As investor attention continues to shift towards the US marijuana market, experts are debating the potential for Canadian firms to participate below the border.
During a panel at the recent Lift & Co. (TSXV:LIFT,OTCQB:LFCOF) Cannabis Expo in Toronto, a variety of participants discussed the opportunities available for companies and investors when it comes to the exponential growth seen and forecasted for the US marijuana space.
Currently marijuana remains illegal at a federal level in the US, and this is preventing Canadian producers from participating there. However, there are still opportunities available to leaders in Canada.
Greg Engel, CEO of OrganiGram Holdings (NASDAQ:OGI,TSXV:OGI) and a speaker at the panel, said that, while his firm won’t operate in the US, there is a viable way for the company to set up a cannabidiol (CBD) business thanks to the legalization of hemp.
“As we saw at the (US Food and Drug Administration) public hearing … there is still some uncertainty around CBD,” said Engel. “So when you look at the market you have to look at where the opportunity is, not only today but in the future, and our approach is how do we enter through technology.”
Finding the right American companies to partner with or work alongside can also help companies break through to the US market when the time comes for a legal entry.
This is a strategy Jeannette VanderMarel, co-CEO of 48North Cannabis (TSXV:NRTH), said her company is using.
“We (are partnered) with several US companies to bring well-known brands from the US and take their IP, their technology, their scientists and help them replicate those products in our facility using Canadian cannabis,” she explained.
For VanderMarel, brand awareness is a key focus of pre-legalization efforts in the US. She believes developing brand curiosity and loyalty is beneficial and may provide companies with an edge.
Acquiring companies that make devices or equipment that are used in the sector but are not directly related to cannabis is another way to build a profile in the US.
“There are ways to work within the regulations, but you cannot be cannabis-touching anywhere in the US. I respect the laws of every country we live and work in, and it’s really important to not come anywhere touching that line,” VanderMarel said during the panel.
Morgan Paxhia, managing partner and co-founder of San Francisco-based Poseidon Asset Management, said the fractured nature of the US market creates challenges due to the different regulations.
He noted that right now, as various states like Illinois work through their own regulations, the US market is even more opaque than usual, subject to change at any given moment. “Every state looks so different,” said Paxhia. “And when you get into that market it can look so different in just a couple months’ time.”
He explained how California, a market he is especially invested in right now, offers a view of a state with several ongoing and changing sub-markets.
“(The San Francisco, LA and San Diego markets) are all very different, and how they are evolving is all different. It’s so driven by the regulatory framework,” Paxhia said.
Despite interest in the US space from the investment market, Paxhia said Canada still has a lot of opportunities thanks to the depth of capital in the cannabis industry, along with the innovation seen.
“From Canada’s perspective, this could be the hotbed of innovation for delivery,” he told the audience. “Whether it’s medical, transdermal, topical or a tincture, or any other kind of delivery, I think there is just so much opportunity to develop that here because so much infrastructure has been established.”
When the US will legalize cannabis on a federal level is hazy, but what is crystal clear is that the cannabis industry in America — as fragmented as it may be — is offering investors a new growth sector thanks to investment in multi-state operators.
During a panel at the Lift Cannabis Business Conference, a component of the expo, Vivien Azer, managing director for consumer research in the beverages, cannabis and tobacco markets for Cowen (NASDAQ:COWN), said she could see the current US administration moving forward with a cannabis program before the next elections in 2020.
Azer explained that if the numbers for US President Donald Trump dip in the lead up to the next election, he could employ a precise deployment of the STATES Act or some other cannabis legalization program to help get re-elected.
The STATES Act is a proposed bill that would create protections at the federal level for operations made legal by policies at the state level.
In the meantime, investors looking to get into the US market should look for companies that are closely adhering to all regulations, while simultaneously preparing for legalization.
Don’t forget to follow us @INN_Cannabis for real-time updates!
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
CanBud Distribution Corporation Closes 2M Second and Final Tranche of its Oversubscribed Private Placement Offering
CanBud Distribution Corporation (CSE: CBDX) (FSE: CD0) (“CanBud” or the “Corporation”) is pleased to announce that it has closed the final tranche of its oversubscribed non-brokered private placement for aggregate gross proceeds of approximately $4,730,000 (the “Offering”).
The Corporation issued a combined total of 39,409,346 units (each a “Unit“) at price of $0.12 per Unit, with each Unit comprised of one common share in the capital of the Corporation (each a “Common Share“) and one common share purchase warrant (each a “Warrant“). Each Warrant entitles the holder to purchase one additional Common Share at an exercise price of $0.22 within 24 months of the closing of the Offering (the “Warrant Term“), provided, however that if the closing price of the Common Shares on the Canadian Securities Exchange (the “CSE“) (or any such other stock exchange in Canada as the Common Shares may trade at the applicable time) is $0.25 or greater per Common Share for a period of five (5) consecutive trading days at any time after the closing date of the Offering, the Corporation may accelerate the Warrant Term such that the Warrants shall expire on the date which is 30 days following the date a press release is issued by the Corporation announcing the reduced warrant terms.
Thoughtful Brands Inc. (CSE:TBI)(FSE:1WZ1)(OTCQB:PEMTF) (the “Company” or “Thoughtful Brands) announces that the letter of intent with Franchise Cannabis Corp. (“FCC”), previously announced in January, has been terminated. The previously announced European joint venture with FCC will continue and allow the Company to launch and tailor its products to European consumer demands
In connection with termination of the merger transaction with FCC, the Company has agreed to pay FCC $100,000 in cash and to issue FCC 5,000,000 common shares of the Company at a deemed value of $0.05 per share. The common shares will be subject to a four-month-and-one-day statutory hold period in accordance with applicable securities laws.
Mergers and acquisitions (M&A) in cannabis space have helped boost the industry to new levels.
Strategic sale of non-core assets by Lobe adds non-dilutive capital and shareholder value
Lobe Sciences Ltd. (CSE: LOBE) (OTC Pink: GTSIF) (“Lobe” or the “Company”) is pleased to announce, further to its press release dated February 23, 2021, that it has completed the sale to Ionic Brands Corp. (“Ionic Brands”) of Lobe’s non-core cannabis assets relating to Washington-based Cowlitz County Cannabis Cultivation Inc. (“Cowlitz”) held by Lobe’s subsidiary vendor, Green Star Biosciences Inc. (the “Transaction”).
Seattle Area Grocery Chain Metropolitan Market to Begin Carrying KOIOS and Fit Soda on March 22, 2021
Adding to its existing presence on the west coast of the United States, all five KOIOS™ flavours and all four Fit Soda™ flavours will be carried in Metropolitan Market stores beginning on Monday, March 22, 2021. Serving the Seattle-Tacoma area (population 3.87 million), Metropolitan Market is one of five chains under its parent firm Good Food Holdings, which has a total of 51 stores in California, Oregon, and Washington State.
Koios Beverage Corp. (CSE: KBEV; OTC: KBEVF) (the “Company” or “Koios”) is pleased to announce that beginning on Monday, March 22, 2021, Koios’ entire line of canned beverage products will be sold at all locations of Metropolitan Market, an urban format supermarket chain in the Seattle-Tacoma area of Washington State. In Q1 2021, the Company announced multiple placements of its beverage products with regional grocers in markets on the west coast of the United States including Market of Choice in Oregon Jensen’s in Southern California and major natural grocery chain Sprouts Farmers Market which has a substantial west coast presence with over one third of its locations (360+ stores across 23 states) in California as well as Washington State 1 . The Company has also recently announced other developments relating to its expansion efforts being undertaken in 2021 such as an in-house beverage canning facility and distribution agreements with regional and national wholesale partners.