Pubdate: Wed, 21 Oct 2015
Source: St. Thomas Times-Journal (CN ON)
Copyright: 2015 Sun Media
Author: Peter Koven
Page: 10


TORONTO - Of all the industries across Canada, none could possibly be
happier with Monday's election result than the medical marijuana sector.

Justin Trudeau's plan to legalize marijuana promises to bring massive
opportunity to an industry that only came into existence last year.

Marijuana equities moved higher on Tuesday as investors absorbed the

Shares of Canopy Growth Corp. (formerly Tweed Marijuana) jumped 13 per
cent, while Aphria Inc.'s shares climbed 11 per cent.

The federal government birthed the marijuana sector in April 2014,
when it introduced rules that required medical pot patients to buy
their product from licensed producers.

That created a market frenzy as dozens of companies popped up out of
nowhere to get into the sector.

Those firms are slowly being whittled down to a much smaller group of
capable long-term producers.

But while the medical marijuana patient list is growing, it is still
below 30,000 people across the country.

That is a tiny number, and it limits the amount of money these
companies can possibly make. As of now, none of the major producers is
cash flow positive.

Legalization, if it indeed happens, will transform the business
because the potential customer base is enormous.

Assuming Canada follows the path of U.S. states such as Colorado and
Oregon that have legalized, pot will become huge business literally

But that will also bring big challenges to the marijuana

Higher production could drive prices down, which would force plenty of
companies out of business if they cannot establish enough scale to
drive down their costs.

Consolidation, which is already happening, will likely become a

The regulatory environment under legalization is completely

And a legalized marijuana industry could also draw interest from the
global tobacco and pharmaceutical industries.

If they bring their scale and know-how to pot, it may become
impossible for the small Canadian firms to hold their ground.
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