Show Notes: Canaccord Genuity Growth Investor Day

Multi-state operators (MSO) of cannabis assets in the US took center stage at a Canadian financial institution’s show for investors.

Stakeholders in the marijuana space learned about emerging opportunities in the public markets during the Canaccord Genuity Group’s (TSX:CF) “Growth Investor Day” event on Tuesday (January 22).

As part of his opening remarks Matt Bottomley, director of equity research and cannabis analyst with Canaccord, said he expects 2019 to be about execution and more about the specifics of a company.

“Companies are eventually going to move away from just being farmers or extractors to consumer packaged goods (CPG) companies,” Bottomley said.

He explained the evolution of cannabis firms relates to the growth and new opportunities thanks to the entrance of alcohol, tobacco, CPGs and healthcare companies to the space.

The analyst predicted the cannabis stock market will stop swinging all together and companies will trade based on their own execution.

Product formulation will be key once edibles and infused products are legal in Canada. Bottomley added these will be the products in high demand for the Canadian recreational market.

“We expect more volatility as markets evolve but clearly as the markets all over the world continue to de-risk and evolve we expect a lot of winners in the space to see valuations even substantially higher than where they are today,” Bottomley said.

The analyst offered two measures on how to differentiate between Canadian LPs: distribution and the ability to build brands.

Here’s a list of all the presenting cannabis companies during the event:

• Aurora Cannabis (NYSE:ACB,TSX:ACB)
• Columbia Care (Private)
• CannTrust Holdings (TSX:TRST)
• Cannabis Strategies Acquisition (NEO:CSA.A)
• Charlotte’s Web Holdings (CSE:CWEB)
• CrescoLabs (CSE:CL)
• Trulieve Cannabis (CSE:TRUL)
• Curaleaf (CSE:CURA)
• MedMen Enterprises (CSE:MMEN)
• Harvest (CSE:HARV)
• Plus Products (CSE:PLUS)
• MJardin Group (CSE:MJAR)
• Organigram Holdings (TSXV:OGI)
• The Green Organic Dutchman Holdings (TSX:TGOD)

As more states open the doors to legalized marijuana programs, investors have shifted their attention to emerging opportunities in the much discussed MSOs, with Bottomley even awarding Curaleaf as his top stock pick for the year.

Curaleaf is, according to Canaccord, the largest vertically integrated cannabis company in the US. This operator has access to 12 legal states and 36 dispensaries open.

Ed Kelenchuk, senior vice president of business development, said the company raised C$400 million as part of its reverse-takeover public launch on the Canadian Securities Exchange (CSE).

The executive added the company is looking to add its 13 state presence in Ohio soon and as such has been able to set up a brand across its operations in the US with consumers.

Kim Rivers, CEO of Trulieve, said while her company has a specific focus on the Florida market, a state Bottomley referred to as the most attractive market in the US, she recognizes a national strategy is needed.

Rivers said she is not expecting an adult-use vote to be put on the 2020 ballot in Florida, instead she sees it as more possible in 2024.

Plus Products, a cannabis brand focused company specializing in edibles in the California market, touted counting with three of the top 10 products for the California cannabis market based on retail sales from the second half of 2018.

Jake Heimark, CEO of Plus Products, which recently launch on the CSE, said while the price of dried flower drops consistently in legalized markets, edibles and other novelty items retain a steady price margin.

Nicholas Vita, CEO and co-founder of Columbia Care, announced his company is currently in the process to reach the public markets and join the competition of its fellow MSOs.

Update from Canadian ventures

As part of his talk with investors Peter Aceto, CEO of CannTrust (TSX:TRST) was able to confirm the clearance of licensing issues his company had with the city council of Pelham, Ontario.

During his presentation for Aurora, Marc Lakmaaker, vice president of investor relations and corporate development, said the ability for Aurora to sell product on the recently launched Shoppers Drug Mart online medical cannabis store was a very important avenue since it opens the doors to newcomers.

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.