There are compelling reasons for investors to be excited about the liberalization of medical marijuana laws. Health Canada estimates revenues from commercial marijuana could reach CAN$1.3B over the next 10 years from an estimated 450,000 users. Some industry insiders believe that’s just the beginning. If the recent legalization of recreational pot use in Colorado and Washington is a harbinger of changes to come, the potential market is of proverbial “blue-sky” quality.
No wonder that Health Canada’s decision to allow licensed commercial growing of medical marijuana has precipitated a “greenrush,” with companies such as Satori Resources ($BUD:CA), Cavan Ventures ($CVN:CA) and Supreme Pharmaceuticals (CSE:SL – formerly Supreme Resources) throwing their hard hats into the fray, and often realizing significant bumps – sometimes historic highs – in their share price.
There is a caveat. Consider the fact that as of late May, a heavily burdened Health Canada had received over 850 applications for growing licenses, with new ones coming in the door at an average of 25 a week. Hundreds of applications have already been rejected, and so far, only a handful of licensed suppliers are listed on Health Canada’s website as authorized marijuana sources.
None of that, however, bothers Cannabix Technologies Inc. (CSE: BLO) (formerly West Point Resources, which traded under TSX VENTURE:WPO). Cannabix plans to capitalize on the greenrush from a novel perspective, while avoiding the shoulder-to-shoulder at Health Canada’s application desk. On June 16, 2014, West Point finalized an agreement with Cannabix Breathalyzer Inc. to license the North American Rights to the Cannabix Marijuana Breathalyzer.
The Cannabix marijuana breathalyzer provides rapid detection of THC. Like alcohol breathalyzers, the Cannabix test can be used roadside to identify drivers intoxicated by the use of marijuana. The device can also be useful for other practical applications such as testing employees in the workplace where intoxication by THC can be hazardous.
“Marijuana is coming to the forefront,” says newly appointed President Kal Malhi, Cannabix’s founder. Malhi is a former RCMP drug-enforcement officer and President of BullRun Group, a private investment company specializing in early-stage business development. Malhi spent 10 years in the famous red serge, including 3.5 years on marijuana enforcement teams and four years on the Lower Mainland Drug Section. “Society says it’s okay to smoke marijuana recreationally,” says Malhi, “and law enforcement has to catch up. As the law stands, there are no guidelines for cannabis – or any other drug. It’s left up to users to gauge whether or not it’s safe to drive after smoking up.”
Despite protestations from pot smokers that they drive better stoned, statistics are beginning to tell a less positive story. According to the National Institute on Drug Abuse, THC is the most commonly found substance, after alcohol, in the blood of impaired drivers, fatally injured drivers, and motor vehicle crash victims. Several studies have found that approximately four to 14 percent of drivers who sustained injury or died in traffic accidents tested positive for THC.
Moreover, a study of over 3,000 fatally injured drivers in Australia showed that when THC was present in the blood of the driver, he or she was much more likely to be at fault for the accident. Additionally, the higher the concentration of THC, the more likely the driver was to be culpable.
According to the National Highway Traffic Safety Administration, marijuana has been shown to impair performance on driving simulator tasks and on open and closed driving courses for up to approximately three hours. Symptoms of impairment include decreased car handling performance, increased reaction times, impaired time and distance estimation, inability to maintain headway, lateral travel, subjective sleepiness, motor incoordination, and impaired sustained vigilance. Mixing alcohol and marijuana may dramatically produce effects greater than either drug on its own.
“Society has come down hard on drunk driving,” says Malhi, “but there’s a persistent myth out there that driving while stoned on marijuana is acceptable. The stigma isn’t as bad and the likelihood of getting caught is low, but the statistics tell another story, especially for young drivers. To make matters worse, the police don’t currently have any reliable tools for the detection of drugged driving. Even when officers know that the driver is high, there’s a low success rate in court because the only tool available is the officer’s opinion.”
Malhi hopes to change all that – the stigma and the reality – with a device that tests for tetrahydrocannabinol (THC), the psychoactive component of marijuana, using breath samples. The system is based on research from Sweden, and has been shown in clinical trials to be successful at identifying individuals who have recently consumed marijuana.
Cannabix will market the device as an aid to law enforcement personnel in the detection of marijuana as a contributing factor to driving offences on North American roads. Cannabix holds patent applications on leading-edge technology to breath test for marijuana impairment. West Point acquired 100% of the exclusive North American licensing rights to Cannabix’s technology.
The device is timely, since there is currently no way to verify recent marijuana use without taking spit or urine samples – a practice that would involve the collection of DNA and potentially run afoul of sections 7 and 8 of the Charter of Rights and Freedoms in Canada, and the 4th Amendment’s prohibition against unreasonable search and seizure in the US. A urine or sputum specimen can be analyzed to reveal whether an individual is pregnant, is using legal medications, or is being treated for diseases such as epilepsy, diabetes or schizophrenia.
The Cannabix device, says Malhi, avoids the DNA collection problem. “In North America, the legal system will not permit search and seizure beyond a certain point, and a saliva test or DNA test can give the police information that they are not entitled to. Our breathalyzer test, however, returns only the information that pertains to the driving test. Having to provide a breath sample is already the norm in North America. Breathalyzers analagous to Cannabix are accepted by the legal system for the detection of alcohol-related driving offences, and the evidence is limited to the offence itself.”
While Charter- or Constitution-based objections to DNA-collection-type tests might be over-ruled in court on grounds of “reasonableness,” the fact remains that sputum- and urine-based analysis can only detect past drug use. Such tests are incapable of measuring whether a person is under the effect of a drug at the time the test is administered. The recency issue, says Malhi, is key to the argument in favour of Cannabix’s testing device.
“Saliva and urine tests are extremely sensitive,” says Malhi, “and any drugs they detect could have been taken as far back as 72 hours before the time of testing. Our test is much more useful for roadside law enforcement, since a positive reading indicates drug use within the last two hours.”
While the Cannabix test does not quantify the amount of drugs in the system, as does an alcohol breathalyzer, Malhi reminds us that “…there are already 18 states in the US with strict per se laws that forbid any presence of a prohibited substance or drug in the driver’s body while in control of a vehicle. Given the obstacles to sputum and urine testing, we think our breathalyzer technology is the answer towards which legislation will necessarily evolve.”
Given the growth of the marijuana market, and the mounting statistical evidence that shows marijuana to be a significant factor in traffic accidents, it seems inevitable that police, policy makers and citizens will soon combine to make a loud and persuasive argument in favour of roadside drug testing.
The Cannabix offering, with its focus on “recency of use” and its avoidance of DNA-collection pitfalls, seems well-timed and well-placed. The Company’s management team is both expert and convincing, and its technology is appropriate and well-pedigreed. If you’re looking for an inside track to the “greenrush” that doesn’t involve the strange and uncertain world of licensed growers, or the maelstrom around Health Canada’s application desk, this could well be the company for you.
Kal Malhi is a Vancouver-based entrepreneur and the founder of Cannabix Breathalyzer Inc. As a retired member of the Royal Canadian Mounted Police and President of BullRun Group, a private investment company specializing in early stage business development, Malhi brings moral authority and a wealth of business and law enforcement experience to the management team. As a specialist in drug enforcement, Malhi is cognizant of the issues of protecting individuals’ rights to privacy while maximizing public safety through law enforcement initiatives.
Dr. Raj Attariwala, MD, PhD, FRCPC, FANM, is a Vancouver-based dual board certified Radiologist and Nuclear Medicine physician certified in both Canada and the United States. He holds a doctorate in Biomedical Engineering from Northwestern University (Evanston, IL). Dr. Attariwala has worked closely with the breath testing technology developed by the Karolinska Institute and Dr. Olof Beck, and has leveraged his training and background in biomedical engineering to formulate product design and patent applications for Cannabix Breathalyzer products. Dr. Attariwala also has several other medical device patents under developments in the field of nuclear medicine.
Dr. Bruce A. Goldberger, PhD, DABFT, is the director of University of Florida Health Forensic Medicine, a professor, and the director of toxicology for the Department of Pathology, Immunology and Laboratory Medicine in the College of Medicine at the University of Florida. He also performs as the technical and administrative director of the University of Florida Forensic Toxicology Laboratory, which provides toxicological services to medical examiner offices and state and local law enforcement agencies throughout the state. In his other roles, Dr. Goldberger is the editor-in-chief of the Journal of Analytical Toxicology; the president of the American Board of Forensic Toxicology; and was a past-president of the American Academy of Forensic Sciences.
Rav Mlait, MBA, is CEO of Cannabix and has extensive experience in managing and raising capital for public and private companies. Mr. Mlait holds an MBA from Royal Roads University in British Columbia with a specialization in Executive Management and his BA (Economics) from Simon Fraser University and has worked with public companies listed on the CSE, TSX and TSX Venture exchange.
Bryan Loree, CMA, CFO, of Cannabix is a seasoned accountant who has held positions in public and private companies in various industries including, renewable energy, exploration, and construction. During this time he has also performed capital raising activities for both private and public companies, primarily in the exploration and renewable energy sectors. Mr. Loree holds a Certified Management Accountant designation, a Financial Management Diploma from the British Columbia Institute of Technology, and a BA from Simon Fraser University.
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