Prepping for recreational Cannabis
In preparation for the expected legalization of recreational cannabis in Canada, Canopy Growth’s (WEED) chair and CEO Bruce Linton stated, “Success in future global medical markets and the recreational cannabis market in Canada will depend not only on capacity but on strong execution and securing supply agreements with the provinces today.”
The supply side
During 3Q18, Canopy Growth increased its inventory and biological assets to a value of 108.3 Canadian dollars from 56 million Canadian dollars in 3Q17. The company stated that it continues to scale inventory to meet the rising demand that will likely result when cannabis is legalized in Canada later in 2018.
The demand side
During the 3Q18 earnings release, Canopy Growth announced the following supply agreements:
- The company stated that it signed a multiyear MOU (memorandum of understanding) to supply up to 1,000 kilograms per year of cannabis to the province of Prince Edward Island.
- The company stated that it signed a letter of intent to supply 12,000 kilograms per year to the province of Quebec.
With investment activities in the cannabis sector ramping up, Canopy Growth and other players (HMLSF) such as Cronos (PRMCF), MedReleaf (MEDFF), Aphria (APHQF), and Aurora Cannabis (ACBFF) will continue to make investments. As for Canopy Growth, the company stated that it had “approximately $400 million cash on hand to fund domestic and global expansion.”
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