Freely Enterprising The System

"There are kickbacks. Let's be blunt -- that's what they are."
"Regardless of whether the physician thinks they're independent, they're no longer independent."
Bryn Williams-Jones, bioethics professor University of Montreal 

"There's rent and there's staffing and payroll and insurance, and all the other things that go into running the business."
"There needs to be a way to have a sustainable business ... and it doesn't appear the governments are providing adequate funding."
Barry Fishman, CEO, Vivo Canada, chain clinics

"There is still a doctor who has to make an assessment of the patient."
"He has to demonstrate you have an actual need for the medicine."
Jordan Sinclair, Vice-President, Canopy Growth cannabis firm

Many Canadians still seem to want a health professional’s help getting marijuana treatment, and the medical cannabis system remains popular. Getty Images

Access to marijuana has been liberalized freely. Last October cannabis legalization took effect. Users of recreational cannabis may now access their drug of preference, or preferential strain of that drug, to their heart's content. Admittedly, there are still logistics to be settled, but when everything is finally in order and entrepreneurs have been duly certified by all the provinces and territories enabling them to open their storefronts with sufficient merchandise to satisfy their clients' needs no constraints to access will exist.

Yet, despite the freedom to simply acquire their recreational cannabis when and where they feel like it, many consumers seem to want to have their need for marijuana validated by a medical certificate. And it is in that area where licensed producers of medical cannabis pay out millions to cannabis clinics countrywide in 'appreciation' when 'patients' register their marijuana prescriptions with the companies. Call that 'referral fees' or call the practise 'education grants'; in plain language they're kickbacks.

The practise of expressing such appreciation surfaced several years back as a sometime thing with a whiff of controversy, one that has since become the norm, a routine part of the business of entrepreneurial pot, twinning commerce and medicine with cannabis. "LP revenue provides the highest margin of all the company's revenue streams", according to a document filed with regulators by Sunniva Inc., which owns both Natural Health Services clinics and a pot producer.

A routine has been established that a producer pays a clinic fifteen to twenty percent of the cost of each dose of cannabis a patient buys over time when someone files their prescription with them. Health-policy and medical ethics experts claim these payments compromise health professionals' focus of placing a patient's interests first, the system in place compelling the health professional to recommend to the patient a specific company he is connected with in his capacity as clinical adviser.

As far as the operators are concerned, payments represent enabling funding of intensive counselling offered to patients. Without those payments funding the counselling services it would fall to the patients to pay for them. Merely having contracts with multiple producers shouldn't be construed as encouraging favouritism toward anyone, it is insisted, all of whom pay back a percentage of business conducted in an interlinked service to clients.

The growing facility of MedReleaf in Markham, Ont.. Nathan Denette/CP

Perhaps it can be best construed as serving clients who feel the need to receive marijuana 'authorizations' post-medical assessment. And the best interests of the clients are served in a seamless transaction beginning with the medical assessment leading to the prescription and the finalization of guiding the client toward a provider. To that end, these specialty clinics assess patients, issue authorizations for marijuana, and assist the patient to access the goods through registering their prescriptions with a certain producer who just happens to be one of those the facility contracts with.

If this pricks anyone's ethical conscience, it's just the way the industry has developed its protocol. In 2015 the then-CEO of a major British Columbia-based cannabis company complained about the morality of doctors and clinics demanding referral fees claiming the practise "taints the whole industry", and going so far as to withdraw from a trade group, in protest. That company is now under a different leadership.

Executives of other companies, however, feel the payments, now standard practise, have a practical purpose; to fund the care clinics provide where appointments can last up to an hour's duration. Vivo Cannabis mentions in one corporate filing that it receives "educational grants" from producers, stressing the while that patient educators are not knowledgeable about contracts with the companies, hence proffer objective recommendations.

According to Mr. Fishman of Vivo Cannabis, while clinics do get income from provincial fees paid to doctors, the most significant revenue relates to producer payments. And those payments can become substantial financial supports for the clinics. Of the $1.2 million in revenue brought in by the Canada House chain of cannabis clinics in a three-month period, a mere $100,000 represented profit not linked to producer fees.

Medical-patient referral payments represented roughly 50 percent of the $3.5 million in sales and marketing costs in another three-month period for pot producer MedReleaf, according to a recent report from parent company Aurora Cannabis which also owns the Canvas Rx chain of clinics and where another of its documents shows revenues jumping by $1.8 million in fiscal 2018 attributed to a surge in producer fees.

"You have this clear conflict of interest in place: the more you prescribe, the more you get", pointed out Marc-Andre Gagnon, a health-policy professor at Carleton University. "In principle, this is simply unacceptable."

For some clinics payments from licensed producers represent the bulk of their income.  Getty Images