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Cannabis Investing

Cannabis companies presented their vision for the future of the industry and the reasons investors should align with them.

On Wednesday (January 24) Canaccord Genuity hosted a cannabis investor day, where companies in the space pitched their concepts for the future of the market and how exactly their business could fit into that picture.
In total there were 28 presenting companies, from a mix of TSX listed LPs, TSX Venture opportunities, and companies operating in Canada through the Canadian Securities Exchange (CSE), but with a focus on the US cannabis market. The conference also had presentations from a variety of currently private companies detailing their plans to go public later this year.
The conference began with opening remarks from Canaccord Genuity cannabis analyst Matt Bottomley, who said right now there is an “incredible amount of cash” being deployed into the industry. Despite the volatility and the changes companies in this space face nearly on a daily basis, Bottomley said in his expectation this industry is rooted in the fundamentals that will make it successful.
Bottomley also explained how Canada and the players in this country have a first mover advantage on a worldwide scale. This notion of Canada as a worldwide leader for cannabis was also discussed during the Lift Cannabis Expo in Vancouver.
Bottomley added people are “flooding to Canada” as a recognition of the steps the country has taken to bring the issue of cannabis to the forefront.

Packed room for Aurora presentation on the heels of the CanniMed acquisition

One of the most anticipated presentations was for Aurora Cannabis (TSX:APH; OTCQB:ACBFF) thanks in no part to its recent acquisition of CanniMed Therapeutics (TSX:CMED).
“We’ll never do another hostile takeover again, ever,” Terry Booth CEO of Aurora told the audience. Booth ran over the company’s most recent updates including its export potential in Australia, its plans for the German and Danish markets as well as a recent announcement in Italy. On January 18, Aurora earned an exclusive deal with the Italian Ministry of Defense to supply them with medical cannabis.
One of Aurora’s potential catalysts is the much detailed Aurora Sky facility, an 800,000 square foot high-technology greenhouse facility located near the Edmonton International Airport. Booth said the facility is on budget and on schedule. According to the government of Alberta, the production is expected to produce the first harvest in the second quarter of 2018.
Booth said that thanks to the CanniMed deal, Aurora will be able to use an extra 50,000 square feet for production. He explained the $1.1 billion was worth it to end the transaction in friendly terms, instead of dragging out the issue.
“If we had to take this ugly and continue to march and deal with the Newstrike boys–whom I like–but there’s lots of Newstrike’s out there,” Booth said.

Update from other companies at the Canaccord Genuity cannabis conference

MedReleaf (TSX:LEAF) took the stage to tell investors about their core focus growth drivers in 2018: the Canadian medical market continued work into innovative products for consumers, the recreational market in Canada and international opportunities for them like Brazil, Germany, and Australia.
One of the most interesting details shared in MedReleaf’s conference was the work being done to complete a cannabis test for patients capable of indicating, through genetics, how high of a dose they need for their particular ailment, depending on their reaction to cannabis.
One of the major prospects for recreational cannabis in Canada this year is the potential cultural shift about the drug and its perception with non-users.
Companies like MedReleaf spoke on the need to provide support and education to physicians so they are more comfortable recommending cannabis medicament to their patients. A test like the one MedReleaf presented could provide the data needed to start changing the mind of medical officials across Canada.

Other efforts, like the one presented by Namaste Technologies (CSE:N; OTC:NXTTF) show the potential of lifestyle apps collecting the data required to create a significant change in this area. Sean Dollinger, president, and CEO of Namaste told the audience the company is launching an Apple Watch app which will be capable of monitoring patients after consuming cannabis.
During its presentation, Delta 9 (TSXV:NINE) outlined its option in the Manitoba market. John Arbuthnot, CEO of Delta 9, told the audience he expected the provincial government there to reveal the winners of the four planned retail licensed next week.
Delta 9 has also extended its partnership with Canopy Growth (TSX:WEED), under the CraftGrow outreach program. If awarded the key license, Delta 9 plans to bring this partnership to their licensed sale of medical and recreational cannabis in Manitoba.
Arbuthnot also took time to explain the company’s unique growing method. Delta 9 employs what they call Delta 9 grow pods, which are shipping containers modified to accommodate the growth of between 30 and 32.5 kilos on an annualized basis. Each pod costs Delta 9 $40,000 to customize and, according to Arbuthnot, presents a key advantage in safety terms.
Since the pods are independently managed they don’t pose a risk, particularly if there were to be a problem with a specific crop. As he explained on the Midas Letter podcast, a heating, ventilating, and air conditioning (HVAC) system runs the risk of an infestation spreading throughout the facility.
“When we compartmentalize our risk, our entire value at risk in any one container at any given time is in the tens of thousands of dollars,” Arbuthnot said.

Investor Takeaway

Despite the current potential for the marijuana business right now, the Canaccord conference dedicated moments remembering how far the industry has come in just a few years. According to data provided by Canaccord, the financial institution has raised $1.5 billion for the cannabis industry since 2016.
There are plenty of opportunities for investors looking into the cannabis space, and not only from the major LPs dominating the headlines. There is exciting innovation coming from players from all sizes through all the public exchanges.
Don’t forget to follow us @INN_Cannabis for real-time news updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.


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