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This Marijuana Stock CEO Recently Revealed His Plans to The Motley Fool

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This Marijuana Stock CEO Recently Revealed His Plans to The Motley Fool

Canopy Growth Corp. (NASDAQOTH:TWMJF) is the largest pure-play cannabis company on the market. It operates in six countries, but it gets the lion’s share of its sales from serving Canada’s medical marijuana market.

Recently, Canopy Growth CEO and founder Bruce Linton sat down to speak with The Motley Fool’s Kristine Harjes. It’s a fascinating conversation, and I recommend everyone tune into this conversation in its entirety. In it, Linton explains how his company is preparing to capitalize on global marijuana legalization, tap into Canada’s fast-approaching recreational marijuana market, and validate the use of marijuana as medicine.

Marijuana plants grow in containers inside a Canopy Growth greenhouse.

IMAGE SOURCE: CANOPY GROWTH.

Legal marijuana is an international phenomenon

Linton doesn’t have plans to enter the U.S. market anytime soon. Instead, he’s focusing Canopy Growth’s attention on the massive opportunity in Europe and elsewhere.

In part, Linton’s reluctance to sell marijuana in the U.S. comes from the stock’s being listed on the Toronto Stock Exchange. That exchange’s rules prevent companies from violating U.S. federal laws if they want to remain listed on it. According to Linton, however, the listing issue is only one of “probably 20” reasons why he’s not going into the U.S. until the federal government gives an OK.

Linton believes avoiding the U.S. market provides Canopy Growth with a competitive advantage when it comes to courting officials in other global markets, such as Germany. He has a point. It could be hard convincing overseas regulators that his company will play by their rules if it isn’t playing by the federal rules in the United States.

The market outside the U.S. and Canada that Linton appears most intrigued by is Germany. Increasingly, European markets are opening offices of medicinal cannabis, and Germany is the largest European market that’s establishing a medical marijuana marketplace. Currently, Germany has issued licenses to companies, including Canopy Growth, allowing them to import and distribute cannabis. It’s yet to issue licenses to grow marijuana, but that’s expected to change soon. According to Linton, Canopy Growth is doing whatever it can to make sure that it has a good shot at getting one of them.

A person holds a marijuana cigarette in front of a Canadian maple leaf.

IMAGE SOURCE: GETTY IMAGES.

Canada’s recreational marijuana market’s going to be big

Canopy Growth makes most of its money serving the Canadian medical marijuana market, but the recreational market should be open for business in 2018, and that market could significantly increase the number of marijuana consumers, according to Linton.

Currently, Canadian dispensaries are serving over 200,000 clients who have medical marijuana registrations. That’s a big and healthy market that’s allowed Canopy Growth to deliver $44 million in revenue over the past 12 months. Linton speculates, however, that the medical marijuana market could be much bigger. He thinks the number of people interested in buying medical or recreational marijuana could reach 400,000 by the end of 2018.

If he’s right, then a lot of money is going to be up for grabs. To make sure Canopy Growth wins its fair share, Linton’s scaling up growing facilities and investing in marketing and sales. As part of this strategy, it’s gobbled up competitors, including Mettrum, to consolidate market share. Those efforts have turned Canopy Growth into the market share leading manufacturer of marijuana in Canada, positioning it to meet demand from recreational users.

To make sure it reaches as many consumers as possible, it’s created an e-commerce store to sell all of its brands. It’s also inked a partnership with beer, wine, and spirits giant Constellation Brands (NYSE:STZ). In addition to securing additional capital by selling Constellation Brands a 9.9% ownership stake, Canopy Growth also gains valuable marketing expertise it can leverage to accelerate its business. Constellation Brands’ arrangement also includes its acting as Canopy Growth’s global adult-beverage partner, so plans appear to be in the works for cannabis-infused beer or spirits.

Rows upon rows of marijuana are growing inside a grow room.

IMAGE SOURCE: GETTY IMAGES.

Leveraging a big user base

Linton jokes that the reason that there aren’t proven clinical efficacy for medical marijuana is that criminals don’t usually sponsor trials. Now that marijuana is emerging from the shadows, Canopy Growth thinks there’s an opportunity to leverage knowledge accumulated from Canada’s medical marijuana users.

The company hasn’t publicly disclosed all the healthcare indications it’s researching, but one of the first areas it’s studying is sleep. There are plenty of opportunities to expand its marijuana research, however, given that there is anecdotal evidence supporting the use of marijuana in cancer, epilepsy, anxiety, depression, and pain patients. Canopy Growth is also investigating the use of marijuana in pet health too.

Overall, Linton’s pretty optimistic about marijuana’s worldwide business potential, but investors should recognize that his role is undeniably going to make him a bit biased. After all, no one wants to invest in a company run by someone who isn’t passionate about the product’s potential! Nevertheless, the marijuana marketplace is evolving quickly, and some companies will be winners. Linton’s got a good grasp on the opportunities and risks, so Canopy Growth could certainly be one of them. 

Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Original Article at https://www.fool.com/investing/2017/12/10/this-marijuana-stock-ceo-recently-revealed-his-pla.aspx

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[Winner] November 1, 2018 Giveaway (Episode 2)

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Brady Shepherd wins our 2nd Rate.Review.Win! Giveaway!

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Automatic Weapons to host November CannaMaps Giveaway!

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Automatic Weapons | CannaMaps

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Will mega marijuana deal get approval in New York?

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Will mega marijuana deal get approval in New York?

ALBANY — The planned merger of two of the nation’s largest cannabis companies is being closely watched by industry insiders in New York who are wondering just how state regulators are going to handle an acquisition that, on its face, seems to violate state law.

MedMen Enterprises and PharmaCann announced the $682 million deal to stockholders last week, noting that the acquisition would create the nation’s largest cannabis company with licenses to operate 79 facilities across a dozen states, including two cultivation facilities and eight medical marijuana dispensaries in New York.

The only catch?

New York Public Health Law, which allows marijuana for medical use only, prohibits a registered marijuana organization from owning and operating more than four dispensaries in the state. The provision was designed to prevent market domination, even as some argue it limits access for patients who must travel to far-flung destinations to get their medicine.

In response to that concern, the state last year doubled the number of medical marijuana organizations allowed to operate statewide from five to 10 — a move that also doubled the number of allowed dispensaries statewide from 20 to 40.

The four-dispensary-per-company limit remains, however.

MedMen, a Los Angeles-based company known for its high-end marijuana stores, would acquire the assets and licenses of Illinois-based PharmaCann in the stock deal, though it must gain regulatory approval from local and state authorities in each of the markets where those assets are held.

“We are in talks with the regulators in all of the jurisdictions impacted by this acquisition, including New York,” said MedMen spokesman Daniel Yi. “The first step in any acquisition is for the two parties to agree to the terms and enter into a binding contract. Then you go seek approvals from all the relevant regulators. We have begun that process now.”

New York’s Department of Health, which oversees the state’s still-nascent medical marijuana program, said Monday that any merger proposal submitted to the agency for approval must be in compliance with state law. There are also requirements regarding ownership changes, said department spokeswoman Jill Montag.

“Regulations prohibit a registered organization from changing the composition of its ownership without prior written approval of the Department of Health,” she said. “MedMen and PharmaCann do not have approval from the department to conduct this transaction, and at this time the department has insufficient information to determine if approval can be granted.”

MedMen said it expects the transaction to close within six months to a year. It declined to speculate on its plans should New York reject the deal.

“It would not be proper for us to get ahead of the process,” Yi said. “We are currently in talks with regulators and we feel confident about the outcomes.”

In a news release issued Monday, MedMen said that it will use “commercially reasonable efforts” to transition licenses to a third party if it is unable to gain regulatory approvals within a two-year time span, with proceeds going to the company and its investors.

Founded in 2014 in Oak Park, Ill., PharmaCann was one of the five original organizations registered to operate grow sites and retail stores in New York, which went live with its medical marijuana program in January 2016.

The firm quickly became a major player in the industry, and today is considered one of the nation’s leading providers of medical cannabis with operations in Illinois, New York, Maryland and Massachusetts, and planned expansions in Michigan, Ohio, Pennsylvania and Virginia.

Its facilities in New York include a cultivation center in Orange County and dispensaries in Albany, the Bronx, and Central and Western New York.

MedMen, meanwhile, had become a major player of its own, primarily out west, selling both recreational and medical marijuana. It entered the New York market last year when it bought out Bloomfield Industries, one of five original organizations licensed to operate in the state.

But it didn’t garner much attention until this past spring, when MedMen opened its first dispensary in Manhattan on pricey Fifth Avenue. The move appeared to be a gamble that New York would soon legalize recreational marijuana, since the state’s tightly regulated medical marijuana program is small by industry standards and unlikely to generate sizable revenues without significant expansion.

Indeed, New York appears poised to jump on the recreational bandwagon. Gov. Andrew M. Cuomo in January ordered a study into a regulated, adult-use program, and by June the Department of Health concluded such a program would have more positives than negatives.

A task force is currently researching and crafting legislation for consideration in the upcoming 2019 legislative session, and public hearings on the matter are being held statewide.

MedMen said Monday that it has consistently advocated for full legalization of marijuana, as well as an increase in the number of licenses and dispensaries.

“We believe that legal, regulated cannabis leads to safer, healthier and happier communities,” Yi said.

Original Article at https://www.timesunion.com/news/article/Will-mega-marijuana-deal-get-approval-in-New-York-13311377.php

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