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This Is Why Companies Levered To The Global Green Economy Will Win

Aug 7, 2017 • 11:31 AM EDT
5 stories (2).png
4 MIN READ  •  By Michael Berger
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While the Dow Jones, Nasdaq, and S&P 500 trade at all-time highs, a new opportunity continues to emerge.

That opportunity is focused on the legal marijuana industry and the industry is in the first inning of a multi-decade growth cycle.

The legal marijuana industry continues to be the fastest growing industry in the world and much of this growth has taken place outside of the United States.

A Marijuana Revolution

A marijuana revolution is taking place all over the world and we have seen several countries (and a continent) board the legal marijuana train in the last year.

Canada has been the greatest beneficiary of this revolution. Some of the country’s licensed marijuana producers can export medical marijuana (flower or oil) to licensed companies in countries like Australia, Chile, Cayman Islands, and Germany.

The international marijuana market represents a significant opportunity and we continue to prefer companies that are focused on capitalizing on the global opportunity.

While we are favorable on the global marijuana opportunity, only a few firms have been approved to sell in other markets. These firms are some of the largest marijuana producers in the world, have a track record of producing consistent high-quality marijuana, a management team that knows how to execute, and a strong balance sheet to support growth initiatives.

Below, we have highlighted three Canadian licensed medical marijuana producers that sell in places outside of Canada. These firms are some of the best known and largest medical marijuana producers in the world and provide investors leverage to this burgeoning opportunity.

Canopy Growth: A Global Cannabis Leader

In April 2014, Canopy Growth (WEED.TO) (TWMJF) became Canada’s first publicly traded licensed medical marijuana producer. Since then, the company has continued to execute and is by far the largest and most diverse medical marijuana opportunity in Canada. Canopy has more than 58,000 registered Canadian patients on its online store, Tweed Main Street.

Canopy Growth is levered to the most attractive medical marijuana markets in the world and only focuses on markets where marijuana is legal at the federal level. For this reason, Canopy Growth has avoided the United States marijuana industry.

The medical marijuana producer is levered to the medical marijuana market in Australia, Brazil, Chile, and Germany. We are favorable on Canopy Growth’s continued success and expect the company to be a leader in the medical marijuana industry for years to come.

Aurora Cannabis: A Threat to Canopy’s Throne?

Aurora Cannabis Inc. (ACB.TO) (ACBFF) started selling to medical marijuana patients in January 2016 and has been on-boarding patients at industry leading rates. The company has more than 16,000 registered patients in Canada and is now one of the world’s largest marijuana producers.

Aurora Cannabis has significantly increased its market share and is levered to new legal marijuana markets in Australia and Germany. The company has a very strong balance sheet and has been laser focused on increasing production capacity ahead of the opening of Canada’s legal recreational market (expected July 1, 2018).

We are favorable on Aurora Cannabis and believe the company is well positioned to capitalize on the emerging legal marijuana market. The firm has made several strategic investments and acquisitions that will help Aurora continue to record above-average growth.

CanniMed: An International Cannabis Oil Story

CanniMed Therapeutics (CMED.TO) (CMMDF) has come off highs from July and has been trending lower with its peers. The firm is focused on the Canadian and international medical marijuana markets and was the first to be awarded a license under the MMPR (now ACMPR).

The medical marijuana producer has benefited from a trend toward smokeless marijuana products and in early May, completed its first shipment of cannabis oil to Australia and the Cayman Islands. (16,560 ml of CanniMed Oils in aggregate).

After CanniMed completed the shipment to Australia, the firm received three additional import permits from the Australian Department of Health for an additional 360,000 ml of CanniMed Oil products to be shipped by the end of September (subject to receipt of export permits from Health Canada).

We are favorable on CanniMed’s leverage to the international marijuana market as well as its focus on smokeless products. The company expects to launch new medical marijuana products (i.e. gelcaps) in the coming months and believe this is a story to watch! 

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Technical420.com. Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.

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