Pubdate: Fri, 14 Mar 2014
Source: Toronto Star (CN ON)
Copyright: 2014 The Toronto Star
Contact:  http://www.thestar.com/
Details: http://www.mapinc.org/media/456
Author: Ashante Infantry
Bookmark: http://www.mapinc.org/mjcn.htm (Cannabis - Canada)
Bookmark: http://www.mapinc.org/mmj.htm (Cannabis - Medicinal)

FINANCING ABOUNDS FOR MEDICAL MARIJUANA STARTUPS

Canada's new medical marijuana industry is set to make history on the 
Toronto Stock Exchange.

Tweed Inc., among the first ten companies licensed by the federal 
government to produce and distribute pot, is in the final stages of 
approval for a listing on the TSX Venture Exchange.

The firm has a ticker secured - TWD - chosen because fertilizer 
manufacturer Potash Corp. has long held the ticker POT, joked 
chairman Bruce Linton. If it is granted the listing it will become 
the country's first public medical marijuana company with an opening 
share price just below $1, he said.

With over $10 million in private financing, Tweed is housed in the 
old Hershey's plant in Smiths Falls and on track to produce 25 
different strains of medical marijuana ranging in price from $5 to $12 a gram.

The company hopes to capture a healthy slice of the $1.3-billion 
medical marijuana industry Health Canada forecasts by 2024. And 
that's worth the scrutiny and paperwork of an IPO, said Linton.

"We thought it was an important step to give another level of 
credibility to what we're doing as a differentiator in terms of 
professionalism," he explained.

Under Canada's new Marihuana for Medical Purposes Regulations (MMPR), 
which roll out completely April 1, the government appoints and 
oversees producers.

The old guidelines allowed users to grow their own medical marijuana 
or purchase it from the government.

The cost for staff and facilities to meet Health Canada's 
requirements is substantial, say licensees.

"To build up a capacity to produce large quantities, and test the 
product, and have a quality, secure operation, that requires 
significant dollars," said Bedrocan Canada CEO Marc Wayne.

"You're moving out of the kind of handmade grow ops in days gone by. 
This is a much more sophisticated industry."

Fortunately, startup money abounds. All the approved or pending 
producers the Star spoke with said they'd been approached with 
multiple offers by financiers.

Venture capitalist Kevin O'Leary may yet be among them. In a recent 
CNBC appearance, the investor of Dragon's Den fame raved about the 
burgeoning U.S. industry where $14 million (U.S.) of recreational pot 
was sold in Colorado in January.

"For me as an investor, this is like getting an opportunity to get 
into alcohol after prohibition just ended," he said on Squawk Box. 
"This is going to be a massive multi-billion dollar business, 
regulated and taxed by the government.... I really like the margins 
in this business - it is phenomenal," he said.

However, with these changes only happening at the state level 
- -Washington is next to allow recreational pot - O'Leary fears running 
afoul of territorial rules.

"If I were to invest in two deals I've been looking at in Colorado 
right now I could run into jurisdictional problems as an investor in 
another state where it's illegal," he said.

The Montreal native needs to look closer to home.

"Since we became licensed, I've received quite a number of calls, 
both from individuals and from bankers wanting to talk to me about 
financing or investing or even going public," said Neil Closner, MedReleaf CEO.

"This is an extremely exciting, interesting time for bankers in 
Canada, because there really isn't a huge healthcare entrepreneurial 
base in this country; mostly because the government controls healthcare."

MedReleaf doesn't have designs on the TSX though.

"Being a public company has its pros, but it involves a lot of work 
in terms of public reporting and news releases and regulations," said 
Closner. "We'd rather focus on growing and treating our patients."

Mark Gobuty, CEO of The Peace Naturals Project, has a similar 
outlook: "We think there's going to be a significant evolution for 
this industry. We need to be nimble and responsive, both to our 
clients and to the regulator, and we need to be privately held, with 
a low amount of shareholders, for really important decisions."
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MAP posted-by: Jay Bergstrom