The document discusses solutions for enabling development of the hemp bioactives industry in Canada by creating integrated supply chains using intellectual property. It proposes a system of networked generic supply chains licensed by a control tower operating system. This would allow various sectors such as food, nutraceuticals, pharmaceuticals, licensed marijuana producers and dispensaries to commercialize hemp derivatives within regulations. The intellectual property could provide licensing opportunities to rapidly expand the hemp bioactives industry in Canada and generate economic benefits.

1. The Hemp Bioactives Conundrum - A Simplified Solution
- Nutraceutical potential has been limited due to perception that hemp
bioactives may be regulated as Schedule F drugs
- Generic nature of the science discourages proprietary pharmaceutical
commercialization within pharma parameters due to generic economics
- The solution is to create a robust set of networked, interdependent generic
hemp based supply chains with mass commercialization of affordable products
- The solution is Innovation via Intellectual Property that can
be broadly licensed as opposed to simple silos with isolated
regulations which discourage innovation and commercialization of
all silos in an interactive, integrated manner
- The solution is a control tower operating system that licenses compatible
applications and capitalizes on the economies of scale
- Canadian Patent 2,921,553 describes the methods to enable all components
- Multiple sector-networked supply chains maximize the value
- Bioactive applications are embodied as formulations in products
- Developers are the hemp bioactives industry innovators

2. The Hemp Bioactives Conundrum – Enabling Development
- Government control has focused on tracking THC, a component hemp is bred
to have a very low level of while ignoring the bioactive entourage
- Other cannabinoids and terpenes exist in biomass; regulations stifle
commercialization of these compounds due to lack of clarity
- Intellectual property innovated to fill this vacuum via utilization of a loophole in regulation
which allows biomass to be converted to derivatives as a “bin run” raw material
- Once derivatives are created only the THC limits are currently tracked
- Terpenes, and cannabinoids, are listed in several food, NHP and pharma schedules so
derivatives are targeted to appropriate applications which match uses to regulations
- Intellectual Property controls and tracks supply more effectively than
centralized regulatory policing and facilitates regulatory compliance
- Pharmaceutical, nutraceutical, medical marijuana licensed producers, unlicensed
dispensaries and food processors all have applications utilizing derivatives as feedstock
- Intellectual property can be licensed to allow governments to collect excise taxes on any
specific hemp bioactive (eg CBD) in compliance with future laws and regulations
- Royalties allow the IP owners to place strategic investments to fill the gaps
in areas they see as bottlenecks for hemp bioactives industry expansion
- Patents can provide generic licensing opportunities to ramp up the industry

3. The Hemp Bioactives Conundrum – Supply Chains
- Farmers, as growers, are paid a premium to manage crops to maximize bioactive content
- Patented harvest method enables on farm production of derivatives as a part of harvest
- Mechanical separations, solvent extractions, fractionations create
supply chains for custom-compounding raw materials
- Secondary derivatives include dietary fibre, protein powder, oilseed granules, full bioactive
nutraceutical flour, residual bioactive food flours, oils with various bioactive profiles,
nutraceutical bioactive-rich protein powder and utility flour concentrates
- Tertiary derivatives include edibles with varied bioactive profiles with food,
nutraceutical and medical applications, dermal preparations in cosmetics
and cosmeceuticals, highly refined bioactives concentrates with various
profiles for food, flavor, aroma, supplement and medical formulations.
- A supply-chain patent tracks the bioactives disposition when it gathers one royalty
at the farm-gate and a second royalty at the retailer (checksum of inventory).
- Contracting of farm supply as part of Intellectual Property licensing guarantees
supply chain players a continuing supply of product profile-specific ingredients

4. The Hemp Bioactives Conundrum – The Food Sector
- Current products include
protein powder, edible oils and oilseed powders and granules
- Future products include
edibles with hemp bioactive content
cooking flours and oils with bioactive content
- Food categories include
margarines, soda pop, candies, beverages,
baked goods, soups, cakes and pastries to name a few
Regulations have and will continue to set the allowable bioactive
parameters of the finished consumer goods which are formulated
with bioactive concentrates and hemp derivatives

5. The Hemp Bioactives Conundrum – The Nutraceutical Sector
- Concentrated derivatives and bioactives formulations in powder and oil
and tinctures can be used as starting materials for single and
compounded formulations including:
- dry capsules and tablets
- gel capsules
- dermal formulations
- flavorings
- compounded multi-component herbal products

6. The Hemp Bioactives Conundrum – The Licenced Producer Sector
- Persons with prescriptions for medical marijuana require marijuana formulations
high in hemp bioactives other than THC, especially
- cannabidiol, minor cannabinoids including caryophyllene and caryophyllene oxide
- bioactive terpenes including myrcene, linalool, alpha pinene, humulene, limonene
- licensed producers can authorize and contract processing by GMP, site-licensed
pharma and nutraceutical manufacturers to create products of pharmaceutical
quality suitable not only for DTC but also pharmacy dispensed products,
liquor and other specialty vendors and export to USA and countries where
CBD is an over-the-counter compound.
- licensed producers can purchase generic hemp derivatives to include as
base material for their cannabis products
- licensed producers can focus on THC, and outsource CBD, so as to
maximize the productivity of indoor production
capacity and capital management

7. The Hemp Bioactives Conundrum – The Pharmaceutical Sector
- Pharmaceutical companies globally researching pharmaceutical
formulations need a reliable source of raws or contract manufactured
ingredients to proceed to commercial products
- In countries where CBD is not regulated as a drug, such as Switzerland,
pharma companies desire to receive hemp bioactives and
derivatives of all sorts.
- In the USA where CBD is widely marketed, it is likely a market
for products formulated by GMP, Site Licensed Canadian facilities
would meet with no objections from Federal Regulators

8. The Hemp Bioactives Conundrum – The Dispensary Sector
- Although dispensaries may or may not be properly licensed or regulated
so are considered illegally operating, they embody the provision within
the Natural Health Product regulations that exempts businesses who
manufacture custom compounded formulations for customers on the orders
of an alternative health practitioner with or without dispensation
by a licensed compounding pharmacist
- Dispensaries also carry edibles and novel formulations from which
to use to formulate custom compounded products
- Dispensaries are within the hemp industry, the equivalent of the farmers market
in the commercial food industry, so are an evolving sector. It is in the
best interests of regulators to use collaboration instead of confrontation
in assisting and working with the dispensary sector as it matures into
a long term player that fits a niche of its own creation
- The entire industry has watched the dispensaries and learned what works,
and what does not, from their experiences

9. The Hemp Bioactives Conundrum – The Black Market Sector
- Currently all sorts of businesses procure amounts of hemp from farmers
and sell everything from dispensary products to highly manufactured
high concentration crystal high CBD for domestic or export sale, as well
as converting CBD from hemp using acid, time and temperature into THC
products, without any regard for law or regulation
- Over the last 3 years, several CHTA-member hemp farmers and processors have
begun to supply the dispensary and black market with substantial quantities of
hemp bioactives destined for the medical marijuana and recreational markets.
A hemp-industry-driven authorization to supply emerging legal supply chains would
remove the economic incentive for diverting bioactives to unapproved applications
more effectively than the perceived punishments which currently are not
curbing these transactions.
- Patent holders working together with Health Canada and CHTA would
then back-track these supply chains and to bring this production into
legally-approved channels engaging in regulated and approved transactions.

10. The Hemp Bioactives Conundrum – Summary : 12 September 2016
The combination of Health Canada MMPR, OCS, Hemp, NHP and CFIA food safety
agencies complement all the categories and types of players likely
to want to commercialize hemp bioactives in Canada.
CIPO-derived patents and IP complement the regulatory platform.
“There is a globally emerging healthspan and lifespan extension market which most
of the players can target-market to. This developing market can grow what is a
2,000 acre biomass acreage in 2016 to about 20,000 acres in 2018 and 200,000
acre by 2022. The economc benefit to both public and private sectors is obviously
significant. It is critical that Canada be a first mover in this industry.
2 cents per milligram of CBD in multiple formulations, if delivered at a consolidated
daily dose of 100 mg a day as a dietary delivered supplement for 25 million people,
would consume 16,000 acres and generate a gross market value of 2 billion CAD annually.
Canada, with a default public medicare system, has the moral hazard that health-supporting
ingredients which are not fully commercialized in a timely fashion cost medicare and the
taxpayer for avoidable Crisis Management and Palliative Care resource allocations. “
Morris Johnson holds title to the aforementioned IP and is the author of this presentation.
Morris Johnson / Lifespan Pharma Inc.
24-1035 Boychuk Drive, Saskatoon, Sask., S7H-5B2
1-306-716-7822
Lifespan.pharma.inc@gmail.com