Pubdate: Sat, 27 May 2017
Source: National Post (Canada)
Copyright: 2017 Canwest Publishing Inc.
Contact: http://drugsense.org/url/wEtbT4yU
Website: http://www.nationalpost.com/
Details: http://www.mapinc.org/media/286
Author: Sunny Freeman
Page: FP5

'ENORMOUS' FATIGUE HITS MARIJUANA SECTOR

Investor fatigue has taken hold in Canada's hot marijuana sector amid
an influx of look-alike producers getting licensed and going public,
analysts said at an industry conference Friday.

"There's massive investor fatigue, like enormous, and people can't
tell the difference between licensed producers anymore," Aaron Salz,
CEO at Stoic Advisory, said on a panel Friday at the Lift Cannabis
Expo in Toronto.

"Fundamentally, to some degree, these businesses, as prescribed by
Health Canada and being in a highly-regulated industry are almost
forced to be identical in many ways."

There are currently 44 licensed marijuana producers in Canada, but
that could easily double over the next year as the government looks to
increase cannabis supply ahead of the coming legal recreational
market, expected as early as July 2018.

The pace of approvals among the thousands of licensed marijuana
producer applicants has already picked up. Health Canada has been
giving the green light to about one or two companies each month since
the beginning of the year, up from just one every quarter previously.

Listing publicly is the cheapest source of easy capital and so there
will likely continue to be an increase in the number of companies
turning to the public stock markets.

"I am seeing a new breed of licensed producers come out that have
something more unique about them. It's kind of a second or third wave."

As the market evolves, the importance of licensed producers who grow
the plants will diminish as packaging, and branding that transform the
drug into novel consumer products such as beverages or edibles becomes
more prominent, the panellists said.

The focus in the Canadian market continues to be on licensed marijuana
producers but it's time to switch to looking at ancillary businesses
that support production and distribution, which are more developed in
the U.S., said Houston-based analyst Alan Brochstein of New Cannabis
Ventures.

For example, Canadians have yet to explore opportunities such as
on-demand delivery companies and other tech-driven offerings that are
the new buzz among Silicon Valley venture capitalists, he said.

"For every dollar spent on cannabis, several dollars are spent in and
around the cannabis, whether it's on genetics, packaging,
distribution, software or compliance," said Scott Walters, who has
helped launch several marijuana start-ups and is currently CEO of
Molecular Science Corp.

"I look at cannabis as a race track, where everyone has to show up and
make a bet where you're going to win or lose on a single shot. But if
you create or invest in a company that serves everybody, like a
parking lot, they have to pay you just to show up."
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MAP posted-by: Matt