Mar­i­juana in­dus­try look­ing abroad for growth


Coun­tries like Spain, Italy, and Colom­bia are likely the next growth op­por­tu­ni­ties for Cana­dian cannabis com­pa­nies after a flurry of con­sol­i­da­tion at home.

The mar­i­juana in­dus­try saw its largest deal to date on Mon­day with Aurora Cannabis Inc. agree­ing to ac­quire MedRe­leaf Corp. for $2.9 bil­lion. That fol­lowed Ed­mon­ton-based Aurora’s deal to buy Can­niMed Ther­a­peu­tics Inc. in Jan­uary for roughly $1 bil­lion and sev­eral smaller deals.

Canada has emerged as a global leader in the pot in­dus­try as it be­comes the first Group of Seven coun­try to le­gal­ize the drug for recre­ational use later this year while a ban at the fed­eral level keeps pure-play U.S. pot com­pa­nies from ma­jor ex­changes south of the bor­der. There are now 90 pub­licly listed com­pa­nies in Canada with a mar­ket value of about $31 bil­lion.

Re­cent merg­ers and ac­qui­si­tions have given the com­pa­nies the scale to start look­ing in­ter­na­tion­ally for growth, said Dan Daviau, chief ex­ec­u­tive of­fi­cer of Canac­cord Ge­nu­ity Group Inc., the lead­ing Cana­dian in­vest­ment bank in the sec­tor. Coun­tries like Ger­many, for ex­am­ple, al­low pa­tients to be re­im­bursed for med­i­cal mar­i­juana to treat a va­ri­ety of symp­toms, he said.

“It’s not just about pop­u­la­tion,” Daviau said. “It’s also about the govern­ments’ re­al­iza­tion that the prod­uct is good for lots of dif­fer­ent in­di­ca­tions.” Cana­dian firms have the right cost of cap­i­tal and in­dus­try knowl­edge to add value, he said.

At the same time, there’s still plenty of op­tions for smaller Cana­dian firms, he said. “The smaller guys and the guys in the mid­dle need to de­cide what their strat­egy is,” Daviau said. “Big­gest isn’t al­ways the best. There are go­ing to be some more big guys and some smaller niche guys.”

U.S. cannabis com­pa­nies are in­creas­ingly look­ing to raise cap­i­tal and list in Canada be­cause of the so­phis­ti­cated in­vestor base here, said Gra­ham Saun­ders, Canac­cord’s vice-chair­man and head of cap­i­tal markets orig­i­na­tion. “All th­ese com­pa­nies are in a race,” he said.

Los-Angeles-based MedMen En­ter­prises, for ex­am­ple, raised $50 mil­lion in sub­scrip­tion re­ceipts last month in Canada ahead of its planned re­verse takeover of Van­cou­ver-based Ladera Ven­tures Corp.

Saun­ders said the U.S. cap­i­tal markets for cannabis are where Canada was two or three years ago. “It’s eas­ier here. We don’t have list­ing prob­lems for cannabis as­sets that there is in the U.S.”

Canac­cord is host­ing a cannabis con­fer­ence in New York this week and has about 700 at­ten­dees en­rolled.

The broad­en­ing in­vestor base in Canada has started at­tract­ing the coun­try ’s big­gest banks, led by Bank of Mon­treal which will ad­vise Aurora on its takeover of MedRe­leaf.

Daviau said he wasn’t con­cerned about the big banks com­ing into the space, in part be­cause Canac­cord has a two-year lead in the sec­tor.

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