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Sunday, February 09, 2014 2:12:14 PM
Cannabis Innovation. Will Canada Eat Our Lunch?
Posted on January 29, 2014 by Robert McVay
One of the problems with cannabis in the United States is its balkanized legalization scheme. Recreational marijuana is legal in Colorado and Washington, but nowhere else. About twenty other states have legalized marijuana to varying degrees.
But, as everyone knows, marijuana is still illegal under federal law. And that’s the problem.
Because growing, selling, processing and even possessing marijuana is a federal offense, we are not seeing large public (or private) companies getting involved in the marijuana business in the United States.
Why should they?
Gillette spent 750 million dollars developing its Mach III razors. Pfizer spends around $7 billion (yes, that’s with a “b”) on pharmaceutical R&D each year. That kind of money can do amazing things for product development.
But spending that sort of money on developing bigger, better, or cheaper marijuana is right now completely out of the question, at least in the United States.
This is not exactly the case in Canada, where the commercialization of cannabis is moving forward much more quickly. The Deal Law Wire Blog writes of how a number of Canadian companies (including the Canadian arm of a US company) are spending big money on cannabis.
Canada has enacted new federal marijuana regulations that will eventually make marijuana a billion-dollar plus business in Canada. With that kind of money, coupled with federal legalization, it should come as no surprise that extremely well funded companies are getting into Canada’s marijuana industry. The Deal Law Wire (a Canadian Mergers and Acquisitions Blog) writes on this, in its post, entitled, Commercialization of cannabis: new regulations set the stage for $1.3B industry:
With the new regulations set to come into full force on April 1, 2014, companies such as Tweed Inc.(Tweed) and Easton Pharmaceuticals Inc. (Easton) are poised to enter the market as prospective marijuana producers.
Tweed plans to establish a $100-million per year cannabis operation in Smith Falls, Ontario. The company has also recently captured the interest of investor group, LW Capital Pool, which is in the process of acquiring Tweed for listing on the TSX Venture Exchange. Easton, a specialty pharmaceutical company, is in negotiations with an Ontario-based company towards a possible investment or partnership.
The potential market for marijuana in Canada has also attracted investment interest from south of the border. Privateer Holdings Inc, a Seattle-based venture capital firm, has invested millions through its Canadian subsidiary, Lafitte Ventures Ltd., for the production of medical-grade marijuana inside a$3-million, 35,000-square foot facility in Nanaimo, British Columbia. Similarly, CEN Biotech, the Canadian subsidiary of Creative Edge Nutrition, has obtained a ‘ready to build’ letter for a 58,000-square foot production facility in Lakeshore, Ontario.
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