In this edition of "Rising High," The Fly conducted exclusive interviews with Bruce Linton, chief executive officer of Canopy Growth (CGC), a Canadian-based cannabis and hemp company, and Paul Benhaim, chief executive officer of Elixinol Global (ELLXF), an Australian-based diversified portfolio of hemp and cannabis companies. In the interviews, Linton and Benhaim discussed the companies, competition, legalization, and more. Here are some of the highlights:
COMPETITION: Following Canada’s legalization, Benhaim said Elixinol has seen the number of cannabis companies in Canada grow significantly but “mainly in terms of market cap rather than actual revenues and capabilities.” He said Elixinol will look to differentiate itself in 2019 by investing in more mainstream marketing and advertising. “To take more retail space, we focus very much on our wide distribution model,” he said. “We will be focusing more on our higher margin branded product sales.” Meanwhile, Linton said he has not really seen competition ramping up. “The gold rush which we’re in has attracted a great number of people who are hoping to find a chunk of gold so they can do what they actually like, but they don’t like digging for the gold,” he said. The CEO added, “There are far more companies existing in our sector, but there are far fewer businesses.” Linton said Canopy Growth has a different value proposition from others in the space due to its scale. “The reason we’re going to continue to accelerate and gain market share is that we’re interested in the outcomes the plant can create and we do everything at scale,” he said.
LEGALIZATION: When asked which country might follow Canada’s lead in legalization, Benhaim said, “I don’t have a crystal ball so I really don’t know.” While the CEO said he has seen more countries moving to the space, he believes the hemp industry will be more important than recreational marijuana legalization. Elixinol believes “more people want benefits from these products without getting high,” Benhaim said. Linton said he expects countries in Europe to follow Canada’s lead as they have good jurisdiction and people working on regulation within the governments. Linton said he does not have a current projection on U.S. legalization. “It’s an impossible riddle. It happens when it happens,” he said. “Don’t worry about it, prepare for it.”
CHALLENGES: Benhaim said he thinks the ongoing challenge for both the industry and Elixinol is the lack of federal clarity around the space. “As that gets clearer, we’ll all be able to have a more secure and strong base to grow,” he said. Meanwhile, Linton said he believes the sector’s biggest risk is “the implosion of actors who aren’t going to be successful.” The CEO said the industry is in a stage where many participants may not have the depth of capital or knowledge to understand the space. “As they die, intentionally or accidentally, and their businesses disappear, many people will feel sort of disconnected from the possibility of the sector,” he said.
OPPORTUNITIES: When asked about opportunities in the industry, Benhaim said the challenges and opportunities are very much connected. “The risks are really the opportunities for our industry to continue expansion throughout the year and the years to come,” he said. The CEO added that he believes the biggest misconception in the industry is that medical and recreational cannabis are the largest markets. “People really need to understand that industrial hemp has many of the benefits, nearly all of the benefits in fact, that those industries offer without the psychoactive ingredient which we believe is more preferable to most people,” he said. “The true growth in this industry really lies in the hemp/CBD dietary supplement space.” Linton similarly said that the challenges of the industry create openings. “Our sector is filled with problems, which are awesome because every time you encounter a problem for which there is no solution, there’s an intellectual property suite to reward you,” he said. The CEO also believes opportunities will come from disruption of categories of current products, he said.
OTHER CANNABIS STOCKS: Other publicly traded companies in the space include Aurora Cannabis (ACB), Aphria (APHA), CV Sciences (CVSI), CannTrust Holdings (CNTTF), Cronos Group (CRON), General Cannabis (CANN), India Globalization Capital (IGC), Tilray (TLRY), ICC International Cannabis (KNHBF), MedMen Enterprises (MMNFF), Biome Grow (ORTFD), MediPharm Labs (MLCPF), Indiva (NDVAF), OrganiGram (OGRMF), Innovative Industrial Properties (IIPR) and KushCo (KSHB).
“Rising High" is The Fly's recurring series focused on cannabis stock news.
Keywords: cannabis, weed, stocks, marijuana, hemp, legalization, CBD, recreational, medical