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cannabis to a lower classification opening the door not only for more products and treatment options but also for more R&D including clinical trials. Per this July article in Forbes, the DEA needs to reclassify the CBD Compound as a prerequisite to the launch of the GW Pharma FDA approved drug Epidiolex.
Constellation Brands Inc (STZ) announced it was increasing its stake in the World’s Largest Legal Cannabis Producer (as measured by Market Capitalization) by 28% to take a 38% stake in The Canopy Growth Corporation (NYSE:CGC; TSX:WEED). I will be using US dollars for this discussion although some of the references have it noted in Canadian currency. Warrants included in the deal could allow for Constellation to own just over 50% of Canopy for about another $3.5B all things being equal. Why is this significant? Prior to this announcement, Canopy Growth’s market valuation was hovering in the $4.7B range and the price tag of this 28% increase in ownership? $3.8B is what Constellation paid but that also includes the aforementioned warrants.
Canopy Growth is the typical target of hucksters, influencers, hobbyists looking for the spotlight, and short sellers – using bulletin boards, social media, and platforms such as subreddit and Seeking Alpha. If a market cap of $4.7B was considered excessive how can they reconcile or justify a $3.8B price tag for 28% and to spend another $3.5B for another 13% (the warrants)? In other words, the entire hypothesis about Canopy’s valuation being too high has fallen apart and should be assigned the credit it deserves. Since day 1, CannaInvestor Magazines (USA and/or Canadian) have:
w Had Canopy at or near the top of stock lists since day 1.
w Stated that this is not dot.com v2018 because it is the conversion of an already existing multi-billion dollar black market into a legal regulated market. Yes, some countries are more progressive than America is at this time but we also know the current President can change direction on a dime … regardless, a return to progress is likely weeks away to at most just over six years away and that is a relatively short time frame indeed. Especially when you consider when that happens it will not be the ground floor but rather lifting the curtain on existing sophisticated industries in several states.
As preposterous as this sounds, this is exactly what the United States is alleged to be doing with respect to travellers to the USA from countries were cannabis is legal (Canadians specifically at this time) and where the traveller used cannabis legally and where the traveller does not have legal cannabis on their possession while travelling. Other reported cases involved officers of ancillary companies where the company has no contact with the physical plant. A few articles on this phenomenon follow and simply click where it says to “Click Here”.
w U.S. reportedly issuing lifetime travel bans for anyone even remotely connected to Canada's legal cannabis industry (Click Here).
w Executives, professionals connected to cannabis industry avoid travel to U.S. for fear of lifetime ban (Click Here).
w Canadian banned from U.S. over pot use a 'ridiculous situation' says Goodale (Click Here).
There are countless other articles that you can look up. As more countries legalize cannabis that would mean the list of international travellers making the USA their vacation destination of choice will decline substantially let alone business travel. But such an isolationist practice may be seen to some as consistent with the increased rhetoric and action we have seen with respect to, for example, immigration and trade.
The Dow Jones and other stock markets are at all time highs and the Economy appears to be overall humming along nicely. This prosperity is due to decades of astute economic and fiscal policy that has been fine tuned and tweaked over the years. It is difficult to objectively articulate that alleged unfair trade deals have done harm by countries such as Canada where the USA enjoys a trade surplus. Regardless of one’s politics, such action and rhetoric can only be viewed protectionist in nature. That truth cannot be denied or even reasonably debated. The debate may be around free or liberal trade vs protectionism and that is a healthy and fair debate. What does this have to do with the legal cannabis and hemp industries operating within individual states?