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Canadian marijuana companies should have first mover advantage

SmallCapPower | February 28, 2017: The ‘Emerging Cannabis Sector’ was one of the panel discussions that took place at the recent Cantech Investment Conference 2017 in Toronto. Canadian marijuana companies, in particular, have been popular among investors and speculators alike following Prime Minister Justin Trudeau’s pledge to legalize marijuana for recreational use. Providing their insights that day were Cronos Group CEO Michael Gorenstein, CannaRoyalty Corp. (CSE:CRZ) CEO Mark Lustig, AgriNomix President Robert Lando, and CannTrust President & COO Brad Rogers.

Here’s a summary of what was said:

Michael Gorenstein:

The current market is nearly $200 billion in revenue representing consumer purchasing habits.

Canada is expected to be the first G7 country to recreational-ize cannabis consumption and will be the gold standard for compliance.

Canadian companies will be the first movers and then spreading to other jurisdictions as they come online. As the market continues to expand there’s incremental cash flow that goes to each of the producers. There’s a first mover advantage for any producer that already has a license in Canada and it’s not just domestic but global.

There’s a big gap between demand and supply, and he expects that to continue for a number of years. Future demand will come from countries such as Germany, with its population of about 81 million, which will likely see insurance re-imbursement for cannabis. He thinks it will be about five to 10 years before supply catches up to demand in the legal market. As new jurisdictions come online, they will likely look to Canada for its experience.

Right now there’s just one international producer outside of Canada that is able to ship internationally to countries such as Germany or Australia, and the rest are all in Canada.

Mark Lustig:

Our Company is focused on future markets such as cannabis in pharmaceuticals, and other products.

In 2016, the U.S. sold about $7 billion worth of legal cannabis products and California would account for $5.5 billion of that as a medical market. In November, California also voted on the recreational expansion of the market.

Trump says he’s going to leave the marijuana issue in the hands of the individual states. It’s the fast-growing sector of the economies of the states that have legalized it and it’s generating a lot of jobs.

Testing of the products is going to be a major part of a legalized marijuana market.

Dealers’ licenses will be a most valuable asset.

Robert Lando:

The lowest cost producer will win in this market.

A lot of technical aspects to growing a crop – it has to be tracked and traced throughout its entire life, and there’s a lot of movement to a growing crop.

Brad Rogers:

“This industry is as small as it will ever be right now.”

He believes the Canadian product is the “gold standard” globally.

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