The final arguments are being given this week in a court challenge of the Canadian federal government’s move to ban home growing of medical marijuana by doctor-approved users. If home-grow advocates succeed, the ruling could serve a big blow to the newly implemented Marihuana for Medical Purposes Regulations (“MMPR”) that aimed to force all patients to buy from approved commercial producers.

The uncertainty surrounding the MMPR program has led Health Canada – the government’s regulatory body – to delay approvals for many aspiring licensed producers. While some companies have already been approved, including Tweed Marijuana Inc. (TSX-V: TWD) (OTC: TWMJF) and OrganiGram Holdings Inc. (CSE: OGI) (OTC: OGRMF), others have been forced into a holding pattern.

Lexaria Corp.’s (OTC: LXRP) sizable joint venture with Enertopia Corp. (OTC: ENRT) to grow 10,000 kilograms of dried medical marihuana per year is no exception to the rule. The good news is that the company’s management team hasn’t been idly waiting around for an approval; but rather, they’ve acquired cannabinoid-related patents with the goal of launching new products into the United States.

In the below video, Cannabis Financial Network sat down with Lexaria CEO and chairman Chris Bunka. The interview occurred at the recent MIS conference in Denver, and focuses on the recent actions and developments at Lexaria Corporation.

Improving Bioavailability

Many medical and recreational cannabis users probably wouldn’t be surprised to learn that smoking is a completely different experience than edibles – but they might not know why. In a 2005 study, researchers found that smoking cannabis resulted in 30% bioavailability of THC, but consuming THC orally resulted in just 4%to 12% bioavailability with highly variable absorption.

These dynamics become a problem when users are trying to consume cannabinoids like CBD, which don’t have any psychoactive effects to gauge absorption. In these cases, users may be disappointed to learn that many CBD supplements simply pass through the body instead of being fully absorbed and utilized in beneficial ways, especially given the high price of many supplements in the space.

In November of last year, Lexaria entered into an agreement to acquire a majority interest in PoViva Corp. – a developer of CBD-infused products. PoViva uses a patent-pending process to bind active CBD ingredients with a lipid in order to enable a more efficient and comforting delivery of CBD’s than competing products, since lipids are more readily absorbed than many other delivery mechanisms.

The Company is clearly excited about the possibility of disrupting the entire legal marijuana market, if contemplated lab tests were to show that its patent-pending technology actually delivers a bioavailability rate anything close to that achieved through smoking. As mentioned by Lexaria CEO Chris Bunka, “Why would any medical marijuana patient contemplate smoking ever again, if we can actually deliver as much active ingredient – with no harmful effects as associated with smoking ? “

Lexaria’s ViPova tea is a CBD-only line at this time, allowing the company to distribute nationwide, but the patent-pending technology covers both THC and CBD, allowing for potential future expansion into those states where THC is legal.

Building a Product Line

Lexaria has since rebranded PoViva as ViPova and launched its initial CBD-infused teas into the U.S. market. As the most popular beverage in the world, tea is an ideal starting point to apply the company’s CBD-infusing technology. Consumers purchasing the tea benefit from the lipid-based technology that helps improve absorption of the CBDs, and creates a more efficient and comfortable experience for the end user.

In February, the company hired a National Sales and Compliance Strategist to spearhead its U.S.-based sales operations and launched its initial “Tea Party” campaign designed to spur grassroots growth. A channel partner program was also established in order to help build distribution channels throughout the United States by working with exclusive retail operations or distributors.

Moving forward, the company plans to leverage the same lipid-based technology and distribution channels to launch a number of other products into the market, including energy bars, coffee, and chocolate by the end of the year. The full and complementary product line could help generate near-term sales and accelerate these sales over time to unlock shareholder value.

Looking Ahead

The medical and recreational cannabis industry generated an estimated $2.7 billion in 2014 revenue, according to ArcView Market Research. While that figure is large and growing, the global nutrition and supplements market is valued at over $100 billion and continues to grow at a 5%+ clip each year. Lexaria Corp. aims to target both of these markets with its recent expansion into CBD-infused products.

While cannabis investors may find the company even more compelling, investors in the nutrition and supplements space may want to take a closer look at the stock as a micro-cap diversification with cannabis exposure. Investors in MusclePharm Corp. (OTC: MSLP) or ForeverGreen Worldwide Corp. (OTC: FVRG) may want to pay especially close attention given their similarities in market capitalization.

For more information about Lexaria, visit the company’s website at www.lexariaenergy.com or www.vipova.com.

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