America’s Role in the Canadian Marijuana Market

November 21, 2016
First Harvest Financial

Marijuana news has been focused on the industry victories brought by Election Day 2016. But, what’s happening north of the border?

As Canada’s legal marijuana industry grows and the Liberal government prepares to fully legalize the recreational market, stock prices are on the rise for marijuana businesses.

“With these things [marijuana stocks] so hot right now, you have to be really careful,” said Bruce Campbell of StoneCastle Investment Management. “If I was buying, it certainly wouldn’t be in one big chunk.”

Marijuana stocks have had somewhat of a wild week in Canada. Canpoy Growth Corp (CGC.TO), which has sold tons of weed in its last two quarters, saw its shares nearly double in value, rising from $9.34 a share to $18. The shares then dropped to $13.59 two days later.

Aurora Cannabis (ACB.V), with its garden home “to thousands of happy plants growing in the foothills of the Canadian Rocky Mountains, sipping fresh mountain water in gentle breezes and basking in ideal lighting conditions,” jumped from $2.12 per share to $3.37.

Shares in Canada’s Aphria Inc (APH.V) also saw increases from $4.64 to $6.41.

Though economic experts expected to see a rise in Canadian marijuana shares over the next year, the sudden dramatic increases have been cause for some concern.

“It’s risen a little too quickly for our comfort,” said Khurram Malik of Jacob Capital Management. “Yes it’s a speculative sector, yes it’s a high-risk sector, yes it’s a highly volatile sector. But, if you’ve got a two- or three-year investing horizon it’s not a bad time to get it [on marijuana stocks].”

The evolution of the American marijuana industry is another thing that has Canadian experts on their toes. So long as marijuana remains federally illegal in the US, Canadian companies will be at an advantage.

As Canopy Growth chairman and CEO Bruce Linton explained, US producers will remain “fractured and fragmented…they can’t patent and they can’t trademark.”

Chris Damas, publisher of the BCMI report, acknowledged Americans growing expertise, but doesn’t think it will affect Canada’s market much under federal prohibition.

“Recreational cannabis legalization in the four states that voted for it last Tuesday has nothing to do with Canada, except as a potential competitive threat,” Damas said. “That market is already being satisfied—either illegally or via co-ops.” For more information regarding America’s role in the Canadian marijuana market, [Click Here].