampoos and you see ointments and you see a variety of different things with CBD.
So Europe’s really got some interesting opportunities, and because of this create across borders, because Europe is considered one market from a customs union perspective, you know, you can move CBD from Bulgaria and Romania into Germany and other markets, and that seems to be what people are doing right now. So there’s certainly a sophisticated market for CBD, and some real opportunities in that space.
James West: Mm-hmm. All right. Will the World Health Organization rescheduling of THC and CBD, I mean, they’ve declined to do that at the most recent meeting, but is that something that will really have an effect on opening up international borders?
Deepak Anand: You know, once these things shake out, James, it is most likely going to do that. The World Health Organization only makes recommendations, there’s a commission on narcotic drugs called the CMD, which most countries are signatory to; and this is a group that works within the UN. And you know, the challenge becomes is, we’re signatory to treaties on the UN that were signed in 1961 and 1971 that was a single convention on narcotic drugs, and this body, the CMD, is the one that would be responsible for amending of those regulations, should they choose to go with what the World Health Organization is recommending.
They do – you know, we’ve got a meeting coming up here shortly in the next month; there will be a variety of other meetings. These things seem to happen on a consensus basis versus a voting basis, and you’ve got a number of countries like Saudi Arabia and Russia that will continue to oppose these things. But we’re getting momentum; I mean, with the number of countries that are coming online, looking at scheduling medical cannabis, at least. We’re moving in the right direction as far as international policy arguments are concerned.
Another thing of interest, James, is the European Union and the EC Commission recently said that they want to come up with a harmonized framework for all 27 member-states to follow. That’s another thing that we’re watching very closely, because that will have impact on how countries go about legalizing medical cannabis within the European Union, and they’re moving towards that, as well.
James West: Okay. So it’s looking more and more like, at this point, anyways, that the US is really like the Third World country in this whole thing, in that they’ve got this problem where they can legalize it in states where there’s not a sort of moral majority issue, but they can’t for the life of them reflect the majority’s consensus in a national policy, which is ultimately going to hurt them very much financially in terms of the missed opportunity, to the point where we’ve seen certain entrepreneurs in the United States publish full page ads in the likes of the Wall Street Journal imploring the President to, you know, to do something so that the US doesn’t miss out on this great economic boom that the rest of the world is jumping all over.
Is there any indication that the US is going to soften its stance on a national basis anytime soon?
Deepak Anand: It doesn’t look like it. I mean, on the one hand, you’ve got the FDA, which is the Food and Drug Administration, you know, sending out a whole bunch of warnings to people that are dealing with CBD especially, saying you can’t really add it to food. This rolls back a number of things that states have done. So on the one hand, you’ve got the Food and Drug Administration that’s got a very aggressive sort of stance on this; but on the flip side, you’ve got a number of political parties, you know, leading up to the next election, really making an issue out of this. We saw John Boehner just yesterday come out and say that, you know, he thinks that we’ve held back on research by sort of controlling the way that cannabis has been regulated.
I think this is going to become an election issue for the next election, and I think that’s when you’ll see the pendulum shift. You know, I caution people that probably think that the US is not going to be a significant player; keep in mind these MSOs, or multi-state operators, are very sophisticated in what they’re doing. They’re slowly but surely really ramping up their production. You look at it from a branding and a marketing perspective, I mean, California is doing a fantastic job as far as brands are concerned.
So the day that switch is flipped, you know, the US is going to a significant power. I mean, there’s a number of massive cannabis multi-state operators that are functioning within the US that would really light up the world once they are allowed to do that. So I expect that to happen fairly shortly, at least on a medical perspective.
James West: Sure, okay. Great, Deepak! Well, I can’t wait to see you in the flesh again; when are you coming to Toronto next?
Deepak Anand: Soon. Next month, I’m going to be speaking at the BMO Investor Conference, so I’m sure I will catch up with you then.
James West: Perfect. Most definitely. All right, Deepak, we’ll leave it there; thanks for joining us.
Deepak Anand: Thanks for having me.
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