RE:Canada Is Headed Towards An Epic Glut Of Marijuana These shorts need a Cannibas 101 education on why the ramp up of supply not only for the huge diverse markets in Canada, but more importantly globally.
First, Canopy is probably the most diversified among all the LPs and stands to benefit from having so many irons across so many fires (i.e. emerging markets) both here in Canada and abroad.
Bruce himself talks openly about the need to see Cannibis for what it is, as an ingredient.
From his recent interview with Midas Letter:
"It wasn’t so much his opinion that refined products (as opposed to smoked bud itself) will mark a broader macro-shift within the cannabis industry. It was Bruce’s comments on the future of cash crop inputs which threw a wet blanket on the idea that marijuana is somehow ‘different’.
Specifically, the Canopy CEO believes companies setting up cannabis grow-ops could soon find themselves in similar positions as most other agricultural commodity producers. That is, providing low-margin cash crops to companies which have invested in the CAPEX to refine them. As Mr. Linton elucidates, “Low cost of production is a big deal, but (cannabis is) only an ingredient. It’s about as exciting over the next three, or four, or five years as the price of sugar in the context of any finished good that uses sugar.”
After Bruce Linton’s comments yesterday, perhaps the more apropos question is “What is the enterprise value of non-diversified cannabis producers with marijuana cash crops only likely to yield low-to-high single digit returns?”
Conclusion
The answer to the above question is self-evident. It’s also the reason why investors are best served investing in diversified growers with tentacles in other areas. Whether that be delivery systems (i.e. vaporizers, inhalers), medicinal CBD/THC concentrates, supply chain software, or consumer edibles, it’s really a matter of diversify or get run over.
Of course, Canopy Growth has perhaps the best cannabis portfolio around. Because they produce the end-products and grow the crops, they can leverage their production costs in way monolithic growers cannot. Canopy also has leveraging power over other suppliers because they own the technology to refine bulk cannabis into higher-margin refined products. In short, they own the supply chain.
Still, to get back to tonight's short propaganda, let's review the list of Cannibis applications:
For medical, we have cancer, glucoma, HIV/AIDS, muscle spasms, seizures, severe pain, sleep, weight loss, debilitating seizures among a growing list of other applications.
For recreational, we have smoking and vapes.
We're a year out from edibles and beverages.
Finally, what these articles painfully ignore is the big LPs (with Canopy clearly leading the way) are gearing up to become global suppliers for Cannibas around the world as the green wave spreads and countries legalize and/or embrace medical marijuana as a legitimate form of medicine.
Increasingly the investing community needs to see and call out the propaganda and fear myths from the short community.