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European Cannabis Stocks Review: FSA Makes ‘Final Call’ For Evidence As Cellular Goods’ Stock Recovers From Confusion Over Its Products’ Inclusion

THE fallout from the publication of the FSA’s Public List is continuing to be felt on the stock markets this week, with the regulator issuing a ‘final call’ for evidence after a number of CBD companies came forward with ‘new evidence linking large numbers of individual products to applications.’

It added that this was an ‘unexpected development’ and that companies should have come forward with such evidence much earlier.

With companies not included on the list facing the prospect of huge revenue and reputational risk, many continue to criticise the FSA’s approach, with the head of law firm Legal Foods calling the list ‘discriminatory and nonsensical’.

Cellular Goods 

Cellular Goods saw its stock recover this week following a 10% dip amid ongoing confusion as to whether its products were included on the recently published FSA Public List, and therefore allowed to remain on sale in the UK. 

On April 11, Cellular Goods published an RNS addressing growing investor concerns that its products were not included on the list, arguing that as its product formulations are manufactured and supplied by Chanelle McCoy Health (CMH), whose Pureis products are included, it could remain on the market. 

It added that its products were clearly labelled as Pureis, and could not be considered ‘new products’ as they have been on sale since before February 2020. 

In a response, published by The Grocer, an FSA spokeswoman said that the company had ‘not provided evidence that their products were on the market before February 2020. 

“Any products not on sale before February 2020 are not eligible for the public list”. 

They added that white label products sold before February 2020, cannot be rebranded after the cut-off date until the product is authorised. 

Cellular Goods released a follow-up RNS on April 13 stating it was ‘currently considering its position pending advice from the company’s advisers and is also seeking further clarification on the FSA’s stance, considering that these products are identical to the validated products from CMH.’

Yesterday (April 21), the FSA issued a ‘Final Call’ for evidence giving businesses until 26 May 2022 to provide proof their products are ‘linked to a credible application and were on the market before February 2020’. 

Rebecca Sudworth, Director of Policy, FSA said: “Our announcement on 31 March that the CBD public list should be used to help prioritise efforts to enforce the novel food regulations has prompted a number of companies to come forward with new evidence linking large numbers of individual products to applications. We are reviewing this new evidence to assess whether these products meet the criteria to be added to the list.

“This is an unexpected development as this product information should have been provided to us much earlier in the process. To support businesses to achieve compliance for their products, we are therefore making one final call for evidence from businesses to link their products to credible applications. Any businesses that have not already done so must send this evidence to us as soon as possible, but no later than 26 May for consideration.

“We aim to update the public list twice before 30 June, with the first update due very shortly. After 30 June, no new products will be added. The only changes made after this will be to reflect changes to the status of products in our novel foods authorisation process.”

MGC Pharmaceuticals 

MGC Pharmaceuticals saw its shares drop by over 10% last week after it informed investors that Daniel Kendall would no longer be acting as the company’s CFO. 

Roby Zomer, MGC’s Managing Director and CEO, will take on his responsibilities on an interim basis until a new CFO is appointed. 

The company said this decision was due to the ‘significant increase in the company’s European Union and Israeli manufacturing and research operations, and the company has determined that it is best served with a London based CFO.

Following its listing on the London Stock Exchange in early 2021, MGC has seen a number of major corporate functions transferred to London, with Mr Zomer set to relocate to London shortly. 

Like its LSE-listed peer, MGC saw its stock prices almost entirely recover this week, aided by yesterday’s announcement that a patent for one of its flagship Covid-19 drug CimetrA was granted by the Slovenian Intellectual Property Office (SIPO). 

The patent reportedly provides MGC commercial protection over CimentrA’s intellectual property, including its formation and manufacturing process, for 20 years. 

A spokesperson told BusinessCann this means their IP is protected across the EU, and provides a foundation from which to apply in the US and further afield.

MGC’s managing director Roby Zomer said: “The grant of the patent by the Slovenian Intellectual Property Office is a key milestone for MGC Pharma.”

DanCann Pharmaceuticals 

DanCann Pharma saw its stock price continue on its downward trajectory following the release of its annual results for the full year 2021. 

While the Danish medical cannabis operator reported its first revenues last year, topping 874,000DKK (£97,746), its losses also rose sharply. 

During the year Dancann reported an EBITDA loss of 13.6m DKK, up nearly 100% from 2020. 

It is understood that a large part of this increased loss was due to staffing and ‘other external expenses’, both of which doubled during the year. 

It added that it ‘incurred development costs amounting to 13.3m relating to the development of a high tech production facility for production of medical cannabis’. 

Furthermore, while it remained positive about its prospects for 2022, it said that at the time of approving the annual report ‘the company and group does not have the necessary capital to implement all the company’s initiatives and operations for the entire year (2022)’. 

This means DanCann will be required to raise additional capital in the coming months. 

“To implement the company’s future plans, the company intends to exercise its outstanding warrants, followed by a minor transaction, preferred as a directed share issue to a selection of prominent investors, in the range of 10-20% of the total sharecapital.”

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