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Imperial will take a 19.9 per cent ownership stake and one of five board seats at Auxly Cannabis. Auxly gets the rights to Imperial’s vaping technology. Auxly’s shares were up 21.92 per cent in late afternoon trading. (The Logic)

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Talking point: This is the second large tobacco company to invest in a Canadian cannabis firm following Altria’s $1.8-billion investment for a 45 per cent stake in Cronos Group, with the ability to take that stake up to 55 per cent. The focus on vaping will put Auxly in direct competition with Canopy Growth, which has made a series of acquisitions in recent months to focus on non-traditional cannabis products. Cannabis edibles, including vaping liquid, will become legal on October 17. It’s not just Cronos and Auxly looking to get in on the space, though. In October 2017, Aurora Cannabis was the first producer to launch a vape-ready CBD oil. Tilray partnered with brewing company Anheuser-Busch in December 2018. However, all these companies may see their product-rollouts delayed. Health Canada expects only a limited number of non-traditional cannabis products to be available “no earlier than mid-December.”

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The Secure and Fair Enforcement (SAFE) Banking Act would protect banks working with cannabis firms from criminal scrutiny. A U.S. House committee is debating the bill Tuesday  afternoon. (Financial Post)

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Talking point: Canadian cannabis companies have had an edge over their U.S. neighbours both because of recreational legalization, and because they have access to cheaper capital, and more of it. The SAFE banking bill will change that by freeing up banks that were previously leery of getting involved in the not-yet-legal space to lend. The change will unleash an onslaught of more moneyed competition that will eat into Canada’s first-mover advantage. It’s something the cannabis sector here has been anticipating, however, it’s not clear it’s fully braced for it. Some Canadian giants in the space have already given up significant ownership to U.S. companies: beverage company Constellation Brands invested $5 billion in Canopy in August 2018 and, that December, tobacco company Altria funneled $2.4 billion into Cronos.

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The activist investor will counsel the company on strategic partnerships. In exchange, he will receive stock options that, if exercised, would make him the Canadian marijuana producer’s second largest shareholder. Following the news, the company’s stock rose 12 per cent in early trading. (Bloomberg, CNBC)

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Talking point: Peltz will help Aurora—Canada’s second biggest cannabis company by market cap—in an area where it has lagged behind its competitors: partnerships with consumer goods giants. The billionaire investor holds large stakes in Procter & Gamble and snack-food firm Mondelēz International. Other cannabis firms have done a number of deals with more established firms in adjacent industries to develop new products and access their marketing and distribution experience. Market leader Canopy Growth and fourth-place Cronos have received investments from alcohol company Constellation Brands and cigarette-maker Altria, respectively.

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Anheuser-Busch InBev NV, the maker of Budweiser, is partnering with B.C.-based marijuana firm Tilray Inc. to research non-alcoholic cannabis-infused beverages. The two companies will   each invest up to $50 million. The partnership is limited to Canada, and decisions surrounding the commercialization of any potential products will come later, as marijuana edibles and beverages won’t be legal in the country until 2019. (Bloomberg)

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Talking point: Anheuser-Busch is joining the ranks of other alcohol giants entering the cannabis industry. Molson Coors Brewing signed a joint venture with Hexo Corp., a Quebec-based cannabis producer. Constellation Brands—an international producer of beer, wine and spirits—is now the biggest shareholder in Canopy Growth, investing $5 billion back in August, and Tobacco company Altria Group announced a US$1.8-billion investment in Cronos Group earlier this month. While the Constellation and Altria deals include the option to take majority control in the future, Tilray wanted to remain independent. The company’s shares increased 16 per cent in post-market trading on Wednesday, and are up over 10 per cent as of Thursday close. Also Thursday, the federal government released its plan for regulating cannabis edibles, limiting solids and beverages to 10 milligrams of THC per package, prohibiting the inclusion of any alcohol or nicotine and limiting caffeine.

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Mike Gorenstein, CEO of Cronos Group, said cigarette giant Altria’s investment in his Canadian pot company could lead tobacco growers to switch to growing marijuana instead. CannTrust Holdings is also talking to farmers of other cash crops about cultivating cannabis, CEO Peter Aceto said. (Bloomberg)

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Talking point: Farmers might want to think twice about turning their fields over to contract cannabis cultivation. Cannabis producers ramped up supply in anticipation of legalization day in October, but PwC predicts that by 2021, annual industry capacity will be 2,000 tons of pot, against demand of 900 to 1,200 tons. And the consultancy said not all of that excess production can be sold in export market. While Canadian cannabis farmers now qualify for some environmental and innovation funding from the federal government, they’re not eligible for safety net programs that protect against sudden crop price drops because of the volatility of the sector. Combined, that makes growing pot for big marijuana processors a relatively risky proposition long term.