Public Pot Company's Pipe Dreams 

Public Pot Company's Pipe Dreams 
Posted by CN Staff on December 06, 2003 at 07:08:09 PT
By Charles Mandel 
Source: Wired Magazine 
Online gambling pioneer Warren Eugene is rolling the dice again. This time the founder of Internet Casinos plans to establish the world's first publicly traded marijuana company. Eugene said he plans to list Medical Cannabis Inc. on the Toronto TSX Venture Exchange and on Nasdaq. "The stock can go sky-high,'' said Eugene. "The company views the current prohibition of marijuana as similar to that of alcohol and tobacco. If (liquor baron) Sam Bronfman were alive today, he might very well be lobbying the government for bonded cannabis warehouses."
However, the flamboyant Internet entrepreneur faces a number of hurdles before he can cash in his chips, including a potential challenge from Health Canada, the Canadian agency that currently regulates the use of medicinal pot. Eugene's business plan centers on Bill C-38 -- a bill that would allow Canadians to possess up to 15 grams of non-medical marijuana. He said he believes if Bill C-38 becomes law, it would eliminate the need for Health Canada to regulate medicinal pot because people would be able to grow their own grass. The new law would also create a business opportunity for Eugene. "They will need an independent who can grow it, package it, sell it and be able to pay taxes to the government to the tune of a billion dollars a year," he said. In preparation for marijuana decriminalization in Canada, Eugene said Medical Cannabis is aggressively acquiring licensed Canadian growers of medical grass. While Eugene is not licensed to grow medical marijuana himself, he said he has already hired four licensed growers and is negotiating for more. Medical Cannabis gave the growers stock, according to Eugene, who added that Health Canada is not aware of his actions. Currently, in order to grow marijuana legally, Canadians must have symptoms associated with a terminal illness with a prognosis of death within 12 months, or symptoms associated with other specified medical conditions. If the individuals are too ill to grow their own grass, they may have a licensed party grow it for them. Health Canada has licensed 520 individuals to grow marijuana as of October. Eugene estimates the grass crop is worth anywhere from CN$4 billion to CN$7 billion and thinks a money-making opportunity exists as governments move to decriminalize the drug. He also said a U.S. Supreme Court decision in October lifting a federal ban on medical marijuana will open the doors to a larger international market. Jirina Vlk, a spokeswoman with Health Canada, expressed doubt about Eugene's plans and said the only company currently authorized to grow pot for the government is Prairie Plant Systems, a Saskatoon, Saskatchewan-based biotech firm that is raising weed in an abandoned Manitoba mine shaft. Prairie Plant Systems has a five-year, CN$5.7 million contract to raise grass for medical use. "You can't buy licenses. It's a person, not a company, that has to have a license,'' Vlk said, adding that Medical Cannabis is operating outside Health Canada's regulations in acquiring licensed growers. Catherine Saunders, another Health Canada spokeswoman, said the practice of passing on growing licenses is illegal and would be a matter for law enforcement agencies. She said the government agency would investigate any patients who transferred their licenses to unauthorized growers. Brent Zettl, president and CEO of Prairie Plant Systems, confirmed his firm is Canada's only legal, large-scale producer. The company delivers to about 80 doctors, who in turn pass along the prescription marijuana to their patients. Nor is getting medical grass easy. Would-be marijuana users apply to Health Canada's Office of Cannabis Medical Access. They must give information about themselves, their medical condition and whether they plan to grow the grass themselves or have someone do it for them. They must have declarations from one or more doctors stating that all conventional treatments for their condition have been tried. Once approved, plants may be grown indoors or out. The amount that is grown and stored depends on a daily dosage approved by the individual's physician. A license is good for up to one year. To gain his entrance onto the public markets, Eugene is engineering a reverse takeover, selling 51 percent ownership of Medical Cannabis to a company already listed on the two exchanges, with a further option for the firm to purchase the remaining 49 percent. "What is unique about this business proposal,'' he said, "is that as a public company everyone now has a sincere and legal way to potentially make money in a budding marijuana industry." Eugene said he believes a publicly listed marijuana company would have credibility because it could be monitored. "We have to file our annual reports. We're under fiduciary responsibility." Zettl expressed doubt that Eugene can make a go of it in the marijuana business. "After going through what we've gone through,'' Zettl said, "the testing and re-testing -- a certain ethical and pharmaceutical standard has to be maintained. It will really be Health Canada's decision. In the future, time will tell what happens." Over at the TSX exchange, the weed firm's announcement also raised eyebrows. "This is the first I've heard of it,'' said TSX spokesman Steve Kee. He said the exchange would have to see if Medical Cannabis meets the listing requirements, a set of regulations governing everything from finances to the operation of the business, and which could take anywhere from weeks to months to satisfy. "It's a huge gamble for me,'' Eugene said. But if anyone's up to the challenge, it's Eugene. In the mid-1990s, the entrepreneur -- amid much skepticism -- established the first online cash casino, and in 1995 he told Time magazine he believed he was "the founder of New York's famous Stork Club" in a past life. The Internet casino king has put up CN$500,000 of his own money, and said he intends to raise more through a private placement. The funds would go toward "development and cultivation of the product" as well as branding. "The key to this is branding,'' Eugene said. Justice Canada spokeswoman Pascale Boulay pointed out that with the end of the current session of Canadian parliament, Bill C-38 has been tabled. "Now it will be up to the new government to decide if they want to resurrect Bill C-38 at the stage that it was, or even to have a complete new bill,'' she said. It would be up to the Canadian parliament to pass a new motion to bring the bill back. Despite all the obstacles, Eugene remains optimistic that the bill will pass, allowing him to move Medical Cannabis forward. He anticipates that when Parliament resumes in the new year with a new prime minister (Paul Martin is taking over from Jean Chretien, who has retired) that Bill C-38 will return as unfinished business and that a more sympathetic Health Minister may be in place. "It's certainly an idea whose time has come,'' he said. "Instead of (my) going into organized crime, this is a push to give them (the government) CN$900 million to CN$1.5 billion in potential tax revenue." Source: Wired Magazine (CA)Author: Charles Mandel Published: December 06, 2003Copyright: 2003 Wired Digital Inc.Website: newsfeedback wired.comRelated Article:Gambling Pioneer Goes To Pot -- Canada Archives 
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Comment #7 posted by Rev Jonathan Adler on December 06, 2003 at 18:02:51 PT:
Branding is Everything!
Aloha and Go For It Warren!
He is right all the way. I see the medical pharmaceutical industry spinning billions of your dollars on uneffective chemicals that only make you broke and sick. Warren smells an opportunity and he is on it like white on rice! I am praying that he likes the brands we have to offer and the undisputed quality of our genetics. Can you beat "volcanic organic"(TM)? I want to be a "mover and shaker" in this new industry for the right reasons. Benefit the rest of the world and you are benefited too. Don't be surprised to see "medijuana" (TM) and "sacramedicine" (TM) on the shelves someday sooner than you think! Mahalos and Mele Kalikimaka!
*Warren, don't stop what you are doing. I got your back!
Hawaii Medical Marijuana Institute
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Comment #6 posted by E_Johnson on December 06, 2003 at 15:34:00 PT
We should rename schwag after Anne McClellan
Hey what's this this stuff? It tastes horrible, it's harsh and it's not working at all.Oh that's some cheap McClellan I got from my doctor. Hey how much does Mexican McClellan cost down in California?
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Comment #5 posted by E_Johnson on December 06, 2003 at 15:12:02 PT
Appreciate things now while they last
I know we'll all be dancing in the streets one way or another after legalization, but one day we'll probably get nostalgic for the old war days and we'll probably claim that the weed was better back during the war because it was produced by true revolutionaries, not some spoiled corporate career punks who can't tell Blueberry from Bubblefunk.
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Comment #4 posted by Cannabis Enthusiast on December 06, 2003 at 14:49:48 PT
Just another wannabe drug dealer...
This guy thinks he will be able to sell Opium over the internet too.Good luck, dude!
Firm wants to sell pot on the Internet
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Comment #3 posted by The GCW on December 06, 2003 at 13:34:34 PT
The pipe is a portable alter.The Green Collar Worker& In case You haven't heard: 
Kucinich put in writting that as presedent He will: 
"decriminalize cannabis" -"in favor of a drug policy that sets reasonable boundaries for marijuana use by establishing guidelines similar to those already in place for alcohol." 
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Comment #2 posted by Max Flowers on December 06, 2003 at 11:50:41 PT
Thoughts on regulation
In my opinion it will never work if they try to place regulations any more restrictive than the ones on tobacco since it is obviously far les damaging. I haven't checked the law, but I assume that there are no laws prohibiting the growing of tobacco at home for one's own use; if someone tried to grow a bunch of tobacco and then sell it without paying the government its cut, there would be problems I'm sure. There's no market however, because tobacco users don't care that deeply about the quality of their product---the government-sanctioned stuff is fine for them.You will see a different attitude from cannabis users, however. They tend to be very selective and discerning, much more like a wine or microbrew enthusiast than a tobacco user. If government were to attempt to control the market, their stuff would no doubt be schwag, and while a lot of people would settle for it (Bud Light, ha ha), a lot of others wouldn't and would demand high quality, which would have to be provided by growers with high standards, either illegally, or with licenses issued by state and federal government.Cannabis prices always find a natural settling point based on a complex set of several factors, and high quality cannabis creates its own market. I don't believe that the introduction of "federal dope" at $50 per ounce that most people don't really like would kill the demand for high-quality connoisseur product. I think that as usual, a private black market would form if necessary. So if they are going to do anything at all, they might as well allow cannabis growers (like vinters, distilleries, tobacco growers) to have licenses, grow up to a certain certifiable quality standard (or better), and sell on an open market. Otherwise, a market will create itself without their consent.
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Comment #1 posted by OverwhelmSam on December 06, 2003 at 09:51:40 PT:
Article Pinpoints An Approach For Commercization
The US government may not be able to decriminalize marijuana, because people would be able to grow their own. There are no commercial benefits for generating great tax revenues.If they legalize it however, they can put restrictions on growning, to ensure the population is recieving quality manufactured marijuana from licensed distributors. Sounds fantastic, but it is definately a positive and effective approach.
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