These hashish manufacturers on the grey market turn into authentic


Harrison Jordan January 7, 2020

rgbspace / iStock

Since legalization, Canadian cannabis users have been flooded with new cannabis brands, mostly with no end in sight. With the launch of Cannabis 2.0 products such as edibles and oil cartridges this month, it is not clear how many new brands will be launched.

But instead of just creating new brands to promote new products, some legal manufacturers are turning to the illegal market where their reputation thrives, even though such products are technically illegal and are not subject to state-sanctioned quality controls.

Once illegal "gray market" brands establish authenticity and a built-in fan base, their consumers can be valuable to newly invented cannabis producers in the hope of benefiting from the familiarity of the old market.

Some companies go this way at full throttle.

Take Pasha Brands, a British Columbia-based company traded on the Canadian Stock Exchange. Pasha has an interesting value proposition: the conversion of illegal but serious cannabis brands into legal brands.

Its brands include Grizzlers, Baked Edibles Inc. and Beard Brothers – three brands that British Columbia consumers have come to know.

Even large companies try to weaken the reputation of the illegal market a little.

Canopy Growth Corporation, one of the largest cannabis companies in the world, will launch oil vaporizer products under the name Juju Joints. Juju Joints, founded in 2013 by Marcus Charles and Rick Stevens from Seattle, quickly became known in the United States for its disposable cannabis oil vaporizer pens.

Here before regulations

In Canada, vaporizers containing cannabis oil were not legal until this month, but that did not prevent Juju Joints from entering the Canadian market early, even though it was apparently illegal.

Numerous online posts and threads by Canadian cannabis users in 2016 and 2017 indicate that the brand's cannabis-containing disposable pens were available in certain illegal stores and online stores.

And in 2018, VICE reported that a regional police officer in Durham – who had somehow received permission from his superiors to run an illegal pharmacy called Living on Medical Marijuana in Port Perry, ON – had previously been selling illegal drugs Juju joints had advertised.

Despite these previous developments with the brand, there is no indication that Canopy was directly associated with the company or brand at that time. Ownership of the Canadian Juju Joint brands was transferred to Canopy in 2018.

CannMart participates in phyto-extractions

As part of the listed Namaste Technologies, CannMarts Onboarding caused a sensation on the gray market.

Before the Canadian government granted cannabis licenses "only for processing", CannMart established itself as the first trading company in Canada to offer its medical patients a marketplace with strains from different manufacturers – none of them were manufactured directly by CannMart.

On December 2, 2019, just before cannabis 2.0 products hit the shelves, the company announced that it had bought the naming rights for the award-winning company Phyto Extractions, which had previously sold cannabis concentrates in the gray market, including shocks through illegal mail order websites for marijuana (MoM).

The response from the Reddit commentators was not impressive.

"Phyto is one of the poorest and shadiest black market extraction brands in Canada. I actually avoid illegal stores that run it," wrote one person.

In another thread, a commentator quipped: "Didn't Phyto sell all the spoiled splinter?", And another redditor replied: "It is the only splinter … that gave me an immediate reaction that burned my neck and made me sick. ”

Another commentator said that while CannMart had a good partnership with a black market extract company, "the problem was that they were partnering with a super shady company."

Anonymous Reddit posts from the past few months indicate that many users suspect that buying illegal chips under the Phyto brand was the mysterious pine resin that doesn't hold you up, leaves white residue on pieces of glass, and tastes good just like black liquorice.

This is in addition to the contributions from 2017 on the website, where users mentioned that the phyto splitter they bought was "under-cleaned" and "tasted like butane".

Holy fuck. Phyto.

That makes me sick. How is that possible?

Talk about shaking my confidence in the legal market.

Maybe I should just start the worst illegal company ever and bring it to the legal market.

Much easier than getting involved, building and applying.

– Travis Lane (@BeardedGreenly) December 21, 2019

After the announcement by CannMart, industry consultant Travis Lane tweeted: “That makes me sick. How is that possible? Talk about shaking my confidence in the legal market. Maybe I should just start the worst performing illegal company ever and bring it to the legal market. Much easier than getting involved, building and applying. "

A limited partnership

Namaste then issued a statement from Molly Meller of RLM PR.

"Namaste is committed to safe and high quality cannabis products and we are licensed to distribute them online across Canada and in cannabis stores in BC, Saskatchewan and Ontario," the statement said.

"This is one of our first agreements on existing market partnerships and we see this effort as an opportunity to legitimize a selection of popular products that would otherwise only be available without regulation or quality assurance."

Meller said that Namaste's agreement with Phyto "focused solely on brand licensing".

"It contains a limited number of cannabis products under the name and / or trademark of Phyto that are manufactured under our supervision by a licensed LP not listed by Health Canada until the CannMart Labs production license is completed and in effect."

When asked about product quality issues with illegal Phyto products, Meller replied that "unfounded reports on Phyto product quality should be directed directly to Phyto Extractions."

Regarding the recent posts from illegal online sellers selling illegal debris with phyto branding?

“Our partnership with Phyto Extractions extends to a very limited number of products, excluding wax and chips. As a result, Namaste Technologies and its subsidiaries have no influence on Phyto's product catalog or how products are offered for sale outside of our contract. "

Later Aaron Bouganim, Managing Director of CannMart, wrote an email to Leafly: "Our partners at Phyto assure that this product [tainted] is not authentic or legitimate. As a well-known traditional brand, they often fight the sale of counterfeit products, as is the case in many other industries. "

Messages to Health Canada

Health Canada requires prospective producers to subject their key employees to an intensive "security check", and private companies must also provide a list of major shareholders.

However, there does not appear to be a mechanism that prevents unlawful actors from licensing the name rights of dubious cannabis brands to legal cannabis producers.

When Leafly Health Canada asked about CannMart's relationship with Phyto, it seemed the first time that they got wind of the situation.

“Thank you for making us aware of these things; We are investigating the situation. Ensuring the integrity of Canada's legal cannabis production system is a top priority for Health Canada, ”wrote Geoffrey Legault-Thivierge, Health Canada spokesman.

"The department is unable to comment until it has gathered more information and facts about the situation you raised."

CannMart now sells Phyto branded oil vaporizer cartridges to its registered medical patients in its online shop and to recreational consumers via the BC Cannabis Stores website in BC.

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Harrison Jordan is a graduate of the Osgoode Hall Law School in Toronto and enjoys reading and writing about the regulatory affairs of cannabis in Canada and around the world.

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