With the impending legalization of marijuana, Canada’s cannabis market could be the biggest financial boom since the dot-com era.
According to a Deloitte study, the Canadian marijuana market is expected to grow to $22bn in the coming years. In a think piece on Pot Network, industry expert Jacqueline Havelka said the industry seemed to be in gold rush territory, with many people having already invested millions despite the fact that many pot firms are yet to turn a profit.
“Many Canadians are hopeful that cannabis will add billions to their flailing economy, particularly boosting the economic decline that some small Canadian towns are experiencing,” Havelka said. “Certainly, governors in the provinces like Ontario and British Columbia are forecasting that cannabis sales will indeed go a long way in helping them to balance their budgets.”
“Skeptics say that many companies today have a great ability to raise money in this hysteria-infused market, but are sure that many of them will not have the same ability to make money.”
A case in point is Auxly, a cannabis firm that injected millions into several growing operations across Canada. Its value once exceeded $1bn but then dipped to around $500mn. For the first quarter of the year, it reported a $10m loss. Despite this, the firm stays unperturbed.
“Most companies take the same tack as Auxly; they’re not worried. After all, Canada has had a legal medical marijuana industry for nearly two decades—since 2001, and that market is booming, particularly in the CBD oil area,” Havelka said.
Investing in pot can have other, unexpected, implications, as one venture capitalist who was banned from entering the United States found out.
CTV News reported the story of Sam Znaimer, who was stopped by border officials in May and questioned about his investments in cannabis.
“In the course of four hours, they never did ask [about pot consumption] and I believe that was because they wanted to send a message to Canadians that it has not only to do with your personal behaviour but whether in any way you have invested in these companies,” he told CTV News.
Possession of the drug is still a criminal offence under the US Federal Law with only certain states allowing recreational marijuana. Despite never admitting to personally using pot, Znaimer was still given a lifetime ban due to his investments in US marijuana firms.