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Wednesday, 02/14/2018 3:56:44 PM

Wednesday, February 14, 2018 3:56:44 PM

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Big Canadian Banks Finally Break the Ice in the Marijuana Business
9:00 AM ET 2/12/18 | PR Newswire
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LOS ANGELES, February 12, 2018 /PRNewswire/ --

FN Media Group Presents USA News Group News Commentary

USA News Group - After sitting on the sidelines for quite some time, it appears that the big Canadian banks are willing to get into the cannabis business with BMO announcing participation.

It's positive new for the cannabis industry that is looking to expand in advance of legalization.

Companies heralding the news in the grower and producer space include Aphria (TSX: APH) (OTC: APHQF), Aurora Cannabis (TSX: ACB) (OTC: ACBFF), AmeriCann, Inc. (OTC: ACAN) and MYM Nutraceuticals Inc. (CSE: MYM) (OTC: MYMMF).

As Marijuana legalization sweeps across the globe, Canada is arguably at the head of the pack. Since 2001, medical marijuana has been legal in the country and a bill that would legalize recreational use of the drug is currently in advanced stages of enactment.

Leaders in the producer group that are moving quickly to deal with demand include Aurora Cannabis (TSX: ACB) (OTCQB: ACBFF), Aphria (TSX: APH) (OTCQB: APHQF), and AmeriCann, Inc (OTCQB: ACAN). These companies are already licensed legal growers of cannabis and experiencing massive demands from new markets.

Beyond the Licensed Producers (or LPs) in the grower/producer end of the business, companies are combining production with product development, sales and distribution. MYM Nutraceuticals Inc. (CSE: MYM) (OTCQB: MYMMF), is one of these, with three sizeable growing operations under advancement combined with multi-brand development right through product distribution.

BMO TAKES THE LEAD

So far, financial players have been relatively slow to react to the immense opportunities that exist in the burgeoning marijuana industry. Large banks have been typically adverse to providing capital to even the medical marijuana operations.

However, these institutions may be finally turning up to the party, with (BMO) the Bank of Montreal leading an equity financing round worth $175 million for Canada's largest licensed producer, Canopy Growth Corporation.

The deal, done in partnership with investment firm GMP Capital Inc., and others like it that are likely to happen in future will give marijuana product firms access to requisite capital for future growth.

The reluctance by financial partners to avail capital to cannabis producers has impeded growth momentum in an industry that is still struggling to gain a foothold in mainstream medical and soon, the recreational industries.

Canopy's deal with BMO and GMP was largely enabled by BMO's private brokers who have long supported Canopy.

Prior to this move, producers have been forced to seek funding from individual investors, venture capital funds, and credit unions among others.

GOOD NEWS FOR ALL PLAYERS

The news has yielded solid optimism among other licensed producers, with Aurora Cannabis Executive VP Cam Battley telling the media that large banks will move in for more equity financing starting this year.

Although there has been no verbal indication to the effect, there is a possibility that Aurora might be looking to secure a deal similar to what Canopy got.

According to Canopy CEO Bruce Linton, the level of stigma that marijuana firms have traditionally faced from banks is debilitating, to the level where simply opening a bank account was nearly impossible a few years ago. He attributed this reluctance to pressure from regulators in US, where attitudes towards marijuana are much more conservative than in Canada.

The fact that Canopy does not operate in the US was therefore a key factor in the company's success with the deal with BMO.

SMALLER MYM NUTRACEUTICALS FEELING THE RIPPLE EFFECT

The effects of positive financing by the "mainstream" is expected to quickly translates to juniors like MYM Nutraceuticals - a company moving up to the field of the major legal producers in Canada.

MYM Nutraceuticals is forwarding three planned facilities; a grow operation in Laval, Quebec which just completed phase one, a joint-venture for a 1 million square foot facility in Casino, Australia and its flagship facility; a 1.5 million square foot greenhouse facility in Weedon, Quebec.

Weedon will be a massive-one of the largest grow operations on the planet. It will house the potential to produce an estimated over 150,000 kg of cannabis per year. That would bring $750 million in revenue to MYM.

In continuity its global strategy, MYM also recently signed a MOU with NEWCANNA S.A.S., a leading Colombian medical cannabis company to form a new joint-venture company.

MYM Nutraceuticals is also diversifying by advancing formulation and production to support branding and distribution of its entities Joshua Tree, MyHemp Skin Therapy, and HempMed offerings.

These subsidiaries develop and sell a variety of cannabis based natural products including custom-made cannabis products with tailored CBD chemistries along with tinctures, concentrates and oils, edibles, vape products and pet care products.

MYM does not currently have any operations in the United States and says it will not engage in that country unless significant changes to the federal laws regarding cannabis are made.

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