Cannabis & Hemp Medical Applications in the US and Abroad with Dr. Stuart Titus

Dr Stuart Titus

Dr. Stuart Titus is the CEO of Medical Marijuana Inc and General Hemp. Dr. Titus talks about how he got into the industry as an investor and then eventually became the CEO. Dr. Titus talks about how cannabis and CBD patients are using it and how he is expanding his business abroad.


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Key Takeaways:

– Wall Street to Cannabis and Hemp
– Noticing how athletes and patients use hemp
– Staring in hemp as an investor
– Expanding outside the United States
– How patients are using CBD and Cannabis
– Where the industry will be in five years

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Dr. Stuart Titus, CEO of Medical Marijuana Inc. and General Hemp is here to help us understand the promise of medical applications with cannabis and hemp and understand the fastest growing areas in the cannabis ecosystem. Stuart, welcome to CannaInsider.

Dr. Stuart: It's great to be with you today. Thank you so much for the opportunity.

Matthew: Give us a sense of geography. Where are you in the world?

Dr. Stuart: Well, today I am in Scottsdale, Arizona. I'm on company travels, and certainly, our home office based out of San Diego, California.

Matthew: That's a nice place to be in the winter months. Good job. Well done.

Dr. Stuart: Well, certainly, we're enjoying some better weather than many people in the rest of the world, and certainly, it's a great pleasure. But, you know, we do travel extensively, and certainly, this is part of the business that we're in.

Matthew: Yes. And what are Medical Marijuana Inc. and General Hemp? What's important to understand about each of those businesses?

Dr. Stuart: Well, Medical Marijuana Incorporated is a public company. We're actually incorporated in Oregon and were founded back in 2005. In March of 2009, Medical Marijuana Inc. had become a publicly-traded company, the first one in the United States in this industrial hemp medical cannabis space. And certainly, our ticker symbol is MJNA for those who like to follow. And the General Hemp, LLC was formed in 2012. We're a private equity company and General Hemp is the largest single shareholder in Medical Marijuana Inc.

Matthew: Okay. And what was your background before getting into the cannabis and hemp industries?

Dr. Stuart: Well, my career started on Wall Street. I was a bond trader and underwriter for about 11 years. I worked with Credit Suisse First Boston for the majority of my career, kind of a big white shoe investment banking firm and certainly had some great experiences on Wall Street. However, after 11 years, enough of the stress and burnout, everything from Wall Street. So, I totally changed gears and I got into the field of physical therapy and physio therapeutics. I had a wonderful practice in the Carolinas and did that for many years. Certainly, here was where I found out that many athletes using cannabis to help with their pain, inflammation issues, and help them with sleep. I started taking some medical cannabis symposiums and from there, saw a tremendous amount of research going on into these extracts from the cannabis plant family, the cannabinoids. And when our public company started out in California in 2009, I became involved just as an investor. And over time, I've taken on an increasingly large role of the company to the point where today I'm the president and CEO.

Matthew: Wow. Okay. Talk about you get your foot in the door as an investor, and then fast forward, now you're the CEO.

Dr. Stuart: Certainly, it's been a great journey. And we've been very excited about the fact that not all cannabis or not all forms of cannabis, necessarily, are psychoactive. There's the whole industrial hemp side with tremendous industrial use and application. But also the non-psychoactive cannabinoids, CBD or cannabidiol, this has presented a tremendous evolution, if you will, in the field of cannabis-based medicine.

Matthew: Okay. You're doing a lot of different things. Can you summarize your business, medical, and research projects to help listeners understand the scope of work here?

Dr. Stuart: Yes. Our company is certainly well-involved in the cannabis space and we have currently five divisions that are in the nutraceutical sales of hemp-based CBD products. We also have two divisions that are in pharmaceutical development. We're very excited about a lot of the research that's going on, not only in the U.S. but also around the globe. Our company, in particular, are doing a good amount of research in countries such as Mexico, Brazil, and some of our pharma partners, actually, over in Europe in the Netherlands. So, with this, we're certainly an international company and believe that there are tremendous potential opportunities here. We're certainly ones who keep investing back into our businesses and developing global operations. It's been great to have had our products introduced and accepted into the country of Brazil as of April 2014. Here in the U.S., basically, our products are available OTC or over the counter to individuals. They can order them online. But in Brazil, it's only available by doctor prescription.

And the initial indication for us was for what's called refractory epilepsy. This is a type of epileptic seizure disorder that children have that basically is resistant to pharmaceutical intervention. And here, in April of 2014, the country of Brazil saw that our products were working when pharmaceutical products weren't to help certain families and children with epileptic seizure disorders, and they welcomed our product into the country at that time. Subsequently, February of 2016, our products were accepted into the country of Mexico, again, similar indications, refractory epilepsy, again where pharmaceutical medications weren't exactly able to control some of the seizure episodes in these children. Our products were able to do so. And certainly, this has been a great journey for us. We're certainly excited about moving into other markets throughout the globe. And currently, you know, we've had a good year last year in terms of sales, and we're expecting further increases coming up here in 2018.

Matthew: As you get into more international markets, how do you manage currency risk? Because, you know, look at the dollar. The dollar has been super strong up to about January 2017. It's gotten weaker. And recently, it's had a bit of a recovery. But when we're talking about some Latin American countries, sometimes we're dealing with volatile currencies, the Brazilian real, the Mexican peso. How do you manage these currency risks? Do you denominate everything in dollars so you don't have to worry about it? How does that work?

Dr. Stuart: Well, yes, a lot of our transactions do wind up in U.S. dollars. And it's nice to know that, say, in Brazil, for example, the country of Brazil, through their health care system actually reimburses citizens for the cost of our products. So those with the necessary doctor prescription, the necessary importation paperwork will actually get their product paid for and covered by the government of Brazil. And they'll, you know, pay us in either the local currency or in U.S. dollars. And most of this, at the moment, we're being able to convert to U.S. dollars.

As we expand over to Europe, obviously, like any international or multinational company, we're gonna have exposure to currency fluctuations. And that's just part of the cost of doing business. Certainly, if we get large enough, and we're just a, you know, small OTC-traded company, but if we were to grow and get up to the, you know, Nasdaq, New York Stock Exchange level where we're doing hundreds of millions of dollars in sales every year, I believe then we'll be a little bit more active in some of the futures markets where we can offset or hedge some of our risk in terms of currency trading.

Of course, my Wall Street background, I've been fairly familiar with the hedging at risks. Most of the risks I took back on Wall Street were in terms of bonds, U.S. Treasury bonds, and hedging that type of risk. But nonetheless, I was very familiar with the currency-currency trading. And certainly, this is a good way for many multinational companies to help smooth out some of the ups and downs that happen, not only in terms of sales but also in terms of relative values of one currency versus another.

Matthew: I know mortgage-backed bonds are still, kind of, traded by individual mortgage-backed traders. And corporate bonds, I believe, are too or most of them. Do you see, kind of, a fintech revolution coming where all that's gonna be put on the blockchain or somewhere into a fintech cloud where people have more transparency on bond issues and things like that?

Dr. Stuart: I certainly believe so. Of course, back when I was on Wall Street many years ago, this was way before we even had electronic trading. I remember all my trades and tickets were done by hand. And certainly, the advent of the computer and computerized trading has moved us to a whole different dimension here, certainly opening up the markets to many people who would not necessarily have had access back when I was on Wall Street throughout the 1980s.

So, you know, we're certainly excited about the fact that, yes, there are additional opportunities, not only through the blockchain but also through new and innovative products. We really believe that once we get to legalization of cannabis, this will be the largest cash crop in the entire United States, bigger than wheat, corn, soybeans. Certainly, there will be a cannabis futures market in Chicago on the Board of Trade. We truly believe that even things such as cannabis backed bonds may have significant appeal for various investors.

Matthew: Yeah. You know, that's really interesting. I actually, in college, worked on the floor of the Chicago Mercantile Exchange and I was able to see kind of this open outcry environment before it went away. And the thing I wonder about, like, hemp seems like a perfect opportunity to maybe be listed as a commodity. But with cannabis, we're talking about all these different grades and different aspects of it. Do you see that being possible?

I mean, hemp for sure, but you'd really think cannabis could be something that could be a commodity that is exchanged because what would you say? It's like you have Blue Dream over here or this... I mean, how do you define the characteristics? Like, corn or pork belly or orange juice can be really commoditized down to a certain grade level. Do you think everybody would start to move into a certain type of grade to make it possible to have huge liquidity on an exchange or something like that?

Dr. Stuart: Well, I think this is a very interesting concept and a lot of it remains, kind of, in terms of speculation and conjecture. But certainly, I think that we could grade this, say if it was, you know, a marijuana type of cannabis that you could have certain grades, say, a 5% THC, maybe a 10% THC, 20% THC, etc. And potentially, these would be contracts that could potentially be deliverable through the commodities exchange. Say, someone wanted to take delivery of their, you know, existing futures contract, and we would have that potential to have it available. And, of course, on the hemp side, you know, there are many different potential industrial applications and different types of hemp are better for, say, textiles, for example. And other types of hemp are maybe perhaps better for, say, your hemp construction building materials. Some types of hemp grow a better seed than others, other varieties. So I can see several different grades of both the marijuana side of cannabis, as well as the hemp side.

Matthew: Yeah. That would be outstanding if that could happen. It would really help a lot of different market participants hedge their risk in ways and know what...lock in their revenue when they're planting their crop. That would be great if that could happen.

Dr. Stuart: Well, certainly, yes. You know, of course, here in the U.S., the hemp industry is very much in its infancy. We're looking to bring back hemp as a tremendous agricultural crop and commodity like it was many centuries and generations ago. But, yeah, I really think that we can move forward with some interesting things in terms of the various potential applications for hemp, and certainly, I think this has got some real legs to it, I think, for the farmer particularly, since this is a developing market that there isn't a lot of, say, production processing facilities in the U.S. like there are in many foreign countries. And until we get, you know, all these production and processing facilities, the farmer needs to have some type of farm gate outlet or a place where they can go to potentially sell their crop to buyers. I'm sure over time as we develop, you know, large hemp textile facilities or hemp building construction material facilities that the farmer will easily have a place to sell their crop and product, even here while the industry is developing. Certainly, the futures market can help bridge that gap. And obviously, once this industrial production starts to ramp up as we achieve economies of scale by larger and larger hemp production here in the U.S., I think it will be easier and easier for the farmer to find great sources and different uses for their potential crop.

Matthew: Let's pivot to cannabis as a medication and CBD as a medication. Do you think that traditional pharmaceuticals are being cannibalized by CBD and cannabis as a medicine or is the whole market just growing, and now cannabis and hemp are making up a part of that growth?

Dr. Stuart: Well, it's interesting to see this return of cannabis as a medicine. And certainly, since the beginning of recorded time, we see, you know, about 8,000 years B.C., ancient Chinese manuscripts and some of the first, you know, Britain-recorded history of the world. We see various cannabis oils, tinctures, preparations, being used medicinally. And really right up until the late 1800s, early1900s, all the large pharmaceutical companies had several cannabis-based medicines that were, you know, routinely available.

And it's great to see this come back. I think it's going to certainly disrupt some of the markets for pharmaceutical medication. Certainly, we believe, as does Dr. Raphael Mechoulam, a great Israeli-based researcher, the grandfather of cannabis medicine, if you will. Dr. Mechoulam believes that once cannabis is fully researched and has gone through clinical study and approvals, etc., etc., this may replace as much as 40% of all pharmaceutical medicines on the market today.

And certainly, if we can get good cost of production, I think this will help lower overall healthcare costs. Certainly, from the nutritional supplement or nutraceutical side, we believe that cannabinoids help supplement the very large self-regulatory system known as the endogenous cannabinoid system. That's a characteristic of all us humans as well as all mammalian creatures. And certainly, to support this very large self-regulatory system, we find many people moving to much higher levels of overall health and wellness. So certainly, there is nutritional applications as well as medicinal applications.

Matthew: We see the advent of personal genomic mapping like 23andMe bring down the cost massively to under $100 to map your genome. Do you think that there is going to be a bridge between cannabis medications being customized to individual genomes so people can get a much more customized and individualized care plan from a plant like cannabis?

Dr. Stuart: That's very, very interesting. I know, again, the research here very early stage, but certainly, quite exciting. We do see that cannabis, and particularly cannabinoids CBD, seems to have a very strong affinity for a certain group of receptors within the human body. Most people in the cannabis industry are very familiar with the CB1 receptors expressed widely in the brain, the spinal column of the central nervous system. Your CB2 receptors expressed nicely throughout the gut, the viscera, the internal organs.

But interestingly enough, there is another receptor group called the G protein-coupled receptor sites that... Well, a very famous cannabis researcher, Dr. Orrin Devinsky from New York University Hospital, basically looking at epileptic seizure disorders in children. Basically, Dr. Devinsky credits CBD's action on these G protein-coupled receptor sites as the reason that these seizure episodes are decreasing so significantly in children with the types of refractory epilepsy.

Interestingly enough, these very same receptor sites are called technically, the G protein-coupled receptor sites, are responsible for the action of about 800 human genes or about 4% of our entire genomic sequence. So, I think that right there bodes extremely well for cannabinoids to actually affect genetic expression and over time, perhaps we can develop certain types of what you might call designer cannabinoids that will continue to improve on the ability of the human body to properly express genes. Hopefully, this will help us overcome some very significant genetically inherited disorders and the other tendencies that cause significant problems for many people with their health and wellness.

Matthew: Yeah. Fascinating. I can't even imagine what it's going to look like 10 to 20 years from now in terms of what's available as medications and ability to target specific symptoms and issues, get into underlying causes and so forth for individual's specific genome. One question, in terms of applications right now for cannabis and CBD, what is the most popular for your products? Is it oral, liquid, pill? What's the application style the people seem to prefer the most?

Dr. Stuart: Right. Well, nice question. Certainly, we have different forms of delivery and our original form is a paste form, which comes in an oral applicator. It's kind of like a dark-colored toothpaste, if you will. And that was basically our original formulation and product. From here, we've taken this, and of course, many parents with epileptic children find it much easier to feed the child with a liquid form. And so we've taken our paste, reformulated this in combination with an MCT oil. This is technically a medium-chain triglyceride oil such as a coconut oil or an olive oil, for example. And this has been a nice advent that we've been able to develop these liquid products. Many people, of course, are familiar with traditional capsules, and we have those capsules that are available for people. And we also have a topical application salve product that many people are enjoying the benefits from the topical application.

We've also been able to develop a nice vape product. This is a vaporization form of CBD. And here, we feel that this actually goes more directly into the cardiopulmonary system, has a much more immediate effect. Of course, when you take CBD and you swallow it, say, in a capsule form like you do any traditional pharmaceutical medication, basically this goes through the digestive tract and then the liver will certainly metabolize it. And with some pharmaceutical meds, this is what really causes the unwanted side effects. But sometimes it takes, you know, an hour or a couple of hours for the effect of the medicine or, you know, say, for example, for our product for people to potentially have this absorbed into their system and throughout the bloodstream, where the vapor aspect really gets more direct effect into this cardiopulmonary system and a more direct effect up to the brain. So some people feel a more immediate sense of relaxation, well-being, etc. by utilizing the vapor technology.

One of our pharmaceutical development partners, Axim Biotechnologies, is actually working on a medicated chewing gum. And here this would be a combination of THC and CBD, which are delivered through the oral mucosa. Again, here, we feel this can be more directly absorbed, directly into the bloodstream versus going through the digestive tract. And I think this would be nice advent if we get this fully across the finish line and up and available for people around the world to use.

Matthew: Okay. Are you involved in any specific research, past or present, or studies of cannabis or hemp?

Dr. Stuart: We're doing clinical study and research with our natural botanical products. We're doing quite a lot down in Mexico and Brazil at the moment. We've had two nice studies from doctors that basically are just informational studies regarding epileptic seizure disorders in children. And certainly, they've been very favorable as far as some of the early-stage results. Our pharma partners at Axim Biotech are doing clinical study and research over in the Netherlands. One study at the University of Wageningen. And then KannaLife Sciences, our other pharma partner, has done a lot of great research in terms of preclinical work at the Pennsylvania Biotechnology Center in Doylestown, Pennsylvania. And now, some of our animal studies are being done at Temple University in Pennsylvania as well.

Matthew: Do you think legal cannabis is having an effect on diminishing opioid addiction at all?

Dr. Stuart: Oh, I certainly do. There's no question there. We're certainly seeing in the cannabis-friendly states, the incidence of opioid overdose death is about 30% lower than the non-cannabis states. And certainly, this is something that even our National Institute on Drug Abuse has seen the potential here for cannabis or cannabinoids to help assist, or possibly even replace opioids. I think this is a tremendous trend. I think over time, this will certainly happen. And it's just an unfortunate, terrible situation, this opioid epidemic. And we really believe cannabis and cannabinoids hold some significant answers for this problem. I think the last count I heard, that on average, about 143 Americans die every single day from opioid overdose. This is something we really need to look at very seriously.

Matthew: It really is. I mean, if you're listening to this, if you yourself aren't addicted, you probably know someone, a friend or family member, that's had a problem with it. I know I've had a friend die from this and it's just... I don't know why we won't talk about it as a country. And it's really affecting the U.S. much more than other countries and it's just a terrible thing.

But switching over back to the international market, you mentioned Mexico and Brazil. If you were to pick one country outside the U.S. that' think is ready and poised for adoption and penetration in terms of, you know, the population getting into this type of thing and adopting it, which country would you say you're most excited about right now? And you can't say all of them. You've got to pick one.

To Be Continued