Canada could upend global marijuana market

Canadian medical marijuana is setting the stage to go global.

The country’s emerging legal producers have a chance to seize opportunities in other countries that could make them worldwide leaders, according to Canopy Growth Corp. Chief Executive Officer Bruce Linton.

“If you pick a theme for 2018 it will be the globalization of medical cannabis,” said Linton, whose company is the world’s largest publicly traded medical marijuana producer. “It’s not difficult to see a really substantial global market coming off what starts here.”

Linton’s comments come at the end of dynamic year for Canopy and its peers. There are now at least 80 cannabis companies listed on Canadian exchanges whose combined market value has ballooned to more than C$20 billion ($15.9 billion), according to data compiled by Bloomberg. Canopy and four other growers — Aurora Cannabis Inc., Aphria Inc., MedReleaf Corp. and Cronos Group Inc. — are valued at more than C$1 billion. More are coming: 208 companies that have applied to be licensed producers are in the final stages of review.

Canadian growers are already able to sell cannabis for medical use at home and the federal government plans to legalize recreational use by next summer. However, the pace of change elsewhere in the world is limited. In the U.S., the largest legal weed market, a few states allow sales, but there’s no move toward legalization at the federal level.

Worldwide legal sales will reach $7.7 billion this year, of which $7 billion will be in the U.S. and about $600 million in Canada, according to a November report from Brightfield Group, a cannabis market research firm. The global total will soar to $31 billion by 2021, Brightfield says, but even then it sees the U.S. and Canada comprising for the majority of those sales.

Canadian producers “are pushing really hard to take that first-mover advantage,” Bethany Gomez, Brightfield’s director of research, said in a phone interview.

Canopy started four years ago when it took over an abandoned Hershey’s chocolate factory in Smiths Falls, an Ontario town about 47 miles southwest of Ottawa. It became North America’s first publicly traded marijuana producer in 2014. Revenues have been growing steadily and Canopy’s shares have more than tripled this year, giving it a market value of C$5.35 billion.

“By the end of 2018, I think you’re going to find that there is for sure one company, maybe a couple others, who are doing all of the things that need to be done in order to be a broad platform,” Linton, 51, said in an interview at Canopy’s Smiths Falls headquarters.

Linton said Europe and South America are priorities for expansion. Canopy already exports to Germany and has supply and licensing agreements and other partnerships in countries including Spain, Australia and Jamaica.

David Kawai / Bloomberg Bill Morneau, Canada’s finance minister, speaks during a press conference on the sharing of tax proceeds from sales of legalized marijuana with provincial governments earlier this month.