The highly successful New West Summit in San Francisco this past weekend included a panel “Canada’s Cannabis Legalization” that I moderated with a goal of informing attendees about the opportunities and risks in the sector. The room was standing-room only, and most of those attending revealed that they had not yet invested in the publicly-traded licensed producers (LPs).
The panelists, which included Terry Booth, CEO of Aurora Cannabis (TSXV: ACB) (OTC: ACBFF), Tim Saunders, CFO of Canopy Growth (TSX: CGC) (OTC: TWMJF), Denis Arsenault, CEO of OrganiGram (TSXV: OGI) (OTC: OGRMF), and John Fowler, CEO of Supreme Pharma (CSE: SL) (OTC: SPRWF), represented a diverse group of leading publicly-traded LPs. Aurora Cannabis operates a large purpose-built facility in Alberta. Canopy Growth, which includes the Bedrocan and Tweed brands, has two indoor facilities and a large greenhouse, all in Ontario. OrganiGram is focused on organic cannabis and operates in New Brunswick. Supreme Pharma subsidiary Seven Acres has a license to cultivate in a large hybrid greenhouse and is the only LP to focus exclusively on the wholesale market.
The panelists contrasted the operating environment in Canada, where medical cannabis is federally legal but highly regulated (ACMPR), with the state-legal markets in the United States, pointing to their ability to more easily raise capital, access capital and pursue international opportunities. Each of them also shared his insight on how the extracts market is likely to evolve and how distribution will change for both medical as well as legal cannabis. While most of the executives were in agreement on the topics that were discussed, one area of contention revolved around the time-line to full legalization, with Arsenault having the most aggressive time-line (in mid-2017) and Booth expecting it to take place no earlier than April 2018 due to his expectation that Canada will give one-year notice to the United Nations in advance of sales.
One clear takeaway is that Canada is poised to be a global leader in cannabis, even absent a very likely legalization that will create tremendous opportunity for the LPs. For those who would like to learn more, New Cannabis Ventures offers a resource page to help investors keep track of the legal medical cannabis program overseen by Health Canada and the evolving framework for adult-use.