Canada Authorizes Several Companies, Including a Cannabis Company to Produce Cocaine & Other Hard Drugs

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British Columbia-based cannabis company Adastra Labs and psilocybin company Sunshine Earth Labs have been approved by Health Canada to possess, produce, sell, and distribute cocaine. Previously, the companies had received Controlled Drug and Substances dealer’s licenses for psychedelics, MDMA, opium, and cannabis. The license was amended in February to include cocaine.

The dealer’s license allows the company to:

• Possess, produce, sell, and distribute – for legal purposes only and not to consumers – up to 250 grams (8.8 ounces) of cocaine and to import and manufacture coca leaves to create synthetics.
  
  
• Possess, produce, sell, and distribute up to 1,000 grams of psilocybin and psilocin.

A dealer’s license allows sales for clinical and scientific research or for medical purposes that have been legalized. Public sales and trafficking of the substances are still illegal.

The licensing deal comes after a radical policy shift to address an opioid overdose crisis that has killed thousands, by decriminalizing small amounts of cocaine, heroin, and other hard drugs.

Ottawa granted a criminal code exemption in January to British Columbia for the three-year pilot project to remove the stigma associated with drug use that keeps people from seeking help. The three-year exemption under the Controlled Drugs and Substances Act (CDSA) for adults 18 years and older to possess up to 2.5 grams of opioids, cocaine, methamphetamine, MDMA, or some combination.

British Columbia is only the second jurisdiction in North America to decriminalize hard drugs after the US state of Oregon did so in November 2020. Advocates have also been pushing for safer supplies of drugs to be made available to addicts who risk dying from toxic drug poisoning linked to illicit street drugs.

Adastra Labs, which had until now focused on crafting cannabis extracts. “Harm reduction is a critically important and mainstream topic, and we are staying at the forefront of drug regulations across the board,” said Michael Forbes, CEO of Adastra. “We proactively pursued the amendment to our Dealer’s License to include cocaine back in December 2022. We will evaluate how the commercialization of this substance fits in with our business model at Adastra in an effort to position ourselves to support the demand for a safe supply of cocaine.”

Forbes has extensive experience working in the front lines of addiction medicine as a pharmacist in his multiple methadone pharmacies. Forbes piloted a needle exchange program at the direction of the Centres for Disease Control and Prevention in 2010.

Government Responses & Retraction

B.C. Premier David Eby was shocked to hear the news. “The short answer is that I was astonished by this announcement,” Eby said. “I understand that this company has indicated Health Canada has given them some kind of authorization. It is not part of our provincial plan. If Health Canada did in fact do this, they did it not only without engaging with the province, but they did it without notice to us."

“We will get answers for British Columbians about this, this is not part of our initiative, and we’ll make sure British Columbians get the answers they deserve about this,” he stated.

Prime Minister Justin Trudeau says he is "as surprised as" British Columbia Premier David Eby after a firm announced it had received Health Canada license amendments to produce and sell cocaine.

Trudeau said Friday the federal government was "working very quickly" with Adastra Labs of Langley, B.C., "to correct the misunderstanding" caused by the company's statement saying it was looking at commercializing cocaine as part of its business model.

He said Adastra did not have permission to sell cocaine on the "open market," while Health Canada said the firm could only sell to other license holders, and its license is for "scientific and medical purposes only."

"Health Canada has contacted the company to reiterate the very narrow parameters of their license," the federal agency said in a written statement. "If the strict requirements are not being followed, Health Canada will not hesitate to take action, which may include revoking the license."

Adastra Labs then clarified and retracted certain disclosures related to its approval to include cocaine under its controlled substances license. The Dealer’s License issued to Adastra Labs does not permit Adastra Labs to sell coca leaf, psilocybin, or cocaine to the general public. 

For cocaine, and under the Dealer’s Licence, Adastra Labs is only permitted to sell to other licensed dealers who have cocaine listed on their license including pharmacists, practitioners, hospitals, or the holder of section 56(1) exemption for research purposes under the Controlled Drugs and Substances Act (CDSA).

Adastra stated that the company is not currently undertaking any activities with cocaine under the Dealer’s Licence and before doing so, it will only undertake such activities legally permitted by the Dealer’s Licence and after consultation with applicable Provincial Governments.

As news of the licensing became publicly known, Adastra Holding's stock price jumped by over 300% before coming down slightly. Adastra shares were trading at $1 cents when the market closed.

The cannabis extraction, distillation, and manufacturing-focused company produce concentrates under the Phyto Extractions brand. According to its most recent earnings report, the company had a working capital deficiency of $2,802,516 as of Sept. 30.

Adastra incurred a net loss of $1.6 million for the nine months ending Sept. 30. “These events and conditions indicate a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern,” a report notes.

Sunshine Earth Lab Authorization

Canadian biosciences company Sunshine Earth Labs, which specializes in psilocybin products announced last week it too has been licensed to produce and sell cocaine, reflecting the federal health agency's bid to improve safety conditions for the country's addicts. They also issued a similar clarification retracting some of its statements.

Sunshine Earth Labs said in a statement it received permission from Health Canada to "legally possess, produce, sell and distribute coca leaf and cocaine," as well as morphine, MDMA (ecstasy), and heroin.

For its part, Sunshine Labs said it "does not engage in promoting or launching safer supply initiatives" and defers the implementation of policy on decriminalized cocaine, opium, and MDMA to experts. But the company also said the elevated overdose death rate in B.C. coincides with public health officials' reports that the majority of deaths came from occasional, rather than chronic, users.

That means decriminalization may not be enough, Sunshine Labs' statement says, and points to some experts suggesting providing users with "an opportunity to purchase certified drugs with known levels of purity and quantity" as a way to prevent deaths.

"While this notion may be difficult for some to accept, it represents the rational next step," the statement said.

Sources CBC, France24, MJBizDaily, GlobalNews, Adastra Labs, Adastra Labs