The marijuana market in Canada is prepped for additional growth: several companies plan to go public in 2017 since the country's regulations are more favorable, giving investors more options in this growing sector.
Companies are choosing to file their IPOs in Canada because of the more restrictive environment in the U.S., said Michael Berger, founder of Technical420, a Miami-based company that conducts research on cannabis stocks, and a former Raymond James energy analyst. The legal cannabis market expanded significantly during the past year and medical marijuana is now legal in countries such as Australia, Germany, Canada, Uruguay and Colombia. By 2018, Canada's legal recreational cannabis market should generate over $10 billion a year.
"One theme we recognized over the last year is an increasing number of companies listing on Canadian stock exchanges," he said. "These companies are choosing to list in Canada due to better business policies."
The number of registered patients is growing at a rapid pace in Canada as licensed producers continue to find innovative ways to create value for its shareholders. The number of patients is nearly 200,000 and growing 10% on a month over month basis, Berger said. The liquidity in the market is also beneficial for investors.
"In Canada, companies can use bank accounts, claim taxes, and write off business expenses legally unlike the U.S. where cannabis companies cannot do any of that and are frequently switching banks on account of their account being closed due to the focus on the cannabis industry," he said.
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