Pot Inc.: Big businesses have
sprung up around fuzzy legal boundaries
January 22, 2005
Dr. Paul Hornby, the grey-haired, ponytailed
scientist who leads Advanced Nutrient's research and development team, admits
he's paranoid. 'I dream of the day when I can do this work without fear
of the door being kicked in,' he confided. 'Marijuana is a
herb -- a very, very useful herb. But the freedom to do research with no
risk is just a dream.'
Hornby pleaded guilty in March 2003 to growing marijuana for the B.C. Compassion
Club Society. He received a one-year conditional sentence that was upheld on
Police seized nine boxes of marijuana weighing 18 kilograms, seven plastic bags
of buds weighing 980 grams, 43 dried plants, plus 367 living plants and 1,892
The estimated street value of the pot, they said, was more than $500,000 -- but
all of it was being sold at cost to medical patients, who saw the prosecution
of their main grower as police persecution.
Hornby's work today for Advanced Nutrients of Abbotsford, he emphasized, does
not require him to break any laws.
"Any activities that directly involve cannabis plants
are carried out by other people," he said. "All I do is analyse data
and assist in product development."
Hornby has every reason to feel nervous -- marijuana remains an illicit drug
and there is considerable controversy about what is legal activity and what is
The owners of Advanced Nutrients, which annually produces $30 million worth
of plant food and fertilizer products specially designed for marijuana, found
themselves charged in 2001 with serious drug offences.
But after two years, all of the charges were stayed and police returned the bulk
of the assets they had seized in their investigation.
As a result of what they consider police harassment, the principals of Advanced
Nutrients became vocal opponents of the marijuana law and harsh critics of the
government's failure to help ailing patients obtain medicine.
They believe sick people should have access to medical
marijuana and are committed to helping them get it.
If there is one reason the Fraser Valley plant-food and fertilizer firm has become
an international force in the booming marijuana industry, it is the work of Hornby
and his colleagues.
Not only have they designed and devised more than 100 proprietary products for
growing marijuana, they also have conducted some of the most extensive private
research into the plant. They have produced for Advanced Nutrients sophisticated
knowledge about how to manipulate the chemical components of the pot plant and
produce a multitude of different strains from the two most used types of marijuana
-- cannabis sativa and cannabis indica.
Hornby's products -- especially Big Bud and Voodoo Juice, for example, are designed
to nurture marijuana that grows fast and produces large resinous buds with a
high amount of THC (delta9-Tetrahydrocannabinol)
-- the predominant member of a family of substances known as cannabinoids
that give the plant its kick.
The University of Mississippi, the only official American facility growing,
analysing and providing pot for the U.S. government, tested Advanced Nutrients'
suggested feeding system. It produced buds that were 20 per cent larger in terms
of biomass and THC levels that were three times higher than the norm.
And Advanced Nutrients is only one of several companies that hope to cash in
on the nascent but potentially massive medical marijuana market based on these
B.C. Cannabis Club Society founder Hilary Black (who was distributing Hornby's
pot), dean of cannabis researchers Dr. Lester Grinspoon from the Harvard Medical
School and Toronto lawyer Alan Young have joined Cannasat Pharmaceuticals Inc.
The Toronto-based firm was created by former media mogul Moses Znaimer, clothing
retailer Joseph Mimran and Hill & Gertner Capital Corp.
The reason is simple -- people suffering from numerous ailments have found pot
and its derivatives offer relief and research indicates some of the 400-plus
compounds in the plant hold enormous medical potential.
Interest in the plant's medicinal properties also has been fueled in the last
decade by the discovery of an endocannabinoid system within the body that chemicals
in marijuana stimulate.
The respected journal Nature Medicine said this family of substances "has
an important role in nearly every paradigm of pain, in memory, in [brain] degeneration
and in inflammation."
As well, marijuana appears to be relatively benign with
few side-effects: Aspirin as a drug is medically a much more dangerous risk for
children than a pot plant. Even peanut butter poses a phenomenally greater harm,
given the prevalence of nut allergies.
In Canada, the government is supplying roughly 1,000 people with marijuana
for medicinal purposes or with the paperwork to allow them to grow their own.
There are also compassion clubs across the country that are illegally supplying
nearly 10,000 other people but that police won't close for fear of public outcry.
Numerous other Canadians who rely on the drug for medical relief buy it on the
street or rely on their friends.
I have lost two pals in recent years to cancer and both found smoking marijuana
the only effective drug for nausea caused by the chemotherapy. When my mother
underwent the debilitating treatment a year ago, I flew to Ontario to give her
a bag of organic B.C. bud to help her maintain her appetite.
Advanced Nutrients has a sheaf of similar testimonials from patients who believe
the quality of their lives, if not their continued survival, is because of the
marijuana the company has provided or the support they received with their growing
Patient groups say as many as one million Canadians want access to medical
marijuana but are being frustrated by the politics and the stigma surrounding
Indeed, medical marijuana patients are among the loudest critics of government
policy and the media for treating the debate about their needs as some kind of
Across the United States., too, in spite of heavy anti-marijuana propaganda
from Washington, a dozen states have medical marijuana initiatives and have moved
to decriminalize the plant.
Although the U.S. federal government continues to wage a global jihad against
the drug, California has more than 60,000 registered medical marijuana users
and cities such as Oakland have two dozen or so licensed compassion clubs.
The illicit, primarily recreational marijuana market
in Canada is estimated at $7 billion -- the medical market by some estimates
may be in the neighbourhood of $20 billion.
Investors and even conservative think tanks such as the Fraser Institute think
that because of the economics and the tax revenue potential, it's only a question
of when, not if, the marijuana laws will be changed.
And in the jockeying that has already begun among companies, people such as Hornby
and others who have long research-based involvement with the plant, are being
courted and hired.
He joined Advanced because of its commitment to medical marijuana and activism
to reform marijuana laws.
"I was arrested in connection with providing medicine," he said. "The
arrest, trial, conviction and media coverage were travesties of justice. I was
a non-profit provider and researcher of medicinal herbs. It was totally wrong
for law enforcement to have spent its resources to attack me."
Some judges in other cases have been sympathetic to that argument -- that
the criminal law should not be used against people producing, selling, possessing
or consuming marijuana for medical reasons.
Cultivation, trafficking and possession charges laid against compassion clubs
such as the Vancouver Island Compassion Society have been tossed on the grounds
the clubs are providing a needed medicine.
"The VICS has provided that which the government was unable to provide:
a safe and high quality supply of marijuana to those needing it for medical purposes," said
B.C. provincial court Judge Robert Higinbotham.
Charges against the Toronto Compassion Club and others also have been stayed
for "not being in the public interest."
Advanced Nutrients has so far been the most aggressive company trying to open
that door to what is clearly a clamouring market.
It helps pay for marijuana magazines, lobbyists and various activist events.
It has hired Carol Gwilt, who is facing charges of trafficking in marijuana
after Vancouver police dramatically raided her Commercial Drive coffee shop last
summer. She has chosen a trial by jury and part of her defence will be that the
shop was dispensing medicine, not trafficking in drugs.
Advanced also helped finance The Cannabis Health Magazine based in Grand Forks,
although its advertising has since been scaled back.
(The magazine is one of the most articulate and reputable sources for information
on medical marijuana issues and patient concerns. Unlike many pot-culture publications,
it eschews associations with the recreational marijuana industry.)
Other firms are being more low key.
Established in January 2003, a Toronto-based company called Cannasat intends
to produce therapeutic cannabis products -- just like a traditional drug company,
according to vice-president Andrew Williams.
Cannasat wants to conduct large-scale clinical trials with the intent of seeking
approval from Health Canada for new marijuana-based medications.
To facilitate that goal, the company has bought a minority interest in Saskatoon-based
Prairie Plant Systems Inc., the 15-year-old private biotech firm with an exclusive
multi-million-dollar contract with Health Canada to grow marijuana.
Pot grown by the company in a mineshaft at Flin Flon, Man., is distributed
across Canada by Ottawa to those who qualify under the federal medical program.
Prairie Plant Systems is the only licensed grower and distributor of cannabis
in the country. Theirs is the only pot production facility that meets the Good
Manufacturing Practices biosecurity standard required by the government.
Around the globe -- in the United States., in Israel, in France, in the U.K.
and in the Netherlands
-- other private and public companies are researching and developing similar
But most are examining specific, synthesized components of the plant rather than
the organic, whole-plant, herbal medicine tack favoured by Hornby and Advanced
GW Pharmaceuticals, a U.K.-based company founded in 1997 by Geoffrey Guy, is
considered a leader in the field in part because of its partnership with one
of the most experienced pot growers, Hortapharm, a Dutch company founded by U.S.
Hortapharm, whose chief grower is said to have created one of the most popular
strains of marijuana, Skunk No. 1, has a licence from the Dutch government to
grow marijuana for research purposes.
GW expects that the strain-specific research Hortapharm has done over the years
(which is very similar if not identical to what Advanced Nutrients has been doing)
will help it develop non-smoking-based products.
Later this year, GW hopes to market in Canada a marijuana-based spray called
The firm's success and the announcement that pharmaceutical giant Bayer was
investing nearly $100 million to become a partner were among the developments
that excited the number crunchers at Toronto's Hill & Gertner.
"We found out they were publicly traded and had raised $150 million, had
a market cap of between $300 and $600 million without even having a product on
the market," Williams said. "So, as investment bankers, we looked at
that and went, 'Hey, this is interesting!'"
Medical marijuana, he said, wasn't something the Bay Street suits had heard about
but the more they dug into the issue, the more they liked what they saw.
"This plant is incredibly versatile -- which is probably why so many
people use it," Williams enthused. "Medically, there seems to be some
real medical applications."
So they hired Harvard's Grinspoon as their scientific adviser.
Grinspoon has been proselytizing about the benefits of marijuana for more than
25 years. He put forward the first business proposals to develop whole-plant
products and has been a tireless crusader for medical pot.
After a lifetime of studying marijuana, here are Grinspoon's
conclusions, which are prominently featured in Cannasat's promotional literature:
"There is very little to support the proposition that smoking marijuana
represents a great risk to the pulmonary system. Although cannabis has been smoked
widely in this country for four decades now, there are no reported cases of cancer
or emphysema which can be attributed to marijuana.
"I suspect that breathing a day's worth of the air in Houston or any other
city with poor air quality poses more of a threat than inhaling a day's dose
of smoked marijuana.
"Furthermore, those who are, in today's anti-smoking climate, concerned
about any toxic effects on the pulmonary system can now use a vaporizer, a device
which frees the cannabinoid molecules from the plant material without the necessity
of burning it and thereby producing smoke.
"As for the psychoactive effects, I am not convinced that the therapeutic
benefits of cannabis can be separated from the psychoactive effects nor am I
persuaded that that is always a desirable goal. For example, many patients with
multiple sclerosis who use marijuana speak of mood elevation as well as the relief
of muscle spasm and other symptoms. If cannabis contributes to this feeling better,
should patients be deprived of this effect?"
But there really isn't much existing research into marijuana's health effects.
What there is, indicates the plant could be enormously useful in the treatment
of AIDS, multiple sclerosis, wasting syndrome, epilepsy, glaucoma, hepatitis
C . . . and a host of other ailments.
"I think a whole new class of drugs will be derived from the plant," Williams
said. He pointed out that the opium poppy is used to produce more than 20 drugs
on the market today, but there are currently only two medications based on marijuana
available -- both used primarily in cancer treatment.
" We think there is lots of room for lots of different drugs to be developed."
But the strident anti-pot policies of successive U.S. administrations has fettered
research. In the United States., the medical program is based at the University
of Mississippi and it is it is next to impossible for researchers anywhere else
to get needed approvals.
In Canada and Europe, the climate is less oppressive.
Current program 'doomed'
Cannasat's Alan Young, the Toronto lawyer at the forefront of the legal challenges
launched against the criminal marijuana law over the last decade, thinks Ottawa's
failure to offer a viable medical program will force open the marketplace.
"Due to a quirk in the way that litigation unfolded," he explained, "we
managed to merge the medical and recreational-use issue such that the health
and vitality of the criminal prohibition depends
on having an effective medical program."
The current controversial and expensive federal program is doomed because it
is being so ineptly run by Health Canada, Young and others believe.
"I was originally recruited in 2003 by venture capital people to see
what kind of market was available for cannabis because there was a lot of feeling
in 2003 that we were moving towards legalization," Young said. "People
actually thought we might be into that large, booze-like market. I advised the
venture capitalists that the only market available right now is to develop the
Young said Cannasat is in the initial stages of raising capital, submitting protocols
to Health Canada and developing a working relationship with Ottawa.
He was peeved the federal government is giving GW an early entry into the
market, even though its home country, the U.K., remains leery.
"Geoffrey Guy, founder of GW, his mantra is we will develop marijuana
that does not get you high," Young said. "One of the reasons I'm not
supporting GW and their product is I don't believe that's a possibility. I also
think it demonizes the plant unnecessarily and it raises the spectre of genetic
modification. I don't know where Health Canada thinks they are developing good
policy by approving a product that can't be approved in its own country."
In spite of Young's criticism, there is no question that the market will offer
different methods of administration for marijuana-based medication and both synthetic
and organic products.
If you need a quick-action response, you will probably have to inhale the drug,
because if you have nausea, for instance, you can't wait for an oral preparation
to be metabolized through the liver. If you have chronic pain, you may want a
patch that delivers a steady, controlled dose.
Regardless, everyone believes a whole class of people will choose to continue
smoking, whether they roll it or use some sort of vapourizer.
"What makes it interesting for us, too," Williams said, "is
that it's really tricky to describe what you are doing because so many people
have such strong feelings about this plant. There's a lot of misinformation,
a lot of myths. Our mission is really to understand the science. We want to do
strain-specific research similar to what Hortapharm did. That's our goal."
But before the company can do anything, the long arduous road of regulatory approval
lies ahead. And to do clinical trials, it must raise tens of millions of dollars
-- which will probably require a public offering.
"We're excited," Williams said. "We look at this as a long-term
R & D play. There will be lots of competition and lots of companies interested
in this plant. It is a pretty remarkable plant when you get into it. Cannabis
is so safe -- you can't overdose on
it, you can't smoke yourself to death and if you look at the side-effect profile
of other drugs that have got approved . . . well, it's only because of the American War
on Drugs and the incessant media barrage against cannabis."
Like others in the field, he emphasized that marijuana was outlawed without debate
or any scientific evidence to support a prohibition -- in the U.S. and Canada,
historians have established, the anti-pot laws were driven by questionable social
Different strains, different pains
Back at Advanced Nutrients, Hornby says it was Black who initially really
turned him on to the plant's medicinal properties, even though he has toked since
he was a 15-year-old. She blew his mind, he said, with her knowledge of what
specific strains of the plant would do.
One strain, for example, would relieve symptoms of muscular sclerosis but do
nothing for glaucoma. Another strain of the plant seemed to help with glaucoma
but do nothing for nausea.
"The strain-specificity blew me away and I've been on that track since that
time. I wanted to know why," Hornby said.
"When we look at the chart of cannabinoids (in the plant), we see that four
or five of these compounds appear in different ratios. The THC might be up here
and the CBD (cannabidiol, another of the family) down here. But if you put one
up to here, you start going to sleep, if you put another down here, you get more
of a head stone. Right? It depends where the CBD is in relation to the THC.
"This is my challenge now -- to figure out what cannabinoid ratio will effect
MS, which will effect glaucoma, which will effect epilepsy."
Hornby also runs a company called Hedron Analytical, which tests and develops
plant and human nutrition supplements, vitamins, and other substances.
And at the moment, he said, he is investigating oral preparations of marijuana.
He developed a method for pre-treating organically grown cannabis to move
the level of THC up or down and to produce an activated oral dose of the medicine
as if it were a brownie or a capsule.
"We have the first standardized medicine ever," he said. "We developed
it. We have it on the shelf. We do it the same way every time so we measure how
much is there and get a standardized product -- 50-milligram caps. Whatever you
like. And we're doing case studies right now with six or seven people with these
capsules to see the effects."
Robert Higgins, co-founder and president of Advanced Nutrients, believes it
is the work of Hornby and others that is fueling his company's explosive growth.
It has offices in Australia, four distributors in the U.S., three distributors
in Canada, distributors in the U.K., the Netherlands, Italy, Germany, France,
Switzerland, Belgium and Spain.
"We have interest now from other parts of the world to distribute through
Asia and in the Middle East," he said. "And all the research we've
done -- we could apply that technology to the world's food situation to give
He and his partners Michael Straumietis and Eugene Yordanov have already envisioned
a spinoff company, Advanced Plant Sciences, focused on products to increase food
production, improve golf courses and cater to professional rose and orchid gardeners.
"What we have over our competition is we are researching cannabis," Higgins
"We have the largest facility anywhere in the world. We have doctors,
chemists, with a long history researching cannabis, trying to unlock the mysteries.
We talk about cannabis, we talk about marijuana, and we do hard research -- about
$500,000 a year on R & D."
"Think about this: Health Canada has issued licences to people who qualify
for a medical exemption that permits them to grow and use marijuana. These licensees
are now sent out onto the street to find cannabis. Take those cannabis plants
or seeds home with
them and, hey, figure it out yourselves, kids, grow your own medicine."
Higgins is not alone in ridiculing Ottawa's marijuana program. It has been attacked
by many patients for providing only one strain of marijuana, for providing pot
that isn't optimum for smoking and for having no cultivation support
for those who want to grow their own.
In the Netherlands, which set up its medical program two years ago, the government
offers one of each main strain of pot -- an indica and a sativa -- because they
provide different kinds of relief.
"With all the varied strains," Higgins said, "we've been able
to break down the different cannabinoid profiles and determine which plants work
very, very well for pain management, which for appetite stimulation. Some are
excellent for MS patients, some are not. We are researching which components,
which plants, and which level is ideal for which person with a given condition."
The government is doing none of this research, he complained, and is stonewalling
those who would establish their own program.
Among many other groups, the Senate and the Canadian Medical Association have
called for research on cannabis.
"No science lab, no licensed researcher or doctor allowed to grow cannabis
-- how insane is that?" Higgins said.
"Yet they are handing out these licences to sick people -- sick and dying
Advanced Nutrients, he boasted, runs a program for marijuana exemptees providing
equipment, know-how, everything they need to set up a safe, sensible growing
In turn, they provide the company with tissue samples of the plant. During the
growing season, that allowed the experts to determine what nutrients the plant
At harvest time, the finished product allowed Advanced to test and determine
the results of that particular feed regime.
If you have a problem growing, the company has a hot-line
number staffed by a man named Tech Mike, who can diagnose and prescribe solutions
for everything from mites to the brown patches caused by a chemical imbalance
-- even if you're not using Advanced Nutrients products and even if you're not
a medical grower.
I sat with Tech Mike for a while in his office and listened to him give a
half-dozen American growers detailed advice on improving their crop.
| canada.com |
By Ian Mulgrew