Legal weed gets its coming out party across Canada tomorrow and while it’s still anyone’s guess who among us will be sparking up a joint, popping CBD pills or, eventually, munching on pot edibles, the likelihood over the long term is that Canada’s cannabis industry will be bigger than most people expected, says investor and philanthropist Brett Wilson, who argues that Canada’s leadership in the sector gives our pot companies a clear advantage on the international stage.
Pot stocks have been rocketing upwards for the past two months as investors scramble to get in on the ground floor of the nascent industry. Leading the pack would be Smiths Falls, Ontario’s Canopy Growth Corp (Canopy Growth Corp Stock Quote, Chart TSX:WEED, NYSE:CGC), whose share price reached an all-time high in early trading on Tuesday, as markets reacted to news that Canopy had acquired US-based hemp research company ebbu. Over the past two months, WEED has doubled in value in the lead-up to Canada’s rec cannabis start date.
And while Wilson, chairman of Canoe Financial, admits that valuations for some marijuana companies may have gotten out of hand, he maintains that the industry’s eventual size will surprise a lot of people.
“A lot of stocks are bubble-like in terms of value, so they’re anticipating a much stronger market,” said Wilson, in conversation with BNN Bloomberg Monday. “You see stocks that are trading at multiples of revenue, but all of that is in anticipation of a global market, of a Canadian market, a medical market and a recreational market that are bigger than what a lot of people were forecasting.”
“I’ve always believed that the size of the market was multiples of what the government was [estimating] —if the government phoned you at home and said, ‘Do you use an illegal drug?’ the odds are that you lie,” Wilson says. “Anecdotally, I’ve discovered that within my world, the community I talk to whether it’s students or business people, the acceptance of cannabis is much higher than the government was forecasting.”
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“CBD oil, the non-hallucinogenic, non-psychoactive part is where I see most of the growth, because that’s the chill factor, that’s the pain management and we’re seeing that the acceptance of it is literally exploding,” he says.
Canada’s publicly traded pot companies are varied in size, with monsters such as Tilray Inc (Tilray Stock Quote, Chart NYSE:TLRY), Aurora Cannabis (Aurora Cannabis Stock Quote, Chart TSX:ACB) and Canopy all boasting market capitalizations above $12 billion, while another half-dozen are in the billion-dollar market cap club and literally dozens of others exist somewhere in the small- and micro-cap spaces. Arguably, though, the one thing they all have in common is management who believe that Canada is leading the world into a new era when it comes to cannabis. Wilson affirms this, even against claims that other countries with warmer climates will eventually be growing marijuana more effectively and cheaply than we do in Canada.
“We are global in terms of world-class capacity to produce at the lowest cost possible,” says Wilson. “I’ve actively invested in Colombia, in Lesotho, in Jamaica … and I believe that Canada will be a choice supplier to the world.”