No question there’s excitement in the air. The Government of Canada is building a world-class cannabis industry – with the target of providing regulated and restricted access to marijuana no later than July 2018. This will make Canada the second nation in the world to legalize both medical and recreational marijuana. The CDN market value is estimated at $6.0 billion annually. To meet that demand, a whole new industry is being developed from the ground up!
With all the changes happening in the industry, Liberty Leaf wants to help our shareholders keep up with current industry news and market conditions. In this article, we are pleased to share with you the findings from a new report by Eight Capital, a Canadian full-service investment dealer engaged in investment banking, equity research and institutional sales and trading. The company has offices in Toronto, Montreal and Calgary. You can download the full 59-page report, The Value Case for Investing in the Cannabis Sector here.
To fully appreciate the value case for investing in cannabis, you to have understand several factors: knowledge of the legal climate in both Canada and the U.S.; awareness of developments in cannabis cultivation and distribution; and knowledge of the different cannabis forms and components, e.g., such as flowers, concentrates, edibles, cannabidiol (CBD), tetrahydrocannabinol (THC) and terpenes.
As just one example of its detailed findings, The Value Case for Investing in the Cannabis Sector shows you how LP share price performance has accelerated since June:
In introducing its report, Eight Capital states:
“We believe that over time the cannabis sector will grow into similar valuations as comparable sectors due to legalization being probable, the role the LPs will play in supply, and the cost of capital decreasing as the industry is legitimized…
“Longer term, the involvement of larger, better capitalized firms in the tobacco, consumer products, and/or retail sectors is possible once the federal and provincial retail frameworks are established. This could lead to one or more monetization events for LPs in the future as larger firms may choose to acquire their way into the market. We still view the largest Health Canada LPs as the best way to play the sector.”
To explain the potential boom in the cannabis sector, The Value Case looks at shared industry features and comparable booms that occurred in such fields as television, cable TV and broadband Internet, automakers and even specialty coffee. The report also considers how the boom will affect the alcohol industry and compete with opioids, as well as commenting on different taxation approaches in Canada and the U.S.
Here’s one of several key take-aways: Eight Capital projects the value of cannabis investments in Canada will reach $3 billion in the medical market and a $6 billion in the recreational market by 2024.
If you are investing in or considering cannabis stocks for your portfolio, you absolutely should read The Value Case for Investing in the Cannabis Sector.