Canadian Legalization Opens up Door for International Investments

As cannabis continues to be a major point of discussion in the United States of America, both social and political, the plant was legalized nationwide in the neighboring land of Canada. With recreational legalization having been passed June 19th, the country is set to enforce the law on October 17th, as provincial and territory governments needed more time to prepare for sales. And while the governments are setting up protocols and processes, businesses have realized the potential for investment from both Canadian companies and their U.S. counterparts.

While cannabis remains illegal, federally, for the foreseeable future in the Unites States, some U.S. companies are not afraid to try and get ahead of the competition. Constellation Brands (NYSE: STZ), owner and brewer of Corona and a plethora of other beverage options, announced this August 15th that it has invested a further USD 4 Million in the Canadian cannabis company, Canopy Growth Corporation (OTC: CGC). The money will be used to continue building Canopy into a global company, with leadership believing that the Company’s Canadian platform is already complete and does not require more funding. This leaves Constellation Brand’s investment to be used in an effort to acquire and build assets focused on gaining entry to potential new markets around the world, with the United States of America mentioned.

Constellation’s investment seems proof that major companies are keen to get a foot in the door of this potentially global market. The United States continues to be a major part of the conversation because of the country’s current commercial success in States that have already legalized cannabis, as well as the potential from all the States that have yet to allow sales. Nevada began sales in July of 2017 and in the first 10 months of sales alone, even after a supply shortage and other issues, the State had surpassed USD 433 Million in medical and recreational sales, beating estimates by more than 100%. By comparison, first year sales of cannabis in Colorado amounted to about USD 683 Million, but a big caveat is that Colorado’s population is 5.607 Million people compared to Nevada’s 2.998 Million. The numbers didn’t go unnoticed and companies in Canada are seeing the potential. CLS Holdings USA Inc. (OTCQB: CLSH) recently announced that their latest oversubscribed founding round in Canada raised CAD 13 Million in addition to the USD 5.75 Million raised within the U.S. The money will be used to complete the build out of their Las Vegas based cultivation and production facility in addition to further updating their Oasis Cannabis dispensary location.

With Canada gaining steam and preparing to open up adult-use sales to the public, investments are growing for companies on both sides of the border. In the U.S., as more States pass legislation legalizing cannabis, federal legalization cannot be far behind and companies must start preparing for the possibility which could represent an enormous market.

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