One Of The Most Significant Components Of A Companys Valuation Is Its Licence.

investors seeking exposure to the market north of the border. We can only finance things that are legal and the consumption of marijuana in Canada today is not legal. Medical marijuana is, but through our process and diligence, we cant take the risk that it could turn out to be recreational, said Daniel Barclay, head of investment and corporate banking at BMO Capital Markets. No matter how much money we could make its not worth the risk or the issues. Related Cannabis producer Tweed Inc. triples production space with purchase of former Hershey factory The reluctance among big banks to do business with marijuana players is indicative of a lack of understanding of the business, said Neil Maruoka, lead marijuana sector analyst at Canaccord Genuity. One of the most significant components of a companys valuation is its licence. You are not going to risk losing that by selling into an illegal market. Those risks havent stopped the big banks from eyeing future opportunities, meeting with players and waiting to pounce once the legal recreational market is in place. The market is set to grow as just 2 per cent of licensed producer applications have been approved, with more expected ahead of the coming recreational market, Maruoka said. At least eight Canadian marijuana stocks had returns in the triple digits last year, sparking talk about a bubble. Maruoka said that talk is overblown. When we look at the valuations across the board, its beginning to price in the rec market, undoubtedly the rec market opportunity is so huge and it certainly hasnt priced in 100 per cent of that as of yet. While the medical market is quite small, currently about 100,000 patients, it has the potential to reach about 700,000, Maruoka said.

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