EDITOR: | February 17th, 2015 | 9 Comments

Canadian Licensed producers of marijuana to benefit from cost accounting court battle

| February 17, 2015 | 9 Comments
image_pdfimage_print

Duchesne-Cannabis-2In a Vancouver courtroom on February 23, 2015 at 9:30 AM PST, the entire Canadian cannabiz industry and 40,000 licensed medical marijuana users, will hold their collective breath as four people have put and may still put an entire industry at a standstill by challenging the right of the Government of Canada to dictate how individuals can provide for their own medicine cost-effectively.

One of four Applicants in Neal Allard et al v. Her Majesty The Queen, Mr Neil Allard, a patient with legitimate needs for medical marijuana, estimates that to maintain his current dosage through a Licensed Producer at a cost of $8-10 per gram would cost approximately $6,000 per month, and $3,000 at a cost of $5 per gram. Until the implementation of the MMPR regulations in Canada, Mr Allard has a license to produce his own medical marijuana at a cost of $0.5 per gram under the MMAR regulations.

Forcing Mr Allard to buy medical marijuana, he argues in court documents, would compel him to pay costs that far exceed his monthly income either now or upon his retirement, and these costs are not eligible for assistance under any health care plan. Given these increased costs, Mr. Allard fears that he may have to risk imprisonment by continuing to produce marihuana or procuring it through the illicit market.

The Applicants’ case is at the center of a controversy that stalled the progress of marijuana industry since its filing in March 2014 a mere few weeks before the MMPR system was supposed to fully displace the leaky MMAR system. By leaky I mean that the lack of regulatory control of the MMAR system permitted medical marijuana to enter the illicit market.

While the case is scheduled to be heard on February 2015, it was the object of interlocutory relief imposed in March 2014. In practice, this means the old MMAR system continues (albeit partially) to be in place until judgement is rendered from the current case, which may still be six months away and yet many more years.

While Allard et al. were granted interlocutory relief to continue growing their own medical marijuana, albeit with some restrictions, there is no guaranty that they will success in quashing the MMPR system. Based on the datum in rulings of The Honourable Mr. Justice Manson (click here) we can guess how both sides will argue their case.

The Applicants (Allard et al.) will most likely center their argument on that the MMPR system is unconstitutional by restricting access to a medicine by patients and forcing them to mail-order products which may or may not sustain their medicinal needs based on the point of view that the chemical profile of marijuana varies with strain and cultural conditions. But the Applicant’s side have an uphill battle at demonstrating that Licensed Producers would not provide the right strains, at the right qualities (The Quality Argument). It is a fact that the Applicants failed to make that demonstration during their injunction hearing per the judgement rendered by The Honorable Mr Justice Manson:

[90]     I am also not convinced that the Applicants have met their burden with regard to whether LPs” [Licensed Producers] “will offer the particular strains necessary to meet their medical needs. While I am sympathetic to the trial and error approach to growing various strains that have apparently served the health interests of medical marihuana users, their affidavits do not provide sufficient evidence that the strains offered by the approved LPs thus far will be inappropriate for their medical needs. I agree with the Respondent that their claims amount to a speculative argument, albeit perhaps a well-founded one”.

If the Applicants fail to successfully argue The Quality Argument their case will rest entirely on The Price-Point Argument, which is rife with pitfalls as I would expect the Respondent (the government) to question the price point of MMAR production by conducting a full review of Mr Allard’s production costs, including Opex and Capex. This is where the Allard et al. argument becomes most vulnerable. The court documents alleges that Mr. Allard’s costs are $200-300 per month from growing his own marijuana, which we calculate at 600 grams per month from the court documents–this is not a typo. This suggests that Mr Allard takes his medicine as tea. However, the court documents also show he has spent considerable sums of money at renovating his dwelling to grow marijuana. Here Allard et al. hit a possible theoretical wall at supporting The Price-Point Argument with credible cost accounting.

Because of this I predict that the case has a great probability to turn into a cost-accounting battle. We would be hard pressed to ask any of the 23 MMPR licence producers (click here; accessed on February 15, 2015) how to grow high quality medical marijuana at $0.50 per gram.


Dr. Luc Duchesne

Editor:

Dr. Luc C. Duchesne is a Speaker and Author with a PhD in Biochemistry. With three decades of scientific and business experience, he has published ... <Read more about Dr. Luc Duchesne>


Copyright © 2017 InvestorIntel Corp. All rights reserved. More & Disclaimer »


Comments

  • Geremi Ratti

    The MMPR failed miserably, even with all the growers combined, I cannot fulfill a full prescription, even if I was allowed to use them all. The doctors are going based on studies rather than facts. Plus being on a fixed income, I cannot afford to buy a full 90 gram prescription and are left less-than-properly-medicated.

    It’s harper’s war on weed, it’s so 1950’s… grow up dumbass. The new regulations are doing exactly the opposite of the MMAR was set out to do and was put in question because the government failed to do their end of the job; now they want to do no work but hand off licenses and collect taxes. Bunch of crooks.

    Support #MMARcoalitionAgainstTheRepeal

    February 17, 2015 - 3:56 PM

  • Jean Bonnez

    These greedy MMPR folks are doomed.

    Their prohibition price won’t fly with the medical crowd.

    I say, grow your own bio-cannabis or buy from compassion outlets.

    Outgrow the Harper goons!

    February 17, 2015 - 4:16 PM

  • Stu

    An easy solution is to do whats right: give Cannabis a Drug Identification Number so that people can access their medication like everyone else. Cannabis if used for medical reasons should be covered by our healthcare system.

    Synthetic drugs cost 100 times more to create and do 1000 times the damage to the patient and society. It only makes sense.

    Too bad the Conservatives are senseless. Make sure to vote in 2015.

    February 18, 2015 - 1:07 AM

  • Wayne Phillips

    The lack of regulatory control of the MMAR system which permitted medical marijuana to enter the illicit market was just one example of both Health Canada and the Gov’t of Canada’s deliberate mismanagement of a court ordered requirement so as to justify Canada’s anti-cannabis agenda.

    February 18, 2015 - 7:51 AM

  • CB

    I will NEVER trust anyone other than myself to grow & care for my own Cannabis. I need not anyone to remove my freedom to tend my own garden, and grow Mother Nature’s own natural bounty, for free, and rid me of the age-old benefits of tending one’s own garden.

    Never in a million years will the restrictions of another human being be validated upon me to do this simple, self-reliant act of caring for myself & having unabashed, unhindered access to do so as required.

    The ONLY issue here has NOTHING to do with our health & wellbeing, rather, it has EVERYTHING to do with greed, shortsightedness, monopoly, lining friend’s pockets & control.

    NATTA…. Get OUT of my gaddamn garden & take your thespian idiocy with you, thank you very much. By the way, call it as it is… These maniacal buffoon politicians & their greedy twit band-wagon hopping thieves slated April Fool’s Day, 2014, as the day to make these patients submit to their nefarious ploy. This is Canada, and it was not limited to the 40,000 ‘sick, dying, marginalized & suffering marihuana patients’ Chartered protections, no sirrie….. it was also actually 34,960,000 Canadians’ rights & freedoms being assaulted under the guise of the same. That is NO JOKE, and it best be time this nefarious Canadian Reform Alliance Party be called out for what they actually are.. Trojan Horse jockeys at best.. actively driving this country into the rocks full-steam ahead. Mutiny anyone?

    February 18, 2015 - 7:09 PM

  • Mister Weed

    The lazy greedy harpos are going to take down a lot of other greedy pigs down with them. In the end, growers will not stop growing and if harper sends any to jail, it will make headline news. There is no right-of-way for greed in health care. Either let me grow my own supply or cover my prescription so I can afford one. Seriously, $1,000 a month on medicine is insane especially if that’s what I get to live off of a month… 🙁

    They just want social security checks back.

    February 23, 2015 - 6:57 PM

  • Lake guy

    The only interest the government has in medical marijuana is the fact that they can now make millions from taxes. The changes to the regulations were made so health canada could rid itself from its responsibility of creating a system that is patient focused.
    They don’t care about the patient….they only care about the fact that the old system cost them money and manpower and their new system costs them nothing and now creates a cash cow….this is how they pat themselves on the back and justify salary raises and bonuses.
    All at the expense of the sick and dying people in our country.
    It’s disgusting really….shame on our government.

    February 25, 2015 - 11:28 AM

  • Health Canada sucks

    Health Canada is taking sick people to court over medical marijuana . Why? Why isn’t our government spending money on taking Apple and Walmart and all the big chains to court to get our tax money back that they never pay because they move it to an over seas account . Like come on people marijuana isn’t the problem corporate companies are . In the end the government will get there tax on marijuana from sick people but won’t go after the big companies to get the taxes our country deserves . Leave the little guys alone we do bought already !! The little people make this country grow its time we get what our country deserves ! Legalize it and shut up , do you know how much pot has been grown right under your nose for the last 30 years . People complain about a smell that medical marijuana grow ops give off . That smell doesn’t harm anything it’s a smell our cars and factories are ruining our atmosphere not marihuana . Tell ur kids its a skunk and move on that’s what my parents did and it’s a good answer

    March 10, 2015 - 7:34 PM

  • Rydermgt

    How are patients expected to determine quality of mail order product – particularly with only two cannabinoids disclosed?

    Health Canada is only mandating that their new dealers disclose two cannabinoids, out of how many? Regarding the “Quality Argument” – the new MMPR is an attempt to deceive!

    The mandated disclosure of at least a third cannabinoid, such as CBN, would help patients and caregivers the ability to determine Quality of Product.

    However, not all Indica contain CBD. Although CBD is a God sent for some conditions, CBG with no CBD, is better for other conditions.

    The “control” of this plant, under the disguise of “standardizing the medicine” does not help patients!

    April 11, 2015 - 5:24 AM

Leave a Reply

Your email address will not be published. Required fields are marked *