Ontario said its government-owned cannabis business lost $42 million in the last fiscal year, while the province collected barely half the amount of excise taxes it estimated it would generate, in the latest symptoms of a shaky start to legalizing recreational pot in Canada’s most populous province.

The Ontario Cannabis Retail Corporation, a crown corporation that operates the Ontario Cannabis Store’s online retail business and sells wholesale cannabis to the province's private retail stores, generated $64 million in the fiscal 2018-2019 year, according to public accounts released on Friday.

However, expenses at the OCRC ballooned to $106 million in the twelve months ending Mar. 31, up from $6 million in fiscal 2017-2018 when the government commenced operations of its cannabis business.

Daffyd Roderick, a spokesperson for the OCS, said the agency wasn’t able to book wholesale revenue from selling into the first wave of physical retail stores in the latest fiscal year, which hurt the crown corporation’s bottom line.

“OCS expects continued revenue growth as the industry evolves and Ontario’s private retail store network expands to meet the needs of adult consumers across the province,” Roderick said in an email to BNN Bloomberg.

“Cannabis legalization is a new venture for Ontario,” Marc Pichette, a spokesperson for the province's finance ministry, told BNN Bloomberg in an email.

Developing the province’s retail framework — needed to effectively stamp out the black market — also led to some initial costs, he added. 

Meanwhile, the Ontario government said Friday it generated $19 million in revenue from cannabis excise taxes in its last fiscal year, falling well short of the $35-million estimate presented in the most recent provincial budget.   

Legal cannabis sales in Ontario have totalled $121 million since October, the second-largest amount in the country behind Alberta which has sold $124 million, according to Statistics Canada. However, sales of recreational cannabis in Ontario have been off to a sluggish start amid a lack of available bricks-and-mortar retail outlets, supply shortages, and various logistical issues.

Cannabis regulation in Mexico is a key topic this week. The US, Canadian, and Mexican economies are more closely intertwined than other countries. According to the U.S. Chamber of Commerce, about 14 million US jobs relate to trade with Mexico and Canada. Therefore, these countries might take cues on regulating an industry from each other.

Cannabis legalization

Cannabis regulation is a good example. After Canada legalized marijuana for recreational use in October 2018, legalizing marijuana in Mexico and the US gained momentum.

While several US states legalized recreational cannabis, Mexico wants to move in that direction as well. A bill to regulate cannabis was introduced in the Senate on September 3. Senator Julio Salazar, the bill’s sponsor, hinted at taking cues from Canada and the US on regulating cannabis. As a result, there will be a discussion on the bill this week. 

Why does Mexico need to regulate marijuana?

Mexico has a history of drug-related crimes. The country has one of the biggest drug trafficking cartels led by El Chapo Guzman. Regulating marijuana could reduce drug crimes in the country.

For example, keeping “profits out of the pockets of criminals” was one of the goals for legalizing and regulating recreational cannabis in Canada. The country legalized cannabis to introduce a legal marketplace for companies. As a result, the companies would have access to capital markets to build the industry. The companies would also conduct research and develop advanced marijuana-infused products. Growth in the legal cannabis market would replace the illicit market.

Canopy Growth (WEED) (CGC), one of the biggest players in the cannabis market, offers several brands to recreational customers. Aurora Cannabis (ACB) doesn’t expect too much demand from advanced cannabis-infused products, according to a Bloomberg report. There’s also the potential for Aphria (APHA) to develop the vaping market in Mexico if legalization follows through.

What we think

While Mexico moves to regulate marijuana, Canadian companies might sell their products to a new market. However, enforcing the regulations will determine the success in Mexico. According to Transperancy.org, Mexico ranked 138 out of 180 on the Corruption Perception Index in 2018. Uruguay, which was the first country to legalize and regulate recreational marijuana, was ranked at 23. Canada was ninth on the same index.

Federal marijuana legalization in the US might be even more distant. Even individual states face setbacks regarding cannabis regulations. However, President Trump might legalize cannabis. With the 2020 election around the corner, we’ll have to see how he approaches the issue. The Trump administration might ban vaping, which could be one of the biggest markets for marijuana companies.

The filing was anticipated before and after the tentative deal, which could be worth up to $12 billion over time, was struck.

"This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation," Steve Miller, chairman of Purdue's board of directors, said in a statement, "and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis. We will continue to work with state attorneys general and other plaintiff representatives to finalize and implement this agreement as quickly as possible."

But legal battles still lie ahead for Stamford, Connecticut-based Purdue, which is spending millions on legal costs as it defends itself in lawsuits from 2,600 government and other entities.

'Clearly a game': Opioid lawsuit settlements appear aimed at giving tax breaks to drug firms, experts say

Tentative settlement: OxyContin maker agrees to tentative opioids settlement but it falls short of national deal

Infographic: How companies turn government settlements into tax write-offs

About half the states have not signed onto the proposal and several of them plan to object to the settlement in bankruptcy court and to continue litigation in other courts against members of the Sackler family, which owns the company. The family agreed to pay at least $3 billion in the settlement plus contribute the company itself, which is to be reformed with its future profits going to the company's creditors.

In a statement, the families of late company owners Mortimer and Raymond Sackler said they have "deep compassion for the victims of the opioid crisis" and believe the settlement framework "is an historic step toward providing critical resources that address a tragic public health situation."

Objections came over the amount of the deal, which some officials say will not reach close to the $12 billion mark, and because it means the company won't be found liable by a jury or judge.The company that made billions selling OxyContin has filed for bankruptcy protection. This comes after it reached a tentative settlement with many governments. AP

Purdue chairman Miller said the company has not admitted wrongdoing and does not intend to. "The alternative is to not settle but instead to resume the litigation," he said on a conference call with reporters. "The resumption of litigation would rapidly diminish all the resources of the company and would be lose-lose-lose all the way around. Whatever people might wish for is not on the table now."

Because so many states balked at the settlement, it could complicate the bankruptcy process. The Sackler family members said they're still trying to get more states to sign on.

"We are hopeful that in time, those parties who are not yet supportive will ultimately shift their focus to the critical resources that the settlement provides to people and problems that need them," they said.

Key issues that could be decided include whether the suits against the Sacklers in state courts will be able to move ahead, and what will happen to the company itself. Under the tentative settlement deal, it would continue to operate, but with profits used to pay for the settlement. Another option could be for a judge to order it be sold.

Court filings assert that members of the Sackler family were paid more than $4 billion by Purdue from 2007 to 2018. Much of the family's fortune is believed to be held outside the U.S., which could complicate lawsuits against the family over opioids.

A court filing by the New York Attorney General's office on Friday contended that Sackler family members used Swiss and other hidden accounts to transfer $1 billion to themselves. The discovery of the transfers bolsters several states' claims that family members worked to shield its wealth because of the growing legal threats against them and Purdue.

The Sacklers have given money to cultural institutions around the world, including the Smithsonian Institution, New York City's Metropolitan Museum of Art and London's Tate Modern.

The lawsuits assert that the company aggressively sold OxyContin as a drug with a low risk of addiction despite knowing that wasn't true.

Since OxyContin, a time-released opioid, was introduced in 1996, addiction and overdoses have surged. In both 2017 and 2018, opioids were involved in more than 47,000 deaths, according to the U.S. Centers for Disease Control and Prevention.

In recent years, there have been more deaths involving illicit opioids, including heroin and fentanyl, than the prescription forms of the drugs. That change has happened as awareness of the dangers of prescription opioids has increased and prescribers have become more cautious.

Purdue's drugs are just a slice of the opioids prescribed, but critics assign a lot of the blame to the company because it developed both the drug and an aggressive marketing strategy.

According to a lawsuit filed by the Massachusetts attorney general, the company pushed big sales of OxyContin from the start. Doing so meant persuading doctors who had been reluctant to prescribe such strong painkillers that this one was safe.

A court filing asserts that Richard Sackler, then a senior vice president in charge of sales at the company, told the sales force at a launch party for the drug: "The launch of OxyContin Tablets will be followed by a blizzard of prescriptions that will bury the competition. The prescription blizzard will be so deep, dense, and white."

Along with others in the industry, Purdue paid doctors who attested to the drug's safety and became a major funder of groups that advocated for pain patients and campaigned to have opioids prescribed.

The Associated Press and the Center for Public Integrity found the industry and groups it funded were also politically active, spending more than $880 million nationally on lobbying and campaigns from 2006 through 2015. That spending helped the industry fight off restrictions on prescribing the powerful painkillers.

All those issues are part of the lawsuits facing the drug industry now. The governments that are suing want reimbursement for costs associated with the opioid crisis and also funding for drug treatment and abuse-prevention programs.

In court filings, Purdue has pointed out that its products were approved by federal regulators and prescribed by doctors.

A federal judge overseeing close to 2,000 of the cases has been pushing the parties to reach a grand settlement that would make a difference in the opioid crisis. The judge, Cleveland-based Dan Polster, has scheduled a trial for the claims brought by Ohio's Cuyahoga and Summit Counties for October.

One lawyer who is suing Purdue on behalf of clients including the city of Albuquerque, New Mexico, and the state of Utah, which has signed on to the tentative settlement, said it's long been a consideration that Purdue could not afford to pay the massive amounts being sought in the lawsuits.

"I don't think there's enough money in that company to pay for the damages that are claimed," said Jonathan Novak.

That is one reason there are other defendants in most opioid lawsuits, he said, including members of the Sackler family and huge drug distribution companies such as McKesson Corp. and Cardinal Health. State and local governments have also been battling over how any national settlements would be distributed.

Organizations facing big lawsuits have a long history of bankruptcy claims.

Dozens of asbestos companies have done so since the 1980s. Last year, USA Gymnastics filed for protection as it faced lawsuits over sexual abuse by team doctor Larry Nassar.

Earlier this year, Pacific Gas & Electric Corp. sought bankruptcy protection because it faces billions of dollars in potential damages from lawsuits over catastrophic wildfires in California.

And in June, another company that makes opioids, Insys Therapeutics, filed for bankruptcy just days after reaching a $225 million settlement with the federal government over a kickback scheme. Now, a bankruptcy judge will have to sort out how much of that will be paid.

Vincent Buccola, a lawyer and professor of business ethics, said Purdue may be trying to avoid going to court in states that have been deeply harmed by the opioid epidemic.

"That's not the jury you want to face," said Buccola, who teaches at the University of Pennsylvania. "So you might try to stop that litigation from happening and consolidate it in front of bankruptcy judge who you hope will be more favorable."

Associated Press reporter Matthew Perrone in Washington contributed to this report.

With marijuana use and mental health both wildly stigmatized, perhaps there are solutions in place that are as simple as having a conversation.

Millions of Americans are coping with mental health issues. Often undiagnosed or misdiagnosed, those who suffer in silence with mental illness issues often remain silent due to the stigmatization that shrouds depression, anxiety, and other psychiatric disorders.

Two perspectives on cannabis and mental health

Olivia Alexander, the founder of Kush Queens, an online retailer in CBD and Cannabis products, shared recently that she questioned growing a business and leading a team while addressing using cannabis for her mental health. “It’s a hard thing to admit that some days you can’t cope with daily life without cannabis,” Olivia explains online. CBD and cannabis helped ease the symptoms of Olivia’s bipolar disorder and Olivia found that she was more successful using cannabis than without. 

But, there’s another side to the story. Dr. Elinore F. McCance-Katz believes that substances like marijuana can carry mental health risks. Speaking in 2018, she shared, “As a clinical psychiatrist specializing in addiction, as someone committed to treating people with substance use disorders, as a concerned American—I cannot stress enough how understated the risks and consequences tied to marijuana consumption are in our nation’s dialogue.” Dr. McCane-Katz listed risks such as a decrease in IQ and a “predisposition to mental illness” as risks that society needs to address.

Interestingly, a study in 2016 demonstrates no loss of IQ in British teens who consumed marijuana. 

“Marijuana users lost about four IQ points over the course of the study. But their abstinent twin siblings showed a similar pattern of decline, suggesting that the loss of mental sharpness was due to something other than pot…” (The American Association for the Advancement of Science) 

Two wildly-different perspectives lead to one, gigantic question: At what point do rewards outweigh risks? 

Mental Health: The figures involved

The National Alliance on Mental Illness, (NAMI,) shared powerful statistics around mental health that may offer more insight: 

• Approximately 1 in 5 adults in the U.S. (46.6 million) experiences mental illness in a given year.
• Serious mental illness costs America $193.2 billion in lost earnings per year.
• 6.9% of adults in the U.S.—16 million—had at least one major depressive episode in the past year. 
• Only 41% of adults in the U.S. with a mental health condition received mental health services in the past year. Among adults with a serious mental illness, 62.9% received mental health services in the past year.
• Suicide is the 10th leading cause of death in the U.S., and the 2nd leading cause of death for people aged 10–34.

Steps to a solution

It may currently be a stretch to stay that cannabis can eliminate the stigma of mental illness, but it certainly has the power to empower and start conversations that can lead to healing. Ljubica Kostovic from TRNTO believes that perception is already changing in CBD and cannabis, with individuals more willing to use for pain, anxiety, and PTSD. He shared, “Cannabis has been used for medical purposes for thousands of years and has been used to treat mental health conditions for over a century — its full legalization on a federal level presents a unique opportunity for us to explore.”  

With marijuana use and mental health both wildly stigmatized, perhaps there are solutions in place that are as simple as a conversation. Twisp House of Cannabis in Washington recently hired a 74-year-old woman named Sonja, as they noticed many of their older patrons wanted to speak to someone who was currently or had been in their place. Undergoing certification, Sonja is hoping to eliminate the stigma of cannabis by sharing her story and the benefits of marijuana with adults who may not have asked before, a tactic often used in the mental health community that allows for greater inclusion and trust.  

Stories are an incredible balm, aren’t they? When individuals feel safe in sharing, it allows others to do the same.