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Peter Aceto’s ouster comes three weeks after the regulatory body found the Ontario-based medical cannabis company had grown weed in unlicensed rooms. Eric Paul, the company’s chair, has also resigned at the board’s request. Robert Marcovitch, an independent board member who led the internal investigation into the unlicensed growing, was named interim CEO. The company’s stock was up 15.89 per cent in late afternoon trading, after falling 37.5 per cent in the wake of the scandal. Aceto has yet to speak publicly of his termination. In an Instagram post earlier in July, he pushed back against accusations that he misled investors, urging them to “let the dust settle.” (The Logic)

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Talking point: This is the second termination of a high-profile cannabis executive in less than a month. Earlier in July, Bruce Linton was forced to resign as co-CEO of Canopy Growth over the company’s slower-than-expected growth. Aceto’s exit, meanwhile, centres on fraudulent activity intended to increase product volume and sales. The departures highlight opposing philosophies among cannabis investors, with one group prioritizing rapid growth and the other seeking a more measured path to profitability. Both companies’ stocks rose when their leaders were fired—a vote of confidence from investors looking for more financial and regulatory discipline in the sector.

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Alberta is placing orders from the medical cannabis company on hold after Health Canada found the company had deceived the regulator and grew cannabis in unlicensed facilities. The company’s stock has plunged 37.5 per cent since Friday close. In an Instagram post on Friday, CEO Peter Aceto broke his silence and addressed accusations that he had misled investors: “21 years a trusted banker of the people & 9 years the CEO. Then 9 months later a thief/fraud? Ah, doesn’t make sense. Let the dust settle.” (Reuters, BNN Bloomberg)

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Talking point: This is the biggest regulatory breach in the cannabis sector since legalization in October 2018. Previous violations included unsanctioned-pesticide use and promoting cannabis products, which producers are prohibited from doing. CannTrust’s violation—which included unlicensed growing in rooms it allegedly hid from inspectors with fake walls while it awaited regulatory approval—highlights the challenges cannabis companies face in balancing increasing pressure from investors to grow revenues while complying with strict Health Canada guidelines.

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The clinics—operating in Alberta, Ontario, B.C. and Quebec—advertise treatments they claim can help with a range of issues, including heart problems and multiple sclerosis. However, Health Canada said there’s little evidence the treatments work.(Globe and Mail)

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Talking point: The rise of stem-cell injections is part of a broader trend toward medical treatments not backed by high-quality scientific evidence. In June, Goop, a controversial-wellness company whose products claim medical benefits without providing scientific evidence, opened its first Canadian pop-up store. The same month, an article in the journal Stem Cell Reports highlighted the rise of YouTube testimonials as powerful marketing tools for unproven stem-cell treatments. A video from actor Mel Gibson where he claims a stem-cell treatment led to a miraculous recovery for his father is now YouTube’s third-most watched video on stem cells. Canadian regulators attempts’ to shut down these kinds of clinics is already facing resistance. Some clinics plan to continue offering stem-cell injections until Health Canada takes a more punitive measure, like fining them.

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The cannabis producer grew pot in five unlicensed rooms between October 2018 and March 2019 before being licensed in April, Health Canada found. The regulator put a hold on 5,200 kilograms of dried cannabis that was harvested from the unlicensed rooms in Pelham, Ont. CannTrust placed a voluntary hold on another 7,500 kilograms of product harvested in Vaughan, Ont. The company warned customers of product shortages. Although Health Canada could clear some or all of its stock for sale if it passes quality tests, the majority of CannTrust’s inventory is now on hold. Its stock fell 22.14 per cent  on the news. (Financial Post)

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Talking point: CannTrust is one of Canada’s biggest cannabis companies, with a market cap of more than $1 billion. The regulatory breach could compromise its market position, according to Douglas Miehm, an RBC Capital Markets analyst. “We believe there is meaningful risk to revenue growth over the coming months,” he wrote in a note to clients. “CannTrust shares may also trade at a wider discount to the peer group given the outstanding questions about the company’s internal quality controls and/or governance.” The news is the second time in July that a major Canadian cannabis company has faltered. Last week, Bruce Linton, the co-founder and co-CEO of Canopy Growth, was fired from the world’s biggest cannabis company. His ouster came after Constellation Brands, which invested $5 billion in Canopy, was disappointed by the slow revenue growth.

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While the amended regulations will come into effect on October 17, Health Canada said it expects only a limited supply of the products—which include cannabis-infused drinks, food, beauty products and vape juice—to be available online and in stores no earlier than mid-December. (Financial Post)

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Talking point: Industry heavyweights have been lining up since cannabis was legalized in October 2018 to get in on the cannabis-edibles game. Since legalization, Canopy Growth has acquired a U.K. skincare company, a German vaporizer company, collaborated with Martha Stewart on a CBD lines of products and received a major investment from alcohol giant Constellation Brands. Tilray partnered with Anheuser-Busch in December 2018. Aurora Cannabis was the first producer to launch a vape-ready CBD oil in October. Some of the regulations in place have faced opposition from alcohol and cannabis companies: in April, 10 companies—including Molson Coors and led by Darrell Dexter, cannabis adviser and former Nova Scotia premier—formed the Cannabis Beverage Producers Alliance to influence changes to the government’s proposed regulations, such as letting cannabis beverage and food products be produced in the same facilities as non-cannabis products. That rule remained in the final regulations released by Health Canada on Friday.

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The old food guide recommended four servings of dairy products, and named “milk and alternatives” as its own food group. Draft versions of the new one, set to be released in 2019, combine dairy products into a new protein category dominated by legumes. (La Presse)

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Talking point: This could have significant adverse impacts for Canada’s dairy industry, which is about to face more competition due to the USMCA opening up the market to U.S. players. The food guide is hugely influential—it’s the second most-requested government form, after tax forms. It’s also used to prepare hundreds of thousands of meals in schools, government facilities, prisons and hospitals across the country. The old food guide recommended a cheese stick or a yogurt as a healthy snack. The new draft focuses on chopped vegetables and nuts. This draft isn’t finalized, but things aren’t looking good for the dairy industry as, along with all other food industry groups, it’s been largely excluded from consultations, and the government has declined to examine any studies the industry has funded.

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Some medical device manufacturers worry mandatory safety audit rules coming into effect on New Year’s Day are too expensive to carry out and are opting to pull their products in Canada. Under the new Medical Device Single Audit Program (MDSAP), medical device makers will reportedly pay between $30,000 and $50,000 for annual audits, roughly 10 times what it used to cost. (Globe and Mail)

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Talking point: Health Canada suggests the new program harmonizes Canada’s system with its peers. However, MDSAP is voluntary in other countries like the U.S., Australia, Brazil and Japan. Certainly, there’s a fine balance between safety on the one hand and accessibility and commercial success on the other when it comes to regulating med tech. While Canada deploys grants and incentives aimed at commercializing its medical research and technologies, ensuring regulatory programs aren’t necessarily restrictive—and counter-productive—is likewise essential to boost Canada’s competitive position in the space.

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Bullying inside Bonify, a Winnipeg-based cannabis producer, led to recalled pot being shipped to licensed retail stores in Saskatchewan, an internal investigation found. Bonify employees reportedly noticed problems with the product early on, but were bullied into staying quiet. Three senior executives have been dismissed and a board member was suspended in light of the report. The producer will keep its Health Canada licences. (Canadian Press)

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Talking point: Recalls aren’t unusual in the marijuana business, given the tight quality standards producers must meet—they’re tolerated, to an extent, as part of the learning curve. Bullying and toxic corporate cultures may also surface in this period of the industry’s infancy, however, this investigation may stand as a warning against allowing that type of culture to take root.

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A high-school-aged youth has been diagnosed with “severe respiratory illness,” and was on life support, but is now recovering, said Dr. Christopher Mackie, CEO of the health unit, in a press conference Wednesday. Mackie declined to specify the brand of the vape used and whether it contained cannabis. Seven deaths have been reported in the U.S., in cases mainly involving black-market vapes that contained THC, the psychoactive ingredient in cannabis. (The Logic, Gizmodo)

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Talking point: Health Canada issued a vaping warning two weeks ago amid reports of the U.S. cases, advising users to monitor themselves for symptoms of pulmonary illness, like coughing and shortness of breath. Canada legalized vaping in May 2018, and the usage of e-cigarettes among teens has risen by 74 per cent since then, according to a University of Waterloo study. Health Canada is currently considering new restrictions on advertising to curb youth vaping, including on social media and at checkout in stores. It’s also considering adding more flavours to its banned list, which currently includes confectionary, dessert, cannabis, soft drink and energy drink flavours. In the U.S., President Donald Trump has stepped into the regulatory process, ordering the Food and Drug Administration to ban all flavoured e-cigarettes.