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Merger madness: Canada’s marijuana industry enters consolidation phase

Canada’s cannabis industry is shedding its wild adolescence and maturing into adulthood as it prepar..

Canada’s cannabis industry is shedding its wild adolescence and maturing into adulthood as it prepares for the legalization of recreational marijuana this summer. Companies are bulking up, knowing the promise of billions of dollars will draw bigger players and more competition.

That path to adulthood though is expensive and fraught with risk. So, it’s perhaps inevitable that Canada’s cannabis players are looking to mergers to scale up and stave off competition.

Consultancy Ernst & Young surveyed nearly a dozen licensed producers about the state of the industry and where things are headed.

“Many believe that consolidation is inevitable, leaving a few large players post-legalization,” Ernst & Young said in a report this week.

Bulk up and diversify

Evidence of that strategy is everywhere right now. A marijuana company from Alberta called Aurora Cannabis has launched a hostile takeover bid for Saskatchewan-based CanniMed Therapeutics.

lab-science

Pot is now big businesses, dominating labs and Bay Street boardrooms. (Mason Trinca/Yakima Herald-Republic/Associated Press)

CanniMed would rather hunt than be hunted. So it launched its own bid and announced a plan to buy an Ontario-based company called Newstrike Resources. They say that merger would result in single entity worth more than half a billion dollars. (You may have heard of Newstrike. It’s the company that partnered with the Tragically Hip earlier this year — one more sign that everyone’s trying to get a piece of the market.)

Aurora is pushing ahead with the hostile bid. But it’s also looking at ways of making these deals less costly and less painful. It issued a statement last week indicating it has ways of nudging unwilling participants into making a deal. That’s because Aurora just bought a greenhouse design firm and the company says it will use that firm as a way of pressuring rival producers into those “partnerships.”

An offer you can’t refuse

Chuck Rifici is one of Canada’s leading investors in the cannabis space. (He helped found Tweed and is the company’s former CEO. He was until recently on the board of Aurora.) He says these deals make sense at this stage because pot companies can use their sky-high stock values to throw weight around and buy up smaller players in all-stock deals.

“It makes sense to do deals where you’re buying optionality in a future market for not much in stock,” he told CBC News. “These smaller companies are in a position to fill in gaps and get a nice premium on their stock and the larger guys are essentially printing cheap paper to do those deals.

“It’s win-win.”

ITALY-MARIJUANA/

Marijuana companies have seen their stocks soar, giving them more weight to throw around when buying out smaller companies. (Alessandro Bianchi/Reuters)

The proposed CanniMed and Aurora deal is a great example of that, he said. CanniMed is well established as a medical player looking to diversify into the lifestyle side of the sector. On the opposite side of the coin, Aurora wants to broaden by acquiring something more medically focused.

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In the Ernst & Young report, Canada’s licensed producers said that sort of consolidation is bound to continue.

“The majority of respondents believe that the cannabis industry will continue to consolidate,” the report said. “Inorganic growth is expected to persist, leaving a few large players.”

And no one, it seems, is immune. Even the country’s largest publicly traded cannabis producer is trying to navigate a quickly changing landscape.

Bruce Linton, the CEO Canopy Growth (formerly known as Tweed) told Ernst & Young he expects the field to narrow considerably.

Marijuana Warning Labels

Experts say the industry will consolidate to a few big growers and a bunch of “craft” producers making smaller amounts. (Seth Perlman/Associated Press)

“Over the long term, I see an industry with two or three major, relevant players and bunch of craft producers,” he was quoted as saying in the report.

New players

This is all happening against the backdrop of a quickly changing regulatory landscape. Rules are being written on the fly and the provinces aren’t necessarily all moving in the same direction or on the same timeline.

Another X factor is new players that haven’t jumped in yet but are no doubt readying to behind the scenes. Existing companies have carved out a toe-hold from which they can build a business. But those unknowns have forced them to guess how regulations will come down.

There are no sure bets, but when it comes to survival, size matters. Hence the mergers.

“It’s still a craft industry, even though you have people that have non-craft valuations.” Rifici says.

Canopy 20171114

Canada’s next cash crop has pushed the industry into a mergers and acquistions phase. (Robert F. Bukaty/Canadian Press/Associated Press)

With the floodgates about to open, many firms are facing a looming capacity crunch. So producers who are licensed now are spending money hand over foot trying to maximize production. Canopy doubled its revenues in its second-quarter results but still lost more than $1 million. Linton told Ernst & Young that’s just part of the process at this stage.

Growing up fast

“You’re spending four times as much as you would normally in order to be ready for a year from now,” he said.

Many of these companies are likely just trying to stick around long enough to get bought out once the new laws are in place.

Much like adolescents , all companies grow up eventually. With a marijuana industry that Deloitte recently pegged as being worth almost $23 billion, perhaps we shouldn’t be surprised to see these recalcitrant teenagers don a suit and tie and start acting like grown-ups.

The post Merger madness: Canada’s marijuana industry enters consolidation phase appeared first on News Wire Now.

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Removal of artwork showing names of murdered women, children draws anger

An artwork depicting names of Australian women and children lost to male violence has been removed from a museum, amid claims it was considered “inappropriate” and “uncomfortable”.

The Lost Petition artwork, listing almost 1000 women and children who have died since 2008, was hung in the Her Place Women’s Museum Australia in East Melbourne for only a week when it was taken down on Wednesday.

Femicide researcher Sherele Moody, who collaborated with artist Dans Bain on the artwork, said the museum had asked to exhibit it.

But when the 30m artwork was hung along the ceiling featuring the names of the murder victims, it drew a reaction.

“While Dans was hanging it, someone came up and said it was really confronting and inappropriate and shouldn’t be there,” Ms Moody said.

“She just brushed it off.

“But then yesterday the museum contacted her and said they were taking it down because it wasn’t appropriate to have it alongside the Emily’s List exhibition there at the moment.”

Ms Moody, a News Corp journalist and founder of the Red Heart Campaign, which aims to end domestic and family violence, said the decision to take it down was “infuriating”.

“Literally what they’re saying, from my perspective, is the stories of women and children lost to violence are not worthy of being seen or heard,” she said.

“These women and children are an inconvenience and inappropriate.

“The murder of women and children is too uncomfortable for them.”

Ms Moody said a museum dedicated to women was the perfect place to display the work.

But the organisation based on celebrating women had now taken down an artwork detailing the greatest social issue facing them.

Families of the victims depicted were “extremely upset” at its removal, as it was a tribute to their memory and highlighted the impact of domestic violence, Ms Moody said.

Her Place museum said the Emily’s List exhibition organisers requested the artist remove the petition from the space, where a new exhibition marking the 25th anniversary of Emily’s List – a network for progressive Labor women in politics – was installed.

“Due to the size and scale of the Lost Petition, there was no alternative space at Her Place Museum to exhibit the artwork,” the museum said.

The Her Place board would reinstall the artwork later in the year, in a move it said the artist agreed on as part of the Her Voice program of Australian Women’s activism.

“The exhibiting of The Lost Petition was at the invitation of Her Place Museum Australia. It is a powerful artwork and that power is reflected in the feedback we have received,” the museum said.

Artist Dans Bain said the decision to remove her artwork made her “uneasy”.

“The fact that this work has been censored speaks to the stigma of male violence against women and children. It is an uncomfortable reality,” she posted on Facebook on Thursday.

“This work lists almost 1000 women and children, every woman and child on the Lost Petition is a loved one and has families that love them. They are not an inconvenience.”

Emily’s List Australia said it had a long term booking at the museum, which as a new facility had competing demands for space.

“Difficult decisions need to be made about how to display significant material in a small public space, during limited run exhibits,” the organisation said.

“The removal of The Lost Petition was temporary to enable installation in a more permanent way … and to ensure other women’s history exhibits move seamlessly in and around it.

“It’s a big, bold piece of art and it deserves showcasing.”

The organisation added protecting women from gendered violence was far from complete and “we are all dedicated to this work”.

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Senator Claire Chandler unable to answer question on who is calling for ban of trans women in single sex sports

A Tasmanian senator pushing for transgender people to be excluded from women’s sport has been unable to name a single sporting organisation in the state who has called for the change.

Under a proposal introduced to parliament earlier this month, senator Claire Chandler wants the Sex Discrimination Act to be amended so it would not be unlawful for a sporting club to ban a person from a team based on their biological sex.

In a sensational grilling on ABC Radio Hobart, Senator Chandler was repeatedly asked to clarify who in particular is calling for the change.

“I’m not going to get into specifics,” she said.

When asked a further three times by host Leon Compton, the senator stood firm.

“What I will say is that I’ve been contacted by parents of girls who have realised how despondent their girls have become competing in sport, in situations where they’re competing against males and feeling like they’re not good enough to be in the game.”

“Is it possible, Claire Chandler, that this isn’t an issue at all; the fact that you can’t name a single group,” Mr Compton quipped back.

“Leon, like I said, I’m not going to get into specifics with you,” she responded.

She added she had been contacted by “sporting administrators” who have been concerned about the legal action that could be taken against them if they do exclude a transgender person from a single-sex sport.

“You look at what is happening with Leah Thomas in the United States, where this trans woman, I should say, swimmer, who’s beating her female counterparts by seven seconds in the pool. That is just madness,” Senator Chandler said.

Senator Chandler’s bill came back into the spotlight after Prime Minister Scott Morrison revealed he had encouraged her to pursue it.

“I support it, as Claire knows. I think it’s a terrific Bill and I’ve given her great encouragement,” Mr Morrison told reporters on the hustings in Tasmania.

“Claire is a champion for women’s sport and I think she’s been right to raise these issues in the way that she has. Well done, Claire.”

But it remains to be seen if Mr Morrison’s backing will translate into broader support.

To have the bill introduced to the upper house, Senator Chandler had to do so as a private members bill, meaning she did not have support of the wider cabinet to put it on the agenda.

“If it was such a great bill, why isn‘t it endorsed by the cabinet?” Mr Compton pressed repeatedly.

“I’ve had a number of conversations with the Prime Minister obviously and with my colleagues about this issue. And look, if it’s something that the cabinet wants to consider, then that is obviously a matter for them,” Senator Chandler retorted.

With only three days left in the parliamentary sitting calendar, it is unlikely the Bill will pass, or even make it to the lower house, before the election.

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Liberal MP Bridget Archer told Scott Morrison would decide if she could attend Grace Tame speech

Child sex abuse survivor and Liberal MP Bridget Archer was told the decision on whether or not she could attend a speech by Grace Tame and Brittany Higgins was “up to the Prime Minister.”

The confusion was blamed last night on a communication breakdown between the Whip’s office and the Prime Minister’s office.

The PMO insists it instructed the whips this morning to seek pairs from Labor for those Government MPs wanting to attend Wednesday’s National Press Club address.

That didn’t happen with Ms Archer told at 3pm it was “up to the PM” before she was finally told she could go after 7pm when news.com.au contacted the PMO.

In a major speech to be delivered at the national press club on Wednesday, the former Australian of the Year will speak out on tackling child sex abuse in Australia.

Tasmanian MP Bridget Archer secured a last-minute ticket to the sold out event on Tuesday, but her request to attend the event was not immediately granted.

Liberal colleagues claim she was told by party whip Bert Van Manem that it was “up to the PM.”

Despite Labor’s offer to allow her to leave Parliament despite the tight numbers on the floor of the House of Representatives, confusion reigned about whether she could attend.

After news.com.au contacted the Prime Minister’s office at 7:05 pm on Tuesday night, Ms Archer’s office then got a call 5 minutes later confirming she was cleared to attend.

The outspoken MP earlier declared she planned to cross the floor and vote against the Morrison Government’s religious freedom laws because they were in breach of Tasmanian anti-discrimination laws.

She told Parliament she was “horrified” that proposed amendments excluded children that identified as transgender.

“After so much progress how did we get back to a place where we ignore the harm we place on children when we tell them they are ‘other’, ‘less than’ and do not deserve rights and protections afforded to others – I fear it may risk lives,” Ms Archer said.

Labor’s manager of government business Tony Burke took to Twitter on Tuesday to insist there was no barrier from Labor MPs on Ms Archer or other MPs attending.

“If requests come in for the Press Club we will accommodate the same as we did for March4Justice,’’ he said.

“The government’s claim that we are meant to offer pairs that they haven’t requested is weird. And wrong.”

Last year, Ms Archer told news.com.au she burst into tears after she was taken to the Prime Minister’s office to discuss her decision to cross the floor on another matter despite repeatedly telling his staff she wanted to delay the discussion.

While Scott Morrison described the talks as “friendly”, Ms Archer said she was ambushed by the meeting and had earlier asked to delay it.

“I didn’t feel like I was being marched to the principal’s office. I just felt a little disappointed that it happened when I had expressed to the Prime Minister’s office that I would have preferred, that my preference was not at that time,” she told news.com.au.

“And I had said in the text messages to the Prime Minister’s office that I didn’t want to have the meeting, before the meeting.

“They sent me a message saying he wanted to see me at 12.15pm. I said I am not ready. I need a break.

“It was a big thing. It was just the emotion of the moment.”

Ms Archer is a child sexual assault survivor who voted with independent MP Helen Haines to suspend standing orders to establish an anti-corruption commission.

“I have found this year incredibly difficult, personally because of my own history as a child sexual abuse survivor,” she said.

“It has been difficult for me to sit with discipline in unity with all this going on around me and it has hurt me. It has hurt me.

“But I am not weak. I’m telling you that I don’t think that some of these things are the right way forward.

“That language being used yesterday about drones and warm bodies. That’s what I said to him. That I am not a drone.”

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