Toronto — Prominent LP board member says there is room for improvement in cannabis investments with a lot of upward value that can be created.
With laws in Canada set to change this summer, many have seen this as an opportunity to dive headfirst into a fairly unknown industry with investments. Canadians discuss cannabis investments and their impact on the cannabis industry as a whole.
So far, the marijuana industry has witnessed big companies acquiring smaller or even medium-sized firms, making smaller players feel anxious that they might not have a bigger role following legalization in Canada.
But investors at The Future of the Cannabis Industry: Innovation & Investment Opportunities event last week offered attendees advice on the challenges and opportunities for entrepreneurs in this new and budding economic sector with an uncertain future.
Investors need to be patient, think long-term
The evening, hosted by The Cannabis Society with Norton Rose Fulbright Canada LLB, kicked off with a fireside chat with Basem Hanna, the co-founder and board member of TerrAscend, a publicly traded Licensed Producer.
“I can confidently say there is room for improvement and there is a lot of upward value that can be created and we do have these vehicles now.”
He and other professionals agreed that the future of cannabis investment looks profitable for new stockholders if they wait and play the long game.
Brice Scheschuk, CEO of Globalive, a global investment firm says, “If you’re looking at investments patiently and with a long-term view, I think they will pay off and you’ll be ok.”
Tegan Adams, the CEO of New Maple Holdings reiterates that sentiment. “Canadian cannabis is in the eye of the international market, both through the sales of the company and the products that we’re producing,” but she cautions new investors to ask the necessary questions before investing as well.
Impasse on an upward trending market
When asked during panel discussions whether Canada has hit peak cannabis and whether Canadian Licensed Producers (LPs) can be global players and leaders on the world stage, Matt Shalhoub, Managing Director of Green Acre Capital, another investment company, responded with an impasse.
“Are we at the top?” he asked, adding: “I think for some players, they are, some they are not.”
I think that when you look at it from the context of a global business and you look at there being many 100+ billion dollar companies, there will be a 100+ billion dollar medical marijuana companies. Could it be someone who hasn’t even started yet? Quite possible.”
He cautions investors to stick with the big names as they are safe players.
Vanessa Grant, a partner at Norton Rose Fulbright, advises new entrepreneurs to research. “The fact that the regulations and the regulatory landscape in Canada right now is still so uncertain, gives you the advantage of time. So take advantage of your time, do your research to figure out what’s in the markets.”
Although Canada is slated to legalize marijuana for summer 2018, the country will not have laws on regulating edibles until 2019.
Looking to the past for future of cannabis market
Marijuana like the tulip bubble?
All the investors in the room compared the marijuana industry to the tech boom of the 1990s or alcohol after prohibition.
Grant interestingly compared it to the tulip bubble mania of 1637 when the Dutch Republic saw prices of tulips reach ten times more than the annual income of a skilled worker at the time and then drastically fall. She drew parallels and believes that similar trends would follow suit with the current cannabis industry and for investors to always be cautious of the markets in general.
Whether future investors will heed with discretion remains to be seen, but events like these allow experts and new investors to mingle and exchange information, further driving the industry.