Pot stock volatility will carry on, says BMO banker

Pot stocks will remain volatile and marijuana supply challenged as the nascent industry struggles to find stability, says a Bank of Montreal executive who’s led some of the biggest deals in the sector.

“The share price volatility you’re watching is going to continue and it’s going to impact where we’re going,” Dan Barclay, co-head of global investment and corporate banking at BMO Capital Markets, told reporters in Toronto. “Until you get to stability, which is probably two to four years from now, you don’t really know what the business is.”

Pot stocks tumbled for seven straight days ending Wednesday amid supply shortages and concerns about valuations. Producers including Canopy Growth Corp. and Aleafia Health Inc. extended declines that began a day before Canada legalized recreational marijuana on Oct. 17. The Horizons Marijuana Life Sciences exchangetraded fund plunged 28 per cent over the period.

Barclay has been behind some of Canada’s biggest pot deals since BMO Capital Markets started offering investment-banking services to the industry this year. Barclay said the industry is an “an evolving market,” with changes to business models, clients and pricing expected for the foreseeable future.