The massive opportunity to profit from American cannabis stocks doesn’t mean you should count the Canadian firms out.
Deservedly, American cannabis markets get a lot of attention from investors. As far as legal markets go, it’s by far the largest in the world – and will continue to be for years.
After all, the legal marijuana market in California alone is far bigger than the Canadian market will ever be, and multi-state operators (MSOs) are learning how to build operations and brands across the U.S., despite patchwork legalization.
These ingenious pioneers will define the American cannabis market of tomorrow, and the portfolios of Cannabis Investor’s Report subscribers will profit tremendously from their U.S. dominance.
But that doesn’t mean you should count out the Canadian licensed producers. They have something that American MSOs don’t.
A Big Lead in Global Markets
Because of the legal clarity in Canada, Canadian cannabis firms have the leeway to build a portfolio of global assets.
And they are using this legal head start and the big balance sheets flush with cash that they have built to acquire assets throughout Europe.
The licenses, cultivation facilities, and distribution they’re buying represent substantial beachheads to launch their global cannabis ambitions. And these markets have the potential to be every bit as big as the U.S.
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In 2018, 6% of Europeans used cannabis – whether legally or not – which makes for a market of about 44 million consumers. All told, that added up to about $68 billion in sales.
Now, that number doesn’t even account for the massive growth we expect in sales of CBD products. Add those in, and you’ve got an easy double over recreational marijuana use.
Toss in the high adoption of medicinal marijuana and the fact that revenues have to grow at nearly triple-digit rates per year for several years just to get from today’s meager legal sales to a market supporting sales measured in hundreds of billions of dollars.
So, for the handful of Canadian companies with the foresight and financial wherewithal to build a European footprint, they stand to dominate the global cannabis market in the years ahead.
European Assets and the Cash for More
I recently wrote to you about Canopy Growth Corp. (NYSE: CGC). With its $4 billion war chest courtesy of Constellation Brands (NYSE: STZ), it has acquired assets in the UK, Denmark, Germany, Italy, Spain, the Czech Republic, and Poland.
Aurora Cannabis Inc. (NYSE: ACB) has every bit as extensive a reach, but it is also in Lithuania, Luxembourg, Malta, and Portugal.
Aphria Inc. (NYSE: APHA) isn’t as flush with cash, with around $70 million, but it has penetrated Germany, Italy, Denmark, and Malta. And Tilray (Nasdaq: TLRY) has found its way into Germany, the UK, the Czech Republic, Croatia, and Cyprus with just shy of $300 million to work on even more acquisitions.
And while the Scale phase will have a big, profit-boosting impact on American MSOs, Canadian cannabis producers are using their edge to take it global.
Global scale means priority access to $344 billion in traditional marijuana consumption, plus a few hundred billion in new cannabis markets. And with a legal market growing at over 80% per year, the market values of all cannabis companies will speed past $1 trillion before you know it.
This market is on fire.
And the wealth created for investors owning scalable cannabis stocks now will set them and their families up for generations. Getting in on cannabis now is like pulling up a chair right next to the founders.
After all, so much value creation happens in the early stages of a company’s growth that you want to secure your seat before the Big Money moves in and pushes stock prices through the roof.
Of course, you’re free to decide that now is the time for you. Just know that the path past a $1 trillion industry is shorter than most expect, and those that find their seat now could be part of an entirely new class of marijuana millionaires.
Executive Director, National Institute for Cannabis Investors
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6 responses to “This Legal Lead Means Global Scale for Canadian Cannabis Producers”
May 22 2019