May 24 Conference

With laws in Canada set to change this summer, many have seen this as an opportunity to dive headfirst into a fairly unknown industry with investments.

So far, the marijuana industry has witnessed big companies acquiring smaller or even medium-sized firms, making smaller players feel anxious that they might not have a bigger role following legalization in Canada.

But investors at The Future of the Cannabis Industry: Innovation & Investment Opportunities event offered attendees advice on the challenges and opportunities for entrepreneurs in this new and budding economic sector with an uncertain future.

On May 24th The Cannabis Society together with Crowd Matrix, New Maple Holdings, Rogers, Weedbox, Wildman & Associates hosted an exclusive, executives only Cannabis Conference for industry influencers, service providers and investors.

Line-up of speakers included Jennifer Knox (Director of Communications at 48 Nrth), Josh Lyon (VP Marketing of Hiku Brands), Basem Hanna (Co-founder of TerrAscend), Tegan Adams (CEO of NewMapleHoldings), Rubsun Ho (CEO of Crowdmatrix), Sara Zborovski (Partner at Norton Rose Fulbright), Vanessa Grant (Partner at Norton Rose Fulbright),  Marvin Singer (Partner at Norton Rose Fulbright), Matt Shalhoub (Managing Director of Green Acre Capital), Brice Scheschuk (CEO of Globalive Capital), Jeremy Potvin (CEO of Weedbox),  Lorilynn McCorrister (Co-founder & CMO of Weedbox), Mike Dacks (VP of Legal and Business affairs of MedReleaf Corp).

The event, hosted at Norton Rose Fulbright was at full capacity with more than 150 tickets sold and kicked off with cocktails and a fireside chat with Basem Hanna (Co-founder & board member of TerrAscend, a publicly traded Licensed Producer).

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“I can confidently say there is room for improvement and there is a lot of upward value that can be created and we do have these vehicles now.”

He and other professionals agreed that the future of cannabis investment looks profitable for new stockholders if they wait and play the long game.

Basem also talked with Jeremy Potvin (CEO of Weedbox) about ups and downs and challenges while building TerrAscend and shared his involvement with the company now.

“I am not involved in the day to day operations, but I go to conferences like these to meet people, learn who they are and get involved in one way or another because you never know where it’s going to take you.”

Josh Lyon, the VP of Marketing and partnerships at Tokyo Smoke / HIKU then took over the stage to talk about how cannabis has the ability to change everyone’s lives. He shared that when they first started with Tokyo Smoke, the mission behind their brand was to make cannabis mainstream and provide a home to people who felt like they did not have one within the cannabis industry.

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“This means something to a lot of people. This isn’t just an agricultural money play.”

Matt Shalhoub, the Managing Director of Green Acre Capital has been investing in the cannabis space since 2014 out of a Toronto based family office. He spent some time in Colorado and Washington -  trying to understand and learn the market and now his main intent with Green Acre Capital is to help cannabis companies grow.

Do you think there is a valuation gap between can and American companies?

“About a month ago I would have said yes. In order for you to have the market covered, you need to have 29 production facilities in the 29 states in which its legal and it becomes a strain trying to manage them as well as looming federal switch on the industry can change the whole perspective, and instead of needing 29 facilities you only really need three.”

The conference continued with Brice Scheschuk, the CEO of Globalive Capital & CFO of Pragmatic Solutions sharing why he got his attention on Cannabis industry after $1.6B telecom exit. He also gave some advice to cannabis entrepreneurs. Brice believes that accelerators will be an important part for the growth of cannabis startups.

What we’re looking at:

  • Bridging infrastructure fund - private credit to cannabis industry
  • HALO - oils and concentrates
  • Hill Street Beverage - dealcoholized/infused beverages

What we don’t like:

  • Public sector valuations are nonsensical from an entry point perspective
  • Companies need to go big or go home - go international
  • LPS generally
  • Investment issuers trading above properly calculated NAV

“If you’re looking at investments patiently and with a long-term view, I think they will pay off and you’ll be ok.”

Tegan Adams, the CEO of New Maple Holdings reiterated that sentiment.

“Canadian cannabis is in the eye of the international market, both through the sales of the company and the products that we’re producing.”

She cautioned new investors to ask the necessary questions before investing as well and mentioned some of the industry’s challenges:

  • Public and civil disobedience
  • Court rulings and injunctions
  • Tax arguments
  • Health Canada regulations

“There is lots of confusion with what exactly is legal. Lots of companies, even publicly listed, have been making a lot of money tax-free, so it will be interesting to see how CRA will step in. Something to look out for.”

Marvin Singer, the Senior Partner at Norton Rose Fulbright started off the fireside chat with Mike Dacks( Vice President of Legal and International Business Affairs at MedRealeaf Corp) by asking what international opportunities in the Cannabis space are there specifically for Canadian players.

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Mike: Manufacturing and logistics opportunities. Establishing import and distribution networks for the space. Looking to create a more cost-efficient global supply chain for growing cannabis in Canada.

Marvin: How do you develop business model when it comes to international narcotics regulation?

Mike: It takes tremendous resources, execution is the key. Any companies looking to get GMPs certified - operate under “good production practices”. Canada will not issue these GMP licenses, have to look to international GMP licensers.

Marvin: Are you seeing competition from American companies entering into international markets?

Mike: They’re limited in their capacity, they work as advisors with other international LPs.

Marvin: So your only competition is in Canada?

Mike: No. Competition is heating up and it’s about execution and getting into the right markets at the right time and a myriad of other factors.

Investment opportunity panel with Brice Scheschuk, Vanessa Grant, Basem Hanna, Matt Shalhoub, moderated by Rubsun Ho.

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When asked during panel discussions whether Canada has hit peak cannabis and whether Canadian Licensed Producers (LPs) can be global players and leaders on the world stage, Matt Shalhoub, Managing Director of Green Acre Capital, another investment company, responded with an impasse.

“Are we at the top?” he asked, adding: “I think for some players, they are, some they are not.”

I think that when you look at it from the context of a global business and you look at there being many 100+ billion dollar companies, there will be a 100+ billion dollar medical marijuana companies. Could it be someone who hasn’t even started yet? Quite possible.”

He cautions investors to stick with the big names as they are safe players.

Vanessa Grant, a partner at Norton Rose Fulbright, advises new entrepreneurs to research.“The fact that the regulations and the regulatory landscape in Canada right now is still so uncertain, gives you the advantage of time. So take advantage of your time, do your research to figure out what’s in the markets.”

Although Canada is slated to legalize marijuana for summer 2018, the country will not have laws on regulating edibles until 2019.

Looking to the past for future of cannabis market

  Tulip price index of 1637 seems to parallel the cannabis market of today

Tulip price index of 1637 seems to parallel the cannabis market of today

Marijuana like the tulip bubble?

All the investors in the room compared the marijuana industry to the tech boom of the 1990s or alcohol after prohibition.

Grant interestingly compared it to the tulip bubble mania of 1637 when the Dutch Republic saw prices of tulips reach ten times more than the annual income of a skilled worker at the time and then drastically fall. She drew parallels and believes that similar trends would follow suit with the current cannabis industry and for investors to always be cautious of the markets in general.

The markets, however, have been volatile as of late, thanks to recent mass acquisitions by big corporations and current economic factors, especially in the marijuana industry.

Whether future investors will heed with discretion remains to be seen, but events like these allow experts and new investors to mingle and exchange information, further driving the industry.

After a short break, the innovation panel with Jennifer Knox, Josh Lyon, Tegan Adams, Lorilynn McCorrister and moderated by Sara Zborovski continued the discussion.

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Sara: How do you envision the interaction of players changing with the introduction of C-45?

Jennifer: Yes, the LP role will change. I am an example of how things are changing.

Lorilynn: Typical marketing does not work. Find different ways to connect with consumers. Every vertical should have a brand.

Josh: It was an operators’ game, and now it’s a communicators game. As a consumer I don’t care about your capacity, I care about your communication and branding.

Tegan: Looking at different provinces and medical system in Canada & Europe, focus on profit margins on our products. Will have to adjust along the way.

All the panellists agreed on organically originated, health/wellness and beauty products being the main focus and the ones breaking stereotypes about Cannabis industry.

The event wrapped up with cocktails, deal-making and networking session for all the attendees and panellists.

Special thanks to our sponsors:

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Some parts of this article originally appeared on Puff Puff Post

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Dana Kulia