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Canopy Growth: Perfectly Positioned in Canada’s Market

Ryan Allway

January 6th, 2016

News, Top Story

The Canadian cannabis industry is poised to become a massive multi-billion-dollar market over the coming years. After the Canadian government implemented the Marihuana for Medical Purposes Regulations (MMPR) back in 2013, incoming Prime Minister Justin Trudeau promised to introduce a more widespread recreational marijuana program that would make Canada the second country in the world to fully legalize the drug after Uruguay’s landmark decision in 2012.

While the actual implementation of the program could take some time, given Trudeau’s prudent approach to crafting the right legislation, Canada will become the first G20 nation to develop a recreational program that is controlled, taxed, and safe for consumers. Many other countries considering programs of their own will likely look towards Canada as a model for their own programs that may be rolled out over the next decade.

In this article, we will take a look at Canopy Growth Corporation (TSX-V: CGC) (OTC: TWMJF) and why it may be best positioned within the burgeoning industry.

Significant Growth

Health Canada estimated that the legal market for medical marijuana under the MMPR program would surpass C$1.3 billion by 2020. When these estimates were created, patients were only permitted to purchase dried cannabis flowers to smoke. The regulatory body agreed to permit oils and extracts back in August, which could dramatically expand this market to include patients that may have been hesitant to smoke marijuana.

The market for recreational legalization should be significantly larger than the medical side of the business at between C$2 billion and C$5 billion per year, according to industry analysts. With recreational marijuana taking off south of the border in the United States, these sales could expand over time as the drug becomes more mainstream.

With the limited number of approved licensed producers, investors have relatively few options to take advantage of the industry’s massive growth. Only a handful of these producers are publicly traded, including OrganiGram Holdings Inc. (TSX-V: OGI) (OTC: OGRMF), Supreme Pharmaceuticals Inc. (CSE: SL) (OTC: SPRWF), and one of the first and largest producers in the space, Canopy Growth Corporation.

Uniquely Positioned

Canopy Growth Corp. – formerly known as Tweed Marijuana Inc. – recently completed the acquisition of Bedrocan, raised about $22 million in growth capital, and extended its licenses to produce dried cannabis under Canada’s MMPR. During the second quarter, the company reported revenue that increased 44% sequentially to $2,466,121 with year-to-date sales that reached $4,176,278 and gross margins of 62% for the quarter.

In August, the company acquired Bedrocan, an MMPR licensed producer, to bolster its presence in the burgeoning medical cannabis industry. The company’s standardized, pharmaceutical-grade product line is a direct extension of the product grown in the Netherlands for more than a decade and used in medical trials. Given its consistent product line, the medical community has embraced its products for reliable titration and dosing of patients.

The new acquisition complements Tweed’s existing products that may be well suited for the new recreational market with management’s focus on patient advocacy. During the second quarter, the company spent approximately $872,352 on branding, outreach, and education costs, having visited more than 10,000 doctors to date. These brand investments have also made its product broadly appealing and recognizable within the new industry.

During the second quarter, the two companies sold 319,000 grams at an average price of $7.54 per gram to more than 7,300 patients. These figures are likely to expand over the coming years as it reaches new medical marijuana patients and potentially recreational patients.

Looking Ahead

Canopy Growth Corp. is uniquely positioned as one of the first and largest licensed producers of medical marijuana under the MMPR program. With the upcoming legalization of recreational marijuana under Prime Minister Justin Trudeau, the company has developed the scale, funding, and branding to take advantage of growth opportunities in both markets.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.

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