In this industry, where everything changes and often dramatically and on a dime … it seems like a long time ago but in fact it was only April when Evolve launched the world’s first U.S. focused cannabis ETF … what opportunities are you seeing in the U.S. cannabis sector at this time?
We view the US market as a second chance for investors to be “first” in a developing market. There is a discrepancy in legislation surrounding cannabis in the US and as a result large institutional investors are not yet able to participate. The same problem is preventing large scale M&A activity from bringing larger consumer product companies such as alcohol, tobacco and food giants from buying in. It’s highly unusual for the retail investor to get the first look at an emerging sector, usually it’s the other way round. We think this is tremendously exciting because once the legal uncertainty is resolved we expect far more participation and a rise in valuations for US cannabis companies.
OK … but what about the risks? It is not legal Federally and yes there are some bills in the queue such as ones declaring what is legal at the State level shall be equal at the Federal level … but such bills have some obstacles and hurdles. But let’s “what if” this and assume cannabis is rescheduled Federally and that this happens relatively soon.
What happens to all of the vertically integrated MSO’s? Surely production will move to where it the least expensive? How do you plan for such contingencies and what other risks are there? Brick and Mortar clinics replaced with virtual ones etc …?
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