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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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Slovenian Prime Minister Janez Janša congratulates Donald Trump despite no election result

Slovenian Prime Minister Janez Janša has handed Donald Trump victory in the 2020 United States Presi..

Slovenian Prime Minister Janez Janša has handed Donald Trump victory in the 2020 United States Presidential election, despite no official result being declared.

“Its pretty clear that American people have elected ⁦Donald Trump and Mike Pence for four more years,” Janša tweeted on Wednesday.

Donald Trump declared a premature victory at the White House and described the election process as a “major fraud on our nation”.

The campaign for Democrat candidate Joe Biden has described the bid to stop vote counting as “outrageous, unprecedented and incorrect”, and say they are “ready to deploy” legal teams.




The Slovenian Prime Minister’s tweet generated an immediate response from several MEPs, including German Nicola Beer from Renew Europe Group.

“Donald Trump has his deeply undemocratic, unjustified playbook on elections EU Member States should not play along,” tweeted Beer.

“The European Union, with all Member States, has a duty to show respect for every single vote. Period.”

No other EU leader has issued congratulations or themselves announced a result in the US election.

“While we wait for the election result, the EU remains ready to continue building a strong transatlantic partnership, based on our shared values and history,” said EU Vice-President Josep Borrell.

The electoral college votes have not all been counted at time of writing.

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“More delays and facts denying … [the] bigger the final triumph for the President. Congratulations ⁦to the Republican Party for strong results across the US”.

The US election is currently locked in a stalemate, with hundreds of thousands of votes still to be counted, and the outcome still unclear in key states.

The post Slovenian Prime Minister Janez Janša congratulates Donald Trump despite no election result first appeared on NewswireNow – A Press Release Publishing Service.

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Lessons for Africa from devastating Mauritius oil spill

The shipwreck of the MV Wakashio has caused one of Mauritiuss worst environmental catastrophes and i..

The shipwreck of the MV Wakashio has caused one of Mauritiuss worst environmental catastrophes and its devastating impact is expected to last for decades. Over 1 000 tonnes of fuel oil leaked into pristine Mauritian waters, covering the nearby shore in toxic sludge and immersing the ecosystem in a desperate struggle for survival.

This environmental crisis couldnt have occurred at a worse time for Mauritius. The spill will seriously impede the recovery of a Mauritian economy highly dependent on coastal tourism and already battered by COVID-19 travel restrictions.

Mauritius and other African states need to promptly review their contingency strategies and response capacities so we can start positing immediate lessons to be learnt.

The national and international response to the MV Wakashio crisis was commendable. France, India, Japan and the International Maritime Organization cooperated to support local Mauritian efforts in a race against time to pump out the fuel from the vessel, which eventually broke apart on 15 August. Meanwhile local volunteers flocked to the shore with improvised booms and barriers.

Mauritius and other African states need to urgently review their contingency strategies

While a full investigation and report is urgently required, it is possible to start piecing together a narrative of what has occurred and how it turned so bad so quickly.

The MV Wakashio left China on 14 July heading for Brazil. On 25 July it ran aground on the reefs located roughly a mile off Pointe dEsny and the Blue Bay Marine Park along the south-eastern shore of Mauritius. No oil leakage was reported at the time, and the Mauritius coast guard swiftly deployed booms and took other preventive actions. The government activated its National Oil Spill Contingency Plan the following day.

By 5 August a minor oil slick was observed surrounding the vessel. It was still assumed that the countrys contingency plan was sufficient and that the risk of oil spill was still low. But then the MV Wakashio flooded and began sinking. Oil started to spill into the sea.

On 7 August Prime Minister Pravind Jugnauth declared a national environment emergency. Fisheries Minister Sudheer Maudhoo suggested that this is the first time that we are faced with a catastrophe of this kind and we are insufficiently equipped to handle this problem. Mauritius called for international help once the scale of the emergency became apparent and quickly overwhelmed the resources and capacity of the countrys national contingency plan.

The disaster demonstrates how even seemingly small oil leaks and spills can be devastating

Some of these resources were acquired as part of the Western Indian Ocean Marine Highway Development and Coastal and Marine Contamination Prevention project from 2007-2012. The project also called for the establishment of the Regional Marine Pollution Co-ordination Centre (RCC) for Marine Pollution Preparedness and Response in the Western Indian Ocean.

South Africa will host the RCC, and its establishment must now be expedited. The disaster demonstrates how even seemingly small oil leaks and spills can be devastating, especially when they occur in sensitive and critically important environmental areas.

Will other African countries and regional organisations develop sufficient capacity to respond to crises on the scale of the MV Wakashio without depending on international assistance? There is a great risk of oil spills and leaks occurring elsewhere in the African maritime domain in the future, especially spills that occur during bunkering.

The Cape of Good Hope route is a maritime super highway. Some countries, like South Africa, are able to swiftly respond on their own, as demonstrated in May when the potential wreck of the Yuan Hua Hu, also carrying 4 000 tonnes of fuel oil, was narrowly averted.

Theres a great risk of oil spills occurring elsewhere in Africa, especially during bunkering

Many countries such as Mauritius lack at least some of the resources or capacities needed to deal with such a disaster. Governments require up-to-date assessments to plan future responses. Better and more collective resources and skills at a regional or continental level are required.

Improved accountability mechanisms are also important. The Japanese owners of the MV Wakashio have offered, under international obligations, to pay compensation for applicable damages caused by the oil spill. Yet in other cases it might not be as easy to track the owners and determine liability (as can be seen in the investigation into the tragic Beirut port explosion of 4 August).

It is time for African maritime institutions to review their approaches and develop appropriate expertise and response mechanisms. This should ensure fast and effective regional or continental action when the inevitable oil leaks arise.

The results should be reported to key multilateral organisations – ideally to the African Union (AU) – as part of the implementation of 2050 Africas Integrated Maritime Strategy. The AU could, for instance, convene a consultative forum for experience and skills sharing with inputs from all the regional economic communities such as that hosted by the Southern African Development Community in 2018.

Disaster relief is expensive, but is nowhere near as controversial as other maritime issues such as creating security frameworks and determining boundaries. It can also foster collaboration anchored in regional AU institutions that draw on indigenous expertise and capacities.

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More than 100 children killed and injured as violence intensifies in Ituri, DRC – Save the Children

Kinshasa, August 13 – At least 83 children have been killed in the northern province of Ituri in the..

Kinshasa, August 13 – At least 83 children have been killed in the northern province of Ituri in the Democratic Republic of Congo between April and July. Save the Children is horrified by the recent escalation of extreme violence, in which also at least 17 children were injured and 12 were sexually abused.

In the same period, around sixty schools were attacked, and 17 health facilities – two of which were supported but the charity.

“The situation for children is getting worse by the day, in a conflict they should not have a part in. We need to ensure children can return to school, that they and their families can go to health facilities if they need to, and that they are protected”, said Malik Allaouna, Save the Children country director in DRC.

“We need more resources, and call upon the international community and the Government of DRC to help alleviate the suffering of these children. We are asking all involved parties to grant unhindered access to humanitarian workers, so they can support those who are most in need.”

Since January 2020, the situation in Ituri has deteriorated significantly in the Djugu, Irumu and Mahagi territories. At least 1,315 people were killed, including 165 children. An estimated 300,000 people have been displaced since January, adding pressure to the situation in Ituri, which already hosted over 1.2 million Internal displaced people in 2019.

“Children who had to flee from the violence told us they had to leave everything behind because militias came into the area of Djugu. Suddenly, they found themselves homeless and without any food, having to sleep in schools”, said Dr Macky Manseka, Humanitarian Health and Nutrition Programme Manager at Save the Children.

Save the Children, which has been responding to this crisis for over a year, warns that displaced populations do not have access to enough food. Communities are also lacking health and nutrition services, clean and safe water and hygiene materials, as areas become increasingly cut off by violence and resources are in low supply.

“For example, there were more than 235 new cases of severe acute malnutrition in July 2020”, Dr. Manseka continued. “But because of the violence, we cant follow-up properly on sick or malnourished children. As a consequence, their treatment is disrupted, which might lead to relapses or even deaths.”

END

Note to editors:

Save the Children supports 17 health facilities, and runs programmes in support of survivors of sexual and gender based violence. It has a strong presence in the field of nutrition, and water, hygiene and sanitation. The organisation is also running education programmes in Ituri, and working to improve access to education for girls.

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