News

17/10/2018

Canada rolls out the green carpet

On this historical day, recreational cannabis becomes legal in Canada. While medical marijuana has been legal for some time now, the legalization of recreational pot in such a big potential market represents a paradigm shift in the industry (by the way, if you're curious about where those potential buyers will get their product, check out this article on BNN Bloomberg). Not surprisingly, opinions about what will happen abound. Already in 2015, MJ entrepreneurs saw big opportunities when Justin Trudeau, a keen supporter of legalization, was elected PM. A whitepaper from Tantalus Labs also saw opportunities for the market in British Columbia in particular, and industry insiders and experts already predicted a bright future for the Canadian cannabis sector in 2017. Now, with that future having arrived, it's a good time to look into some of the challenges and opportunities for the industry in Canada. 

Opportunity: Investments


When such a big market opens up, it's only natural that people flock to it to see if they can get a share. In the early days of the cannabis boom, companies attracted private investors who would buy shares of individual companies. To make their life a bit easier, an ETF was launched in April 2017, combining 14 Canadian cannabis stocks. (The ETF recently passed the $1 billion mark.)

While banks were at first still hesitant to invest, this year they're showing less trepidation - for instance, in January the Bank of Montreal financed Canopy Growth. Later that year, in a forward-looking report from Deloitte, the firm estimated cannabis sales to exceed $7 billion in 2019. No wonder investors big and small are scrambling to get in on the ground floor.

In recent months, the investment carousel took yet another turn, with large beverage companies showing interest in the industry, seeing potential in cannabis-infused drinks. A notable example is Constellation Brands investing a whopping 4 billion USD in Canopy Growth.

All that money is having a big impact on the big players in Canadian weed, as shown in the graphs below, showing the development of stock prices over the last year (data retrieved from Google Finance on October 10, 2018).

Click here to read the full article at HortiDaily, including the contribution of Oreon.

Canada rolls out the green carpet