With Canada legalizing recreational marijuana in October, the coming year could bring the mainstreaming of cannabis on a global scale—and with it, solid investment opportunities.
According to research from the Canadian Imperial Bank of Commerce, the cannabis industry in Canada alone is expected to grow into a multibillion-dollar sector, reaching C$6.5 billion by 2020. Bloomberg reports that cannabis companies listing on Canadian stock exchanges currently have a combined value of $32 billion.
Wall Street has taken notice.
“The well-capitalized cannabis industry has been evolving rapidly and looks to address a far larger (market) than we had originally forecast,” says Wall Street analyst Vivien Azer of Cowen.
“Canada’s move to legalize cannabis across its 10 provinces is the first step in establishing marijuana as a key functional ingredient that will disrupt a group of consumer product categories collectively worth up to $500 billion,” Azer adds.
“There’s no excuse for Canada to miss its opportunity to become a global player in the cannabis industry”, agrees Ryerson University instructor and cannabis business expert Brad Poulos. “There are over 30 countries that have now legalized medicinal cannabis.”
Accordingly, companies around the world have been positioning themselves for what appears to be a lucrative new dawn—while potential startups are looking for venture capital—something Hillcrest Merchant Partners knows a thing or two about.
The Toronto angel investment firm specializes in early-to-mid market growth companies in industries such as cannabis, electric metals, blockchain, mining, gaming and tech. It also advises companies with growth potential.
Hillcrest Merchant Partners’ co-founders and managing partners Donato Sferra and Mark Attanasio are always looking for game-changing companies that have the potential to transform industries—while researching growth trends.
“Trends are important and when people talk about trends, we think from a macro level,” Donato Sferra explains. “When we think about macro trends that excite us one is the legalization of cannabis. A lot people thought we were crazy, that cannabis legalization is a crazy thing. The cannabis trend is something that we are really excited about for a whole bunch of different reasons.”
When it comes to cannabis, the two have experience with some of the leading companies. “We became involved with small start-up companies six years ago and now they are multi-billion dollar companies that are branching-out to other parts of the world and do some pretty incredible things,” Donato Sferra adds. If you are thinking about tapping into the cannabis market, Toronto’s Mark Attanasio outlines the key steps in securing venture capital: “Display that you have done extensive due diligence. It is critical to back up your pitch with data-based, industry-relevant metrics. And be sure to include revenue potential and the capital you will need to obtain your projections.”
Mark Attanasio points out that not all venture capital firms are alike or have the same investment philosophy. Some specialize in one arena, like green technology. Others only want startups that sell into Fortune 500 companies. “Study them through their websites and the business media to ensure a good match,” he advises.
Ultimately, it comes down to a great idea and great management, Sferra says. “People talk about money, which is obviously important, but money is really a commodity and isn’t necessarily a differentiator.”
Whether you are looking to invest in cannabis, tech or energy—or if you dream about establishing your own company, “It’s really about bringing the right team together to help the idea come to fruition,”
About Carson Derrow
