Adastra Holdings (CSE:XTRX) Ltd stock got a bump when Health Canada issued a license for the company to produce, sell and distribute cocaine — then it hit the sobering reality of political resistance.
The Langley, British Columbia company’s shares soared from C$0.68 at the close Wednesday to C$1.33 at the closing bell Friday on the announcement of the license, which included a declaration from CEO Michael Forbes that Adastra would “evaluate how the commercialization of this substance fits in with our business model.”
However, swift backlash from BC Premier David Eby and even Prime Minister Justin Trudeau sent shares crashing back to C$0.80.
At issue is Forbes’ use of the word “commercialization.” Trudeau said Friday that the federal government was “working very quickly” with Adastra “to correct the misunderstanding” that the company would sell cocaine as part of its business model, according to reports.
That misunderstanding especially matters because British Columbia recently became the first province in Canada to allow adults to possess up to 2.5 grams of opioids, cocaine, amphetamines and ecstasy without facing criminal charges or having the drugs seized.
However, while the Health Canada license enables Adastra to “interact with” up to 250 grams of cocaine and to import coca leaves to manufacture and synthesize the substance, an agency spokesperson said Friday that the license is for “scientific and medical purposes only” and not for selling to the general public.
Adastra is only permitted to sell cocaine to other entities that hold the same controlled drug and substances dealer’s license, or those with an exemption for research purposes.
In other words, it's unclear how much this will impact the company’s top and bottom lines.
Health Canada has said it reached out to the company to “reiterate the very narrow parameters of their license.”
“If the strict requirements are not being followed, Health Canada will not hesitate to take action, which may include revoking the license,” the agency said.
Adastra, primarily a cannabis company, received its controlled drug and substances dealer’s license in August last year and asked Health Canada for permission to expand its license to include cocaine in December. Adastra can also possess, produce, sell and distribute up to 1,000 grams of psilocybin and psilocin, also known as magic mushrooms.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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