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Marijuana is Canada's New Gold

Written by Monica Savaglia
Posted March 19, 2018 at 8:00PM

There are a lot of changes happening right now for a particular industry... and they’re some pretty big changes.

They could affect a lot of lives and bring a lot of money to the pockets of investors.

A lot has happened with the marijuana industry. One of the biggest changes is that it’s even an industry at all.

For years, marijuana was a hush-hush topic. It was a drug that was considered to be harmful.

Some people lost their jobs or couldn’t even get a job because of the drug. It was life changing, but mostly because of the stigma behind it.

However, a lot has changed in the past two years. Some really big examples can be seen with government legislation and the medical industry.

Canada’s public health agency, Health Canada, reported that the number of people in the nation who were registered to use medical marijuana reached 235,621 by the end of September 2017. That’s a 40% increase from the end of March 2017.

That means 0.6% of the country’s population of almost 37 million were using marijuana for medical reasons. That might not seem like a lot to you, but it’s important to recognize that it's steadily growing.

And as Canada aims to legalize recreational use this year, we could see a substantial growth in marijuana usage as a whole.

Back in 1995, a year before California became the first U.S. state to legalize medical cannabis, a Gallup poll recorded that only 25% of Americans supported the idea of making weed legal.

That has changed significantly. This past October, a Gallup poll showed that about two-thirds of the respondents were in favor of full legalization. This was an all-time high for Gallup’s 50-year-old survey.

Meanwhile, the U.S. Congress is making it exceptionally hard for legalization throughout the country. It’s still considered a Schedule 1 substance, meaning it’s equal to illegal drugs like LSD and heroin and is said to have no recognized medical benefits.

The U.S. is missing out on a lucrative opportunity because of its stubbornness when it comes to legalizing cannabis.

However, Canada isn't wasting any time. It legalized medical marijuana in 2001 and had Health Canada oversee licensing and regulation with the substance.

Now, if all goes well, Canada could be the first developed country in the world to approve recreational use for marijuana. Recreational cannabis could officially launch in August or September of this year.

A Market Full of Optimism

Investors and companies have begun to see the incredible potential and opportunity associated with cannabis.

As I mentioned earlier, Canada is in the process of legalizing recreational marijuana in 2018. This news has had four of the largest publicly traded firms surging — investors want in.

The combined market value of the four largest publicly traded firms has reached more than C$1 billion. Together, all marijuana companies on Canadian exchanges have a combined market value of about C$32 billion.

Jason Zandberg, an analyst at PI Financial in Vancouver, Canada, had this to say about the current market:

Every hot equity cycle tends to create a pile-on effect. Individuals will enter a hot new space looking to capitalize on a growing demand, in this case legalized cannabis.

Investors and companies are looking to marijuana for a new way to earn a lot capital.

If and when full legalization happens in Canada, it’s going to bring a huge increase to the market’s capital potential. Not to mention, there are going to be a lot of companies that want to be a part of this booming industry.

Mining Companies Are Trading in Gold for Weed

For many years, Canada has been best known for its mining and oil and gas sectors, which comes as no surprise given the country’s terrain.

Canada has been able to rely on these sectors to bring in different types of investing opportunities.

However, with the demand for marijuana steadily increasing, these resource companies are looking to marijuana for new opportunities for their businesses.

There are a significant number of companies that began in the mining or oil and gas sectors and have now shifted towards Canada’s marijuana industry.

An astounding 40 companies have already shifted towards weed. About half of Canada’s marijuana firms first started in the resource sector and then converted to cannabis through reverse takeovers and spinoffs.

A former wind power developer, Jay Wilgar, started a medical marijuana company with his friend Travis Kanellos.

Both of them wanted their startup to go public, so they were weighing their options.

One of their advisers threw out the idea that they partner with Newstrike Resources Inc.

At the time, Newstrike Resources was a Toronto-based firm that was mining gold in Ontario and Wyoming, but it wasn’t having much luck.

“I think they had given up on what they were pursuing from a mining point of view,” Wilgar said.

This is happening to a lot of resource companies in Canada. Companies like Newstrike Resources are realizing it would be more profitable to be part of the marijuana industry rather than spend a lot of money on mining and not actually earn a profit from that particular resource.

The partnership also worked out perfectly for Wilgar and Kanellos. They wanted to partner with a company that understood capital markets — and that’s exactly what they got.

Using mining companies as a way to publicly trade makes it easier and faster to list on the public exchange. Companies don’t have to undergo a full securities commission review or file a prospectus, which is what they would have to do for a traditional initial public offering.

These kinds of partnerships are being monitored. Canadian exchanges demand that companies present a viable plan to sustain operations and also submit to a review.

The potential is obvious. Everyone wants a piece of the action, and you can’t blame them.

If you want to learn more about how you can be a part of the marijuana industry, check out this exclusive presentation on medical marijuana.

New opportunities and changes are presenting themselves when it comes to investing in marijuana. You don’t want to get left behind as this industry skyrockets.

Until next time,

Monica Savaglia

Monica Savaglia

Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.

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