Canadian cannabis industry turns heads

U.S. investors looking to their northern neighbours as leaders

U. S.- based cannabis investment firm Arcview Group says it is impressed by the calibre of investors, including big funds and institutional investors, who are interested in the Canadian marijuana market, despite having little involvement in cannabis south of the border.

John Downs, Arcview’s director of business development, said the high levels of Canadian capital pouring into cannabis, as well as the country’s plans for legalization, piqued the firm’s interest in holding an event in Toronto.

“We’re paying attention down south, we actually look to our northern neighbours as leaders in the space,” he said Tuesday at the Arcview Investor Pitch Forum, its first event in Canada. “I would consider Toronto a significant hub for cannabis financing.”

An increasing number of U. S. marijuana companies are eyeing investment opportunities in Canada as they see companies garner significant investment dollars and huge valuations both through their ability to list publicly on Canadian exchanges and through private investment interest.

Canadian- listed marijuana companies are considered less risky for investors because in the U.S. the drug is still illegal at the federal level, even in states that legalized medicinal and/or recreational use.

The investment firm hosted a “Dragons’ Den- style pitch competition to connect Canadian and American entrepreneurs and investors. It has held 35 such investor forums in the United States. When we are in the United States, our audience membership tends to skew toward high networth individuals, we don’t see a lot of funds or institutions,” Downs said.

“Here, it seems there are many more institutions that are willing to go in and engage and invest in the industry and that’s a huge boon for us, we’ve seen a lot of big money in the room.”

One of Arcview’s investment partners, Colorado- based cannabis venture fund and accelerator hub Canopy Boulder also made the trip north of the border to scope out potential in- vestments in the Canadian cannabis space.

“Canada has the opportunity to become a model to the rest of the world for federal legalization,” said managing director Patrick Rea.

Canopy ( no relation to the Canadian licensed producer of the same name) took the idea for building an accelerator hub from the tech industry. The company, which has invested in and helped grow 64 marijuana start- ups, sees huge opportunity in the space, partly because there are no giant companies that early stage companies must contend with.

“In many ways, Canada reminds us of how Colorado was a couple years ago, on the verge of a massive period of growth and the resulting needs and demands from those licensed businesses will drive all sorts of economic benefit,” Rea said.

Bloom Automation, one of the marijuana start- ups that went through Canopy’s accelerator program, won over the judges Tuesday with its pitch to bring its “bloombot” robots to the cannabis industry.

The company has inked five letters of intent in the U.S. and is looking for US$ 400,000 to bring its robots that trim the plants to the testing stage in time for planned market availability next year. The robots cost about US$24,000 apiece. The company estimates that breaks down to about US$16 to US$24 per pound, compared to US$ 100 to US$ 150 per pound for human trimmers.

The company’s pitch Tuesday also caught the ears of several Canadian licensed producers in attendance who are interested in the efficiencies robotics could create, said CEO John Gowa.

“We’ve been talking to licensed producers and there’s a much greater focus in Canada on automation, on not having old- fashioned labour techniques because they’re producing a larger capacity at a commercial scale.”

I WOULD CONSIDER TORONTO A SIGNIFICANT HUB FOR CANNABIS FINANCING.