Canada and Cannabis Legalization: The View from a Cannabis-centric Investment Firm
How big a deal for cannabis sector investors are Canada’s plans to legalize recreational marijuana?
The proposal, unveiled earlier this month by Prime Minister Pierre Trudeau, would make Canada only the second nation in the world, after Uruguay, to completely legalize the retail sale and use of cannabis for adults.
That legalization plan also means Canadian-based cannabis industries can – unlike their counterparts in the U.S., where cannabis remains illegal under federal law – make full use of Canadian banking and financial services.
“The industry has gone from a Ziploc bag with a hoodie on the corner to now where you’ve got publicly listed companies in Canada acquiring assets in the United States using European money,” Scott Boyes, President and CEO at The Canadian Bioceutical Corporation, told Bloomberg in a recent interview.
Other experts express some caution, however, when looking at the Canadian cannabis market and the sudden rush of investors looking to take part in the ‘green rush’ up north.
“I think the valuations are high, and they reflect that there’s an issue of growth and sales opportunities in cannabis companies,” says Scott Greiper, co-founder and president of Viridian Capital Advisors, a New York-based investment bank solely dedicated to the cannabis industry.
Greiper says that Canadian companies have been aggressively raising capital over the past year. 
“They have very healthy balance sheets, flush with cash,” he tells Blunt Network. “And so now they are looking towards U.S.-Canada companies for either acquisitions…or investment opportunities, all in an effort to accelerate growth in the Canadian market, with opportunities for investment growth in the U.S. markets.”
And as more capital is raised in Canada, larger cannabis cultivation facilities are being developed. Greiper believes that Canada will eventually become one of the world leaders in cannabis. “But you have to consider…that Canada is about the size of California when it comes to the cannabis marketplace,” he says. “Ultimately the U.S. will become the leader.”
Greiper also doubts that coast-to-coast legalization in Canada will create any legislative or legal pressure on the U.S. cannabis market.
“The U.S. market is bifurcated,” he notes. “All the legalization issues are happening at the state level, both medical and recreational. There are 29 legal, medical states and of course it’s still federally illegal based on its Schedule One status.”
However, he continues, “if you ever want to appreciate how large the U.S. legal cannabis market can become, in terms of the share of the legal cannabis product and the size of investment community around cannabis, just look at what’s happening (in Canada).”
Greiper praises the Canadian government for its well-thought-out roll-out of cannabis legalization.
“And the fact that it is a federally-legal market means that there is a lower level of risk to invest there, than having to deal with the uncertainty of our Attorney General here…or the Trump Administration,” he continues, “where it is relatively unknown how the administration’s going to pursue or limit the rollout of recreational cannabis at a state level in the U.S.”
Despite the political uncertainties in Washington Greiper says his firm is confident that the U.S. medical cannabis market is safe, although “we’re not quite sure about the recreational market.”
He also observes that cannabis legalization has become a global initiative.
“I think the genie is out of the bottle,” he says. “States and governments can roll out legal cannabis programs and have a regulated market, a relatively safe and secure consumer market. And anarchy is not breaking out in countries and states that legalize cannabis. So I think the facts on the ground so far are overwhelmingly positive, from the economic and social and legal perspective.”
