The Cantech Investment Conference 2017 wrapped up last week and “The Emerging Cannabis Sector” panel moderated by Mackie Research Equity Analyst Neal Gilmer, was one to watch.
Not only because it was held during a technology conference, but also because, as Gilmer explained, the cannabis sector is an opportunity investors should look into since it is growing at a very rapid pace.
Members of the panel were a mix of cannabis industry participants that included Michael Gorenstein, President, CEO & Chairman of the Cronos Group (TSXV:MJN), Marc Lustig, CEO of CannaRoyalty (CSE:CRZ), Brad Rogers, CEO of CannTrust, and Robert Lando, CEO of Agronomix.
Opportunities in cannabis
Gilmer started off by asking, “Where do the opportunities lie?”
Rogers thought that opportunities are aplenty, and “the revenue potential is huge both nationally and internationally.” Gorenstein agreed, and said, “we’re really walking into a market where there’s nearly $200 billion in revenue.” He went on to say that they believe in the Canadian market because it is the first G7 country to “recreationalize cannabis consumption.”
Lustig, on the other hand, finds opportunity in “watching the evolution of product development.” He went on further to say that there is tremendous opportunity in Canada, “ if you do things right and work within the confines of the legislation.”
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According to Lando, “In any market where things mature, the low cost producer wins so this is an opportunity for those who grow: to take the opportunity with good margins to be able to plow them into low-cost capability so that when the time comes, they’ll be a low cost producer and they’ll be able to make money no matter what the value of the crop is.”
The demand and supply in Canada
Gilmer asked Gorenstein and Rogers about how they saw the cannabis market in Canada in terms of supply and demand. Gorenstein said he sees a very big gap between supply and demand, and that they get a lot of inquiries in the wholesale segment.
Meanwhile, Rogers said, “this industry has a lot of growing up to do, from the regulators to the producers.” He added, ”Because the regulations we work under, our product is worldwide the gold standard. The testing that has to go through the regulatory requirements — although there have been some recalls, etc. — the guys who focus on quality and are able to execute at an enterprise scale, we’re going to win.”
There is no denying that the cannabis sector is booming, and not only for end users. US legalization in late 2016 helped foster growth of this industry, and the Canadian federal government legislation anticipated in 2017 will only enrich it further. With a vast number of companies ranging from growers to dispensaries and even pet products, there is no shortage of ways to get into this market that is said to grow to $21.8 billion by 2020.
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Securities Disclosure: I, Pia Rivera, hold no direct investment interest in any company mentioned in this article.