The intrepid Canadian entrepreneurial class is remarkable for its adaptability. When the dot com boom began to coincide with a broad malaise in the mining sector, mining companies became tech companies at an alarming rate. After the dot com meltdown in 2000, and the subsequent rise of the resource sector, many of those same tech deals switched back to become uranium, graphite, niobium, rare earths, lithium, or any of a number of exotic minerals that became the latest fad investment.

Now, with mining companies on their knees and financing running at about 10% of what it does in a healthy resource sector, there’s a new fad investment that calls itself “Medical Marijuana”. The ironies inherent in marijuana going legal and mainstream in BC are legion. Foremost among them is the fact the BC is regarded the world over as one of the best regions in the world to source non-medical, or illegal, marijuana.

But this new craze has got some definite holes in it, and while fortunes have already been made by some of the more nimble promoters on the block, there will be, as is always the case with sudden hot investment obsessions, more losers than winners. The conversion from mining company to dope company has already proven the breath of life for a handful of erstwhile miners.

Tweed Marijuana Inc. (TSX.V:TWD) is providing the first glimpse into what may be in store for medical marijuana investors. The company started trading on April 4th and opened at $4.60. The stock, by the end of the day, was down 43.7% to close at $2.59 on volume of just under 10 million shares traded. So there are a whole bunch of early stage investors whose first experience in the space is a decidedly bad trip.

The company has 35 million shares outstanding of which 12 million are held in escrow.

According to the company’s filing statement, Tweed is licensed to grow up to 15,000 kilograms of marijuana per year, which it anticipates selling for between $5 and $12 per gram.

Medical Marijuana to be worth $1.3 billion within 10 years

On its web site, Health Canada indicates that as of December 2012 there were 28,115 individuals licensed to possess and consume dried marijuana for medicinal purposes in Canada. According to a CBC report on January 28, 2014, in 2013 there were 38,000 authorized users of medical marijuana in Canada with a combined prescribed 190,000 kg of medical marijuana per year. Health Canada officials have been widely quoted as stating that Health Canada anticipates the number of Canadians authorized to consume medical marijuana could be as high as 450,000 by 2024.

Tweed estimates that its average selling price will be $8.80 per gram of marijuana, which implies gross annual revenue of CA$132 million, or $3.77 a share. The 2 key considerations for investors at this point is 1. Will Tweed be able to produce 15,000 kilos of pot per year, and 2. Will they be able to sell it all?

That’s literally the multi-million question.

Tweed is first out of the gate with an actual 180,000 square foot medical marijuana-growing facility in Smiths Falls, Ontario. There are at least 27 other companies organizing to become medical marijuana companies, the majority of which have no operating business, but whose share prices are nonetheless way up since announcing their intention to become such.

There are 12 licensed growers of medical marijuana at this stage in Canada. But growing marijuana isn’t the only way to capitalize on the growing trend toward marijuana decriminalization. TSX Venture listed Pan American Fertilizer Inc. (TSX.V:PFE) announced its intention to produce specialty fertilizers for medical marijuana growers in Uruguay, where a federal program regulating producers of decriminalized marijuana has triggered a rush to grow pot in that South American country.

“The next step in implementing our strategy is to become a fully integrated fertilizer company focused on South American which will include specialty fertilizers and agronomic advice for high cash value and medicinal crops” stated Rob Rennie, Pan American’s Executive Chairman.”

“These new funds will now allow Pan American to better define the opportunity to be the preferred supplier of specialty fertilizers specifically tailored for various cultivars of medical marijuana” Randy Wright explained. We will work with the best scientists in Canada and Uruguay together with marijuana producers in Uruguay to ensure that our products best meet our customers’ needs” Right continued.

That announcement caused the tiny junior’s shares to triple before settling back to Friday April 4th, 2014 close of $0.11 – still up over 100% since prior to the announcement.

Uruguay’s now officially legal medical marijuana laws suggest that Pan American is indeed the better bet, considering that its at this point, highly uncertain that the Canadian government will be able to force the Canadian medical marijuana consumers into buying from the licensed growers there.

Canadian Medical Marijuana Regulation Uncertain

On April 1st, the federal government cancelled all the growing licenses of the country’s 38,000 registered medical marijuana consumers, who until that point, were allowed to grow their own medical marijuana.

The plan was for all these users to have to start buying from licensed growers. The problem is, marijuana can be grown for a total all-in production cost of pennies per gram, so users who were accustomed to growing their own pot requirements for less than a dollar a day have suddenly been forced into a situation whereby, if they had to buy pot at Tweed’s projected average of $8.80 a gram, and the average daily consumption dose is 10 grams per day, they’re looking at upwards of $80 per day.

Federal Court Judge Michael Manson apparently sided with the individual growers, and ruled that patients currently licensed to grow their own marijuana would be permitted to produce the drug even after new regulations banning the practice took effect on April 1st.

The judge granted an application from medical marijuana patients seeking a temporary injunction to preserve the status quo until their constitutional challenge of the new system could be heard.

That paves the way for a full-on constitutional challenge, which could take months or years to reach a resolution after appeals. Plus, with the illegal marijuana business producing and selling pot at an average street price of about $5 a gram, one has to wonder how many of the 38,000 licensed users will abandon home growing willingly, or resort to other illegal growers, rather than pay the government-mandated premium.

At the end of the day, opportunities in medical marijuana will produce some big winners, as in the case of Pan American Fertilizer investors. But more likely is the experience of Tweed’s earliest investors, who have seen their investment go up in smoke.

Next Gen Metals (CSE:N), a Vancouver-based firm concentrating on the investment in medical marijuana, industrial hemp and alternative medicine sectors, announced today that the company’s subsidiary, GreenRush Financial Conferences, had launched its website, www.greenrushfinancialconferences.com.

According to the news release, all interested parties or corporate entities seeking to attend or participate in the world’s first medical marijuana investment conference to held in Vancouver at the Vancouver Convention Centre May 7, 2014, may register online with GreenRush as spaces are limited.