Investors have rushed to pour money into the growing number of Canadian-listed shares in marijuana-related companies. But experts caution that the torrid pace is unlikely to last forever.
“Everyone compares this to the dot-com era,” said Chris Damas, editor of investment newsletter The BCMI Cannabis Report. “You could throw a dart and hit a winner in cannabis.”
The legal cannabis market is worth about $10 billion already in North America, and projected to grow in the coming year. A report from Arcview Market Research estimates that figure is set to expand to almost $25 billion in three years — and that’s assuming no other U.S. states move to legalize between now and then.
Ever since the federal government announced last year that it intended to legalize the recreational use of cannabis for adults starting July 2018, Canada has become a global hotbed of the burgeoning industry, because the regulatory regime elsewhere has handcuffed would-be rivals.
“Canadian licensed producers have a chance to grab first-mover advantage in a worldwide market that U.S. agricultural and pharmaceutical companies could otherwise have been expected to dominate,” wrote Tom Adams, Arcview’s managing director, in the report. “The U.S. northern neighbour may be the world leader in moving toward a well-regulated legal cannabis industry.”
Bloomberg data shows there are 84 public companies trading on Canadian stock exchanges that are somehow connected to the cannabis industry, and collectively they are worth $37 billion US.
Chief among them is Ontario-based Canopy Growth Corp. More than a year ago, Canopy made headlines as Canada’s first billion-dollar pot company. Today, it’s worth more than six times that.
“We’re in full expansion mode,” Canopy Senior Vice-President and Managing Director Rade Kovacevic told CBC News in an interview this week. Canopy has added three million square feet of greenhouse capacity this year, and expanded into a number of other provinces.
“We are gearing up for it and excited about it,” he said. “It’s kind of a massive startup company.”
But they aren’t the only ones. While full of small operators, the industry is dominated by four big names: Canopy Growth, Aurora Cannabis, Aphria and MedReleaf. Canopy was at one point well out ahead in front, but Aurora has grown quickly through acquisitions, most recently a high-profile one that saw it take over Saskatoon-based CanniMed for almost $50 a share.