High demand for Medical Pot: Canopy Growth Corp reaches $1 billion value

Is Canada’s first $1 billion medical marijuana company a good investment? / National Post


Demand is high for Canopy Growth Corp., as it becomes the first Canadian medical marijuana company to be valued at over $1 billion.

This is a sharp turnaround from earlier in the year when the CBC reported that major Canadian banks were worried about granting loans to medical marijuana companies and any possible recreational marijuana companies in the future out of fears that they wouldn’t financially benefit from doing so.

Canopy Growth has reported a profit of over $5 million since the end of September. The number of registered patients under Canopy Growth’s distribution is up to over 24,000, an increase of around 18,000 patients since the same time last year.

The CBC reported that the company was worthy of their more than $1 billion value in July of this year. However, the recent US election, in which Massachusetts, California, Nevada, and Maine all voted to make marijuana legal has had an arguably positive impact on the company. This brings the number of US states in which marijuana is legal for both sale and possession for medical or recreational use up to eight, including Colorado, Washington, Alaska, and Oregon.

Despite the huge increase in value, some experts say investing in medical marijuana companies might not be the best option for the time being.

Pat McKeough, Chief Investment Officer for TSI Wealth Network in Toronto, in an interview with the CBC, compared the new companies to the rise of the automobile when it was first invented.

“When cars first came out, they were a wonderful invention, and there were about a hundred companies at one point… but only a handful survived into the 1920s,” McKeough said.

With recreational marijuana growth, distribution and use up for debate soon, investors might instead choose to wait until legislation on that matter is final, which will likely not be until sometime in 2018.

The Business News Network reported that trading for all of Canada’s publicly-traded marijuana companies, including Canopy Growth Corp (CGC.TO), Aurora Cannabis Inc (ACB.V), Mettrum Health Corp (MT.V), Aphria Inc (APH.V), OrganiGram Holdings Inc (OGI.V), and Supreme Pharmaceuticals Inc, was halted during periods of trading. Nearly 24 million of Canopy Growth were bought and sold on Nov. 16 alone, with the company closing at $11.40 per share.

Canopy recently announced that it has been granted approval for its wholly owned subsidiary, Tweed Inc., to begin using its new breeding area in Smith Falls, Ontario.

“This breeding area now allows Tweed to launch two projects core to its vision of offering Canadians the most variety and options in the sector,” said Mark Zekulin, President of Canopy Growth Corporation in a press release. “First, working with our world class partners, we can begin breeding new varieties uniquely available in the Canadian regulated market. Second, as part of our commitment to supporting a patient’s right to grow at home, we can now begin large-scale production of seeds for the legal Canadian market.”

Medical marijuana was made legal in Canada in 1999, but the types of products available were extremely limited. Patients only had access to dried forms of the product. In 2015, the Supreme Court of Canada ruled that the restrictions on products available to patients was unconstitutional. The same year, the Minister of Health announced that properly licensed producers would be able to legally produce and sell fresh marijuana buds and oil in addition to the dried product.

Medicalmarijuana.ca says cannabis is a “safe, virtually side effect free alternative to all pharmaceuticals,” and has benefits for patients with mental health issues, chronic pain, sleep disorders, migraines, as well as eating disorders and cancer or HIV/AIDS.

Health Canada says acquiring a license to use marijuana in therapeutic doses may be as simple as speaking to your doctor and filling out a form. Health Canada emphasizes that the license allows patients to purchase only from regulated and licensed producers listed on the Health Canada website.

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