- Canada Leads in Legalization; US Ahead in Consumer Brands
- Looser Laws from Washington Would be Global Game-Changer
Investors with billions of dollars in ready-to-invest capital want to know: who will win the cannabis investment war: Canadian or American companies?
Canadian businesses, like Chemesis International Inc. (OTC: CADMF; CSE: CSI) own licenses to grow and sell weed. The federal Canadian government legalized recreational pot use in October. In the first phase of the new law, all the retail outlets are owned by the provincial governments, so they must get their pot supplies from private growers.
These private companies – some small, others huge corporations – enjoy deep-pocket funding. Their message is loud and clear: we have the ready-for-market product consumers around the world want (and that global legislatures seem eager to allow.)
The Battle for Pot Domination
Top 10 firms by market value are evenly split between Canada, US
Note: all values in US dollars as of Nov. 27 Source: Bloomberg.com
Remember, Canada’s population is smaller than California’s, and the US market for legal marijuana is already larger than its northern neighbor, with estimates saying it could eventually be more than 10 times the size.
America is where brands and fortunes are made. There’s no reason to think that cannabis will be any different, despite the current federal prohibition.
A key question has emerged as investors pour billions of dollars into the marijuana industry: Will it be US or Canadian companies that win the race for cannabis supremacy?
Today, the Big Four global weed companies, including two with valuations north of $10 billion, operate in Canada. But among the top 10, half are now operating in the US after a surge in American companies listed publicly in Canada.
So, what country is the winner? Let’s look at the strategy for each.
There are 133 licensed producers, or LPs, in Canada that have the green light from the government to cultivate and sell pot in the medical and recreational markets.
The most prominent are Canopy Growth Corp., Tilray Inc., Aurora Cannabis Inc. and Aphria Inc., with a combined market capitalization of almost $30 billion.
A key advantage has been easy access to money as Canadian capital markets dominate financing and stock listings in the industry.
While Canada is the first major economy to legalize weed, it has a small population of less than 37 million (about one-tenth the size of the US.)
The larger LPs see the limits of selling pot there, so they now turn to international markets to drive growth. Many are prohibited from operating in the US because they’re listed on the Toronto Stock Exchange, which threatened to delist companies that violate US federal law.
Instead, these Canadian companies turn to countries like Germany, Australia, Colombia and Israel to establish regional beachheads from which to sell medical marijuana.
This option isn’t open to the US players, which can’t move cannabis across state lines, much less export it internationally.
Canada is now a lily pad from which to leap to the rest of the world and that can lead to a lot of success. This should lead to a handful of companies that emerge from Canada that are global champions.
The risk Canadian pot producers face is that they become nothing more than farmers, producing a low-margin commodity while their American cousins reap the financial benefits — including higher profit margins — of selling recognized brands.
The laws in Canada prevent most marketing and branding, a hurdle for companies trying to connect with consumers.
Look at Corn Flakes: you don’t know where the corn comes from, you don’t know the name of the farmer, and very few consumers really care.
Canadian companies are not as aggressive and competitive and capitalistic as their American counterparts.
United States of America
The most valuable pot companies operating in the US are “multi-state operators.” These companies acquired licenses to grow, distribute and sell weed in various states around the US with some form of legal pot use.
This includes Acreage Holdings Inc. and Curaleaf Holdings Inc., which raised more than $700 million combined in recent weeks through private placements as they went public in Canada.
More than 30 states now allow medical marijuana and Michigan became the 10th to approve recreational use recently.
With public support for the legalization of pot use in the US greater than 60%, there is growing optimism for relaxed restrictions. That means more of the world’s largest consumer economy will have greater access to legal pot — a mammoth incentive for investors.
In the US, you have a huge potential market moving quickly toward legalization.
Still, the US stocks are currently “far less liquid,” which can be a problem for large investors.
The federal prohibition on weed keeps institutional investors on the sidelines. But as more states ease restrictions, capital is flowing to US companies.
A key turning point came in April, when Senator Cory Gardner, a Colorado Republican, said President Donald Trump didn’t intend to go after pot businesses operating legally in states with fewer restrictions. That led to a surge in hedge funds getting involved in the industry.
Some states require companies that sell pot also grow and distribute it. This is especially true on the East Coast where the governments issued fewer licenses.
That could all change if marijuana gets a federal okay. But for now, it’s a big part of the appeal of investing in companies like Curaleaf.
The company aims to become the largest cannabis retailer in the US. They feel that pot, even if it’s federally legal, will likely be sold in specialty shops, rather than grocery stores or on Amazon.com Inc. That means a retail presence will be important in the industry.
Many US companies are also developing house brands to market edibles, vape pens, weed and other products, many of which aren’t yet legal in Canada.
The Best Play: A Combination Company
Maybe the best play for investors is a company that has roots in Canada, and existing deals (and on-going negotiation) with suppliers and distributors around the world.
One such opportunity – Chemesis International Inc. (OTC: CADMF; CSE: CSI) – combines a solid corporate base in Canada; grow, distribution and retail operations in the US; and agreements for international opportunities in such places as South America and Oceania.
IMPORTANT NOTICE AND DISCLAIMER
The GreenStockReport.ca website (“GreenStockReport.ca”) is owned and operated by Invictus Digital Marketing Group Inc. (“Invictus Digital Marketing”, “we”, “us”, “our”). This page contains the terms and conditions that apply to your use of GreenStockReport.ca (the “Terms”). By using GreenStockReport.ca, you are agreeing to be legally bound by the Terms. If you do not agree to any Terms, you should not use GreenStockReport.ca.
Invictus Digital Marketing, its editors, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate Invictus Digital Marketing. Advertisers placing advertorials on GreenStockReport.ca pay Invictus Digital Marketing between Cdn$75,000 to Cdn$150,000 for a total production budget for these advertising efforts. Chemesis International Inc. (the “Company”) has paid Invictus Digital Marketing Cdn$150,000 for a period of three months for advertising and marketing services rendered on behalf of the Company. Other than as set forth above: (a) neither Invictus Digital Marketing nor any of its directors or officers has any other financial or other interest in the Company; and (b) neither Invictus Digital Marketing nor any of its directors or officers beneficially owns any securities of the Company.
Any paid advertising article contained on GreenStockReport.ca should not be construed as a financial analysis but rather as an advertisement. Such paid advertising article includes, but not limited to, the article (the “Article”) in respect of the Company, and such Article does not purport to provide an analysis of that or any other company’s financial position or prospects and any information supplied does not purport to be tailored to the needs of any person or company accessing GreenStockReport.ca.
Speculation in securities carries a high degree of risk, and investors purchasing speculative investments should be capable of absorbing losses of all of their invested capital. No reader should make any investment decision without first consulting with his or her own independent personal financial and tax advisors.
GreenStockReport.ca is intended for informational, educational and research purposes only. An author’s views and opinions regarding the companies featured in reports on GreenStockReport.ca, including those in the Article in respect of the Company, are his/her own views and are based on information that he/she has researched independently and has received, which the author assumes to be reliable. Although such author attempts to research and present information based on sources he or she believes to be reliable, there are no guarantees as to the accuracy or completeness of the information contained on GreenStockReport.ca.
None of Invictus Digital Marketing, its associates, authors, and affiliates are responsible for errors or omissions on GreenStockReport.ca. Although the information contained on GreenStockReport.ca is believed by Invictus Digital Marketing to be reliable, neither Invictus Digital Marketing nor GreenStockReport.ca and its editors make any representation or warranty as to the accuracy of any of the content on the website or accept any liability for how readers may choose to use it. Readers should independently verify all statements made in this website by conducting his or her own research and due diligence, including carefully reviewing public filings on www.SEDAR.com of the Company or any other company about which statements are made in this website. There is no assurance that the Company or any company featured by Invictus Digital Marketing will receive additional funding or experience any future development necessary for corporate success.
The information provided on GreenStockReport.ca is not in any way to be construed as an offer or solicitation to buy or sell any security of the Company or any other company. Neither Invictus Digital Marketing nor any of its principals, officers, directors, partners, agents or affiliates are, nor do they represent themselves to be, registrants under applicable securities legislation. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein.
Any statements expressed on GreenStockReport.ca are subject to change without notice.
GreenStockReport.ca is published as a copyright publication. In addition, certain names, graphics, logos, icons, designs, words, titles, phrases or brands and other trademarks featured or referred to on GreenStockReport.ca are the property of their respective trademark holders. The display of any trademark does not imply that a license of any kind to use the trademark has been granted. GreenStockReport.ca may contain links to related websites for stock quotes, charts, etc. GreenStockReport.ca is not responsible for the content of or the privacy practices of these sites.
Forward-Looking Statements: Except for statements of historical fact, certain information contained in this website constitutes “forward-looking information” or “forward-looking statements”, within the meaning of applicable securities laws (“Forward-Looking Statements”). Forward- Looking Statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, “estimates” or “intends” or by discussions of strategy, forward looking numbers or intentions including, but not limited to, statements regarding the expected continual growth of the market for the Company’s products, the Company’s ability to fund its capital requirement in the near term and in the long term, pricing pressures, statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance.
Such Forward-Looking Statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such Forward-Looking Statements. Past investment performance is not in any way indicative of future investment performance.