Canadian weed shares continue to rise after Canadian regulators reject Aurora Cannabis’ request to speed up the hostile takeover of CanniMed Therapeutics Inc.
If the request to shorten the minimum deposit period to 35 days was approved, it would have likely prevented CanniMed‘s bid to buy Newstrike Resources Ltd. This would have increased the likely hood of the hostile takeover occurring.
Aurora Cannabis, based out of Alberta, offered to buy CanniMed for $24 per share in November. However, CanniMed immediately created a shareholder rights plan or a “poison pill”. They view the deal as a “coercive.”
In response to Wednesday’s announcement, Canadian weed shares hit a new high. CanniMed was up 4.7 percent to $20.89 in mid-afternoon trading, while Aurora was up 9 percent to $7.86. Meanwhile, Canopy Growth Corp. was up 17 percent and Cronos Group Inc. rose 19 percent. Cannabix Technologies Inc., THC Biomed International Ltd, and Aphria Inc. all rose 10 percent. And lastly, OrganiGram Holdings Inc. was up 6 percent.
And the industry continues as a whole continues to rise, with the HMMJ Canadian Marijuana ETF up over 9% in the last two days. This ETF represents over 12 companies from the entire Canadian industry.
But this is only the beginning, as Canadian growers are eyeing a global expansion.
Canadian Growers Eye a Global Expansion
According to Canopy Growth Corp. CEO Bruce Linton, Canadian LPs have the opportunity to become worldwide leaders in a brand new industry. Linton’s company is the world’s largest publically traded marijuana producer and he says,
“If you pick a theme for 2018 it will be the globalization of medical cannabis. It’s not difficult to see a really substantial global market coming off what starts here.”
Currently, there are at least 80 companies listed on Canadian stock exchanges. Their combined market value has soared to more than $20-billion CAD. According to Bloomberg Data, Canopy, Aurora Cannabis Inc, Aphria Inc, MedReleaf Corp and Cronos group are all valued at more than $1-billion CAD. And more companies are coming, as Canada has licensed 208 new companies to hit the industry. This will triple the current number of companies on the market.
Breakdown of Global Sales
According to a November report from the Brightfield group, worldwide sales will reach $7.7 billion USD this year. This estimates $7-billion to occur in the US and about 600 million in Canada. By 2021, the global total will rise to $31 billion USD, but Canada and the U.S. are still in position to account for a majority of future sales.
Bethany Gomez, Brightfield’s director of research outlines that Canadian producers are “pushing really hard to take that first-mover advantage.” Confirming that point, Linton says that Europe and South America are priorities for expansion. So far, Canopy exports to Germany and has supply and licensing agreements in Spain, Austrailia, and Jaimaca. Linton goes on to say that,
“By the end of 2018, I think you’re going to find that there is for sure one company, maybe a couple others, who are doing all of the things that need to be done in order to be a broad platform.”
The identity of those global leaders will begin to reveal themselves as global legalization inches closer and closer. For now, excitement and hype will likely continue to push the price Canadian weed shares higher and higher.