Tilray, a Canadian medical cannabis company, has entered into an agreement with Sandoz Canada, a major pharmaceutical company, that would leverage sales knowledge and product development, and would potentially allow for future distribution of cannabis products to pharmacies and other medical providers.

Sandoz Canada is an affiliate of Sandoz International GmBh, a company that falls under the umbrella of Novartis AG, a Switzerland-based pharmaceutical giant. This marks the first endeavor between a cannabis company and a pharmaceutical giant, and has been highly anticipated for years, as medical and recreational cannabis markets across the globe have grown and expanded.

“A lot of people were wondering when global pharma would enter the cannabis industry. Now it officially has. This is a huge milestone for us, our industry, and the medical community at large,” Brendan Kennedy, the Chief Executive Officer (CEO) of Tilray, said in an interview with VICE Money Kennedy also indicated that this collaboration with an established and well-recognized company would help ease the stigma surrounding the medical cannabis industry, allowing both doctors and patients to feel more comfortable prescribing and using cannabis-based products for medical purposes in more familiar forms, including pills and topical creams. Kennedy indicated that this would help boost the trust that consumers have in medical cannabis products.

The binding letter between Tilray and Sandoz Canada would form a strategic partnership, producing co-branded products, joint research endeavors, and development of new products, as well as increased sales initiatives, which would help establish new points of sale and purchase for Canadian medical cannabis consumers, pending passage of additional legislation and regulatory approval.

Tilray, based in Nanaimo, British Columbia, is a private company owned by Seattle-based cannabis investment firm Privateer Holdings. Tilray has been in the Canadian cannabis since 2014, and was the 10th company to obtain an Access to Cannabis for Medical Regulations (ACMPR) license from Health Canada in 2014. Tilray was also the first company to legally ship medical cannabis to the European Union (EU).

Canada passed the ACMPR in 2013, and has seen significant expansion in the cannabis sector since then. The Canadian medial cannabis market is already a billion dollar industry, with around 235,000 registered medical patients as of September 2017, which was a 35% increase since April 2017. The number of medical practitioners prescribing cannabis products has also increased, to 10,433 at the end of September 2017, from 9,726 three months before.

Currently, Canadian consumers of medical cannabis can only receive their medical cannabis products through the mail, as there are no points of physical distribution. Shoppers Drug Mart is currently positioning itself to be able to distribute medical cannabis, having lined up agreements with four licensed partners. Shoppers’ parent company, Loblaw, has applied for a Canadian producers license that would allow them to distribute medical cannabis if it is approved, which it is expected to be.

Other organizations also support the expansion of distribution across Canada, including the Canadian Pharmacists Association, which argues that pharmacists should play a role in the distribution. Kennedy indicated that he was optimistic that cannabis and cannabis-based products would be sold at Canadian pharmacies by the end of this year. Health Canada recently published a paper in which it indicated that it intends to collaborate with provinces and territories, as well as the National Association of Pharmacy Regulatory authorities to establish option for controlling the sale of cannabis products as well as how they are displayed, including having them behind the counter at Canadian pharmacies.

There is currently some disagreement about how pharmacies would be able to distribute cannabis products. Each province has different colleges that control the pharmacies, and while some, such as the ones in British Columbia and Quebec, have pushed for over-the-counter distribution of cannabis, others, such as Alberta, have argued that pharmacies shouldn’t sell cannabis products until they have Drug Identification Numbers and additional scientific testing.

Kennedy told VICE Money that Sandoz Canada has spent the last year and a half focusing on how pharmaceutical companies will fit into the cannabis landscape, saying, “They were really focused on ethics, quality and compliance practices and were looking for a company the right way. We had our first meeting with them in the summer of 2017.”

Many global pharmaceutical companies have not been pursuing inroads into the cannabis industry, possibly because of issues with obtaining patents for those products. Phillipe Lucas, the Vice President of Patent Research and Advocacy at Tilray, told VICE Money, “The patent potential of cannabis is restricted to certain formulations, not the kind of products that are currently available through the ACMPR. In fact, patents in methods of delivery have already been claimed by others.”

The options for the Tilray-Sandoz partnership are made broader by the fact that Sandoz focuses on generic drugs, allowing them larger reach in the market. Tilray currently exports its products to the EU, including Germany and the Czech Republic, but also to Australia and New Zealand. The costs of medical cannabis is covered under Germany’s universal drug program. Kennedy sees cannabis as a biotech product, saying, “A global pharma company knocking on our industry’s door is the first step in that process.”

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