Pubdate: Fri, 26 Jan 2018
Source: Globe and Mail (Canada)
Copyright: 2018 The Globe and Mail Company
Contact:  http://www.theglobeandmail.com/
Details: http://www.mapinc.org/media/168
Authors: Matthew Campbell and Doug Alexander
Page: B5

BMO OPEN TO CANNABIS DEALS IF FIRMS CAN PASS 'THE TESTS,' CEO SAYS

Bank of Montreal is open to more deals with cannabis companies, as
long as those firms can get past "traps" in the lender's due-diligence
process, chief executive Darryl White said.

The Toronto-based lender became the first major Canadian bank to
arrange a stock sale for a company tied to cannabis this month when
its capital-markets unit helped lead a $200.7-million equity financing
for Canopy Growth Corp. In his first public comments about the deal,
Mr. White called the marijuana producer "a bona fide business
operating within the boundaries of the law."

"This is a transaction for a good client who is focused on medical
marijuana in Canada with no nexus to the United States," Mr. White,
46, said on Thursday in an interview at the World Economic Forum in
Davos, Switzerland. "We put it through the same due-diligence process
we would any other underwriting."

BMO is "very conscious" of the regulatory environment in dealing with
Canopy, Mr. White said, describing the Smiths Falls, Ont.-based
producer as "the biggest and, in our mind, most successful company" in
the industry. He said the lender would consider similar transactions,
as long as they "pass all of the tests."

"We assess every single case with those traps I just described," he
said. When asked if the bank plans to take on a bigger role in the
marijuana industry, Mr. White said, "We'll have to see."

BMO is one of the few Canadian banks to provide business accounts to
companies in the four-year-old medical marijuana industry, serving
about a dozen firms. The industry is exploding as Canada moves toward
legalizing pot for recreational use this year. At least 84 companies
tied to marijuana are trading on the country's exchanges with a
combined market value of about $37-billion.

Non-bank Canadian securities firms including Canaccord Genuity Group
Inc., GMP Capital Inc. and boutique companies have been most involved
with the nascent industry. While most of the country's big banks have
shied away from making commercial loans, Canadian Imperial Bank of
Commerce was part of a $20-million credit agreement with MedReleaf
Corp. last year.

In a wide-ranging interview, Mr. White also touched on economics,
saying he's noticed a "positive vibe" at Davos and in markets in
Europe, Asia and North America.

"The big risk that underlies all that is trade," Mr. White said,
adding that he worries about the consequences of the North American
free-trade agreement disappearing or being radically reshuffled. "The
question is, will all that be disrupted if we have bad news on NAFTA?"

Canada's economy is unlikely to repeat last year's 3-per-cent growth
rate that topped the Group of Seven countries, he said. Still, it
"won't be bad" given the country's overall strong economy and falling
unemployment rate. He described Canada's housing market as facing a
"supply-demand imbalance" mainly in Vancouver and Toronto, while being
balanced in the rest of the country.

"For the foreseeable future, people shouldn't be overly concerned"
about housing, said Mr. White, who took over as CEO about three months
ago.

Mr. White also addressed the issue of sexual harassment and the #MeToo
movement, saying he expects such issues to surface on Wall Street
despite longstanding efforts to clean up the industry.

"There will be problems and I think the liberalization of people
feeling comfortable raising their hand is absolutely appropriate," he
said. "Major financial institutions began to get this right a long
time ago, so it's conceivable that despite the perceptions of Wall
Street, the financial services industry - and appropriately so - was
ahead of others." BANK OF MONTREAL (BMO) CLOSE: $103.56, DOWN 14c
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MAP posted-by: Matt