When Canada announced plans to legalize adult-use cannabis, the world’s press seized on how it would mark a first among the G7 group of industrialized nations.
But behind that eye-catching headline, an even bigger one is emerging. And it tells the story of how Canada’s progressive approach is helping transform a talented generation of home-grown companies into tomorrow’s global leaders.
Canada’s move to legalize speaks directly to Casa Verde Capital‘s thesis, premised on the belief that the cannabis industry will be among the most compelling investment themes of our generation.
Cannabis is fast-becoming a global market, with Australia, Germany, Israel and other countries legalizing medical cannabis, thus opening up new and big domestic markets fed by international trade.
Israel and Canada have already established dominant positions in the cannabis research sector, grabbing market share with billion-dollar companies in a space where U.S. companies could and should be leading the way.
Bloomberg laments how the United States is effectively “giving away” the medical-marijuana industry, and it’s hard to disagree. How else to describe a situation in which Israel has a government-sponsored medical-marijuana program with well over 100 clinical trials held there to date, while in the United States the entire supply of FDA-approved, research-grade marijuana is limited to a 10-acre plot on the University of Mississippi campus?
Fortunately, America’s missed opportunities in the budding cannabis pharmaceutical space don’t negate other significant gains at home, like the recent opening of the legal cannabis market in California, the world’s sixth largest economy.
Research released this month by Cowen & Co projects that the value of the entire U.S. market will reach $75 billion by 2030, assuming federal legalization.
Meanwhile, a slew of very recent (and seemingly significant) U.S. political developments could portend a dramatic change in the prevailing prohibitionist headwinds. Consider that the following events all occurred in just the past week or so:
- President Trump assured Sen. Cory Gardner (R-Colorado) his administration would protect states’ rights concerning cannabis
- New York Gov. Andrew Cuomo laid the groundwork for statewide cannabis legalization
- Former House Speaker John Boehner joined the advisory board of Acreage Holdings, a multistate cannabis operator
- FDA advisory committee approved CBD-based epilepsy drug by GW Pharmaceuticals
- Senate Minority Leader Charles Schumer plans to introduce a bill to deschedule marijuana decriminalization
While these developments are certainly promising and worth keeping an eye on, for now we’ll continue to employ our ancillary investment strategy.
Our approach already provides us with considerable visibility in our home market. Based in Los Angeles, Casa Verde focuses on companies working exclusively in the ancillary cannabis industry. That’s akin to investing in the picks and shovels during the gold rush.
This approach means that the companies we invest in can scale quickly across state lines whereas plant-touching businesses in cultivation, distribution and retail can be limited in geographic scope due to the various local license requirements.
Published: May 07, 2018
Founder & Interim Editor of L.A. Cannabis News