Emblem Establishes Temporary “Patient Access Investment Fund” to Partially Cover Medical Cannabis Excise Tax

Press Release

Emblem will continue to advocate against the application of any tax on medical cannabis

Toronto, October 15, 2018 – Emblem Corp. (TSXV: EMC, OTCQX:EMMBF) (“Emblem” or the “Company”) today announced that it will segregate CDN $5 million of its current cash holdings to establish what it is calling the Patient Access Investment Fund (the “Fund”), the interest from which will be used to help offset some of the cost of the excise tax that will be applied to medical cannabis products, effective October 17, 2018.

Federal and provincial governments to tax medical cannabis

On October 17, the Access to Cannabis for Medical Purposes Regulations (“ACMPR”) will be replaced by the Cannabis Act, and all Licensed Producers will be required to collect and submit a federal cannabis excise tax to the government. The standard rate tax is the greater of $1.00/gram equivalent or 10% of the purchase price, with some provinces requiring an additional excise duty adjustment on top, which can range as high as 19.3% (the “New Excise Tax”).

In response to the New Excise Tax, Emblem will implement a $0.50/gram or equivalent increase to the prices of its medical cannabis products on October 17, 2018 and will absorb the remainder of the New Excise Tax over the $0.50 increase using interest from the Fund, with any portions not covered by the interest generated by the Fund being wholly absorbed by Emblem.

Patients are Emblem’s first priority

Emblem will continue to advocate against any tax on medicine and support organizations such as Canadians for Fair Access to Medical Marijuana (“CFAMM”) in their work to remove taxes from medical cannabis.

“Patients are our first and foremost priority and we stand together with them to advocate for the removal of taxes from medical cannabis. We believe that failing to do so will render this medicine less affordable, preventing vulnerable patients from accessing their physician-authorized medication,” said Nick Dean, CEO, Emblem Corp. “Until a time when the government decides to treat medical cannabis equitably to other medications, Emblem will cover the portion of the tax that is not covered through the retail prices changes on behalf of patients through the Patient Access Investment Fund.”

Cannabis already the only medicine subject to HST

“No other prescription medication in Canada is subject to tax. In fact, medical cannabis is already the only medicine subject to HST,” said James O’Hara, President and CEO of CFAMM. “The tax adds a significant financial burden to already-struggling patients and further marginalizes those managing a health condition. It increases the stigma that can come with using medical cannabis. Furthermore, it defeats the purpose behind the government’s often-stated position of driving purchases away from the black market.”

Another challenge for patients is that cannabis does not yet qualify for coverage by most private or government health insurance policies, so many patients are paying 100% out-of-pocket for their prescribed medication.

“Our message to patients is that we are all in this together. We are proud to support our patients during what we hope is only a temporary period of governments imposing an additional tax on medicine,” said Dean. “Canada needs the marketplace for medical cannabis to remain competitive to ensure adequate product choice for patients. A continued tax on medical cannabis is unsustainable in a competitive market, and in the end, patients will be hurt through reduced access to a wide variety of medicinal cannabis products. We encourage patients to join us in advocating to the federal government that medicine should not be taxed.”

About the Emblem Patient Access Investment Fund

The Fund is a CDN $5 million professionally-managed investment account, from which generated interest will be directed to covering the New Excise Tax applied to the Company’s medical cannabis products over the $0.50/gram equivalent that will be passed on to Emblem patients in the October 17, 2018 price update. The remaining portion of the New Excise Tax will be covered by Emblem, including any amounts required to be paid over and above the interest generated by the Fund.

Emblem is hopeful that the government will remove the excise tax on products sold to registered patients in the near future, at which time the Company will redirect the money in the Fund back into its working dollars, where it can be redeployed towards its primary intended purpose of supporting medical product development and innovation.

About Emblem
Emblem, through its wholly-owned subsidiary Emblem Cannabis Corporation, is a fully integrated licensed producer and distributor of medical cannabis and cannabis derivatives in Canada under the ACMPR Emblem’s state-of-the-art indoor cannabis cultivation facility and research and development laboratory is located in Paris, Ontario. Led by an experienced management team of healthcare executives, accomplished marketing professionals, and cannabis experts, Emblem is focused on driving shareholder value through product innovation, brand relevance, and access to patient and consumer channels. Emblem is also the parent company of GrowWise Health Limited, one of Canada’s leading cannabis education services. Emblem trades under the ticker symbol EMC on the TSX Venture Exchange.

For more information, please visit www.emblemcorp.com.

 

For media inquiries, please contact:

Morgan Cates
H+K Strategies
416.413.4649
Morgan.cates@hkstrategies.ca

 

For investor inquiries, please contact:

Ethan Karayannopoulos
Investor Relations
Emblem Corp.
647.748.9696
ethank@emblemcorp.com

Alex Stojanovic
Chief Financial Officer
Emblem Corp.
416.923.1331
alexs@emblemcorp.com

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This news release contains certain forward-looking statements and forward-looking information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “anticipate”, “achieve”, “could”, “believe”, “plan”, “intend”, “objective”, “continuous”, “ongoing”, “estimate”, “outlook”, “expect”, “may”, “will”, “project”, “should” or similar words, including negatives thereof, suggesting future outcomes. Management of the Company believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to the Company, including data from publicly available governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which Emblem believes to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. While Emblem is not aware of any misstatement regarding any industry or government data presented herein, the medical marijuana industry involves risks and uncertainties and is subject to change based on various factors.

Forward-looking statements are not a guarantee of future performance and are subject to and involve a number of known and unknown risks and uncertainties, many of which are beyond the control of the Company, which may cause the Company’s actual performance and results to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in the Company’s December 31, 2017 Management’s Discussion and Analysis, which has been filed with the Canadian Securities Administrators and available on www.sedar.com. Any forward-looking statements are made as of the date hereof and, except as required by law, the Company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.