Investing in Cannabis? Consider Going Global With Canadian Companies

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With so many American states legalizing medical and adult-use cannabis, it’s no surprise that entrepreneurs are joining the rapidly growing industry. Federal illegality, though, makes it tough for these pioneers and their investors to make money.

Last month, I suggested that investors looking to capitalize on cannabis legalization would be wise to explore international options. While the United States has yet to embrace cannabis legalization at the federal level, several other countries have created federally legal medical cannabis programs.

American neighbours to the north and south are on board. Mexico recently legalized (but hasn’t yet implemented) medical cannabis. Canada’s federally legal medical cannabis program now serves more than 200,000 patients nationwide. Uruguay has legalized cannabis and allows it to be sold in pharmacies.

While countries on five continents (not Asia or Antarctica) have embraced medical cannabis at the federal level, investors should pay particular attention to five regions that show particular promise. The good news is that there are Canadian companies active in all five, which means investors may be able to participate globally without trading in securities all over the world.

This study compared the business scenarios in Canada, Australia, Germany, Israel, and South America and suggested to go ahead with the investments in the global Canadian businesses.  

When it comes to legal cannabis investment opportunities, Canada is the king. Health Canada, which oversees the medical program, has issued 62 licenses to about 50 medical cannabis companies, and 23 of these licensed producers (LPs) trade publicly. Five even trade on the Toronto Stock Exchange, the equivalent of our own New York Exchange, including Aphria, Aurora Cannabis, CanniMed Therapeutics, Canopy Growth and MedReleaf.

These companies are positioning for full legalization in July by expanding their production capacity and ramping up their extracts expertise. Canada was slow to permit cannabis concentrates, but concentrates are now driving industry growth, despite the fact that they remain highly restricted (oil only, with THC potency capped). In addition to serving a larger market following legalization next year with a broader array of products over time, including edibles most likely, many of the Canadian LPs also have global operations.