Medical marijuana companies will likely tap the Canadian bond market to fund growth as investors become more comfortable with the industry and the federal government gets set to legalize the drug by next year.

"There would be an appetite for more traditional debt arrangements and, given that leading cannabis companies have significant assets now, this may be one direction that we see the market go in the future," said Cam Battley, executive vice president of Aurora Cannabis Inc., a licensed marijuana producer in Mountain View County, Alberta. "I suspect we're headed in that direction right now."

Canadian marijuana companies have tapped capital markets to fund expansion plans amid expectations that Prime Minister Justin Trudeau's government will unveil a proposed law as early as Thursday to set the stage for legalization in 2018. Shares in companies like Canopy Growth Corp., the first Canadian pot company with a market value of $1-billion -- making it a marijuana unicorn -- have soared, and the company announced last week it will expand west by acquiring rTrees Producers Ltd. in Yorkton, Sask.

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Aurora announced the sale of $75-million of 7 per cent convertible debentures, debt that can be converted to equity at a specific price, in a private placement Tuesday. The sale was increased from an initial target of $40-million and marks the company's third convertible debt deal. It sold C$15 million with a 10 percent coupon in September and $25-million of debentures with an 8 percent coupon in October.

Aurora will use the proceeds from the sale to fund its international expansion, which includes acquiring a 19.9 percent stake in the first Australian company to be licensed to research and cultivate medical marijuana, Mr. Battley said.

"With the change in social attitudes, people are looking at the cannabis sector with different eyes," he said in a phone interview. "This is going to be a significant market going forward."

Aurora shares fell 8.5 per cent to $3.01 in Toronto, after soaring 18 per cent Monday. The company has jumped 33 per cent this year, for a market value of $969-million.