There is no doubt that the Canadian cannabis market has been taking over in recent times, but many investors have stated that this could be just the beginning. With legalization for recreational use set to be voted on for the third and final time at the beginning of this summer, it seems as though Canada could become the hearth for legal cannabis.
Growers in the Canadian market have also been working hard to expand their production capacities given the increasing demand throughout the market. Companies like Canopy Growth Corp. (NASDAQOTH:TWMJF) and Aurora Cannabis (NASDAQOTH: ACBFF) are both beginning to bring their operations into the peak of the cannabis market. Both companies are also capable of producing more than 400,000 kilograms of cannabis per year if at full capacity. With legalization happening in the expected near future, many investors are starting to bring their money to the U.S.’s northern neighbor.
The increasing market in Canada for cannabis is not the only thing that has the market excited. One of the most promising aspects of Canadian legalization is the influx of capital and investments that could come via Wall Street or other large financial institutions around the world. Throughout the developed world, cannabis is illegal in every country for recreational use nationwide. This means that companies working in the cannabis sector usually do not have access to any national banking or banking services for that matter. Because of this, most cannabis operations have had to deal in cash which is extremely unsafe and ineffective for running a business in the modern day. Financial institutions have also been extremely cautious to invest in these businesses because of the potential trouble that they could get in. This could be changing in the near future if Canada is able to legalize cannabis for recreational use.
The largest marijuana stock by market cap known as Canopy Growth recently completed a $135 million offering which was co-led by the Bank of Montreal (NYSE:BMO) and the company MP Securities. This historic movement is the first time that one of only a few big banks in Canada has attempted to put a foot into the cannabis industry. This is not only a big step for Canada, but it represents a paradigm shift in the way that the world will perceive the cannabis industry. With investments coming from such large financial institutions, this effectively opens up the door to new investments and banking opportunities for cannabis companies. The CEO of Canopy Growth, Bruce Linton stated recently that “[The banks are] cautious about allowing debt instruments, they’re cautious about allowing [employees] to give financial advice. I think you’ll see, on about January 1st, 2018, a bunch of them pushing into the sector, and for sure by July, they’re all there. I think that’ll be the final normal business hurdle that we get over.” This quote was taken back in December, but it continues to show how quickly these companies want to get the market up and running.
If the market is able to become legalized, companies would be able to receive lines of credit and have debt deals, which is one of the main ways that businesses are able to grow in the modern day. By having these lines of credit, companies in the cannabis space that would not have existed could come to fruition. Although the cannabis market is still very much in its infant stages, it seems as though the market is headed in the right direction. The hopes are high that the next six months or so will continue to be positive for the world of cannabis.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
