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Trading Lesson: What Investors Must Know for Global Cannabis Market

09/27/2018 1:19 pm EST

Focus: COMMODITIES

Michael Berger

President & Founder, Technical420.com

The nature of cannabis industry has changed a lot in a short period of time and this leaves a lot of questions for investors. Earlier this month, Tilray made headlines after the Canadian cannabis producer surged higher and traded as high as $300, writes Michael Berger.

This move higher caught the attention of mainstream financial media and cannabis stocks have become a major speaking point since then.

The reason why the success of Tilray (TLRY) was so well covered is because it was the first Canadian cannabis company to conduct an initial public offering on the Nasdaq Exchange. Another reason why this new offering generated significant interest is due to the caliber of people involved.

In 2015, Privateer Holdings (which owns more than 70% of Tilray) closed a Series B round of funding and raised $75 million, which included an investment from the Founders Fund, a $2 billion venture capital firm led by Peter Thiel, the co-founder of PayPal and Facebook’s first outside investor.

While Thiel’s Founders Fund was a part of the Series B round, they were not the largest investor in the round. Although many articles reported that Thiel owned more than 70% of Tilray, this is not correct.

A global opportunity

The global cannabis industry is in the early innings of a major growth cycle and new markets are opening all over the globe. In August, Canopy Growth (WEED.TO) (CGC) received a $5 billion (CAD) investment from Constellation Brands (STZ) and plans to use this capital to capitalize on international opportunities.

From Australia to Colombia, Germany to South Africa, new cannabis market are emerging and this is an opportunity that needs to be monitored. Canopy Growth now has the capital to significantly expand and already has cannabis operations on five continents and in 12 countries. This type of leverage is impressive and Canopy is well positioned to see incredible growth for years to come.

A burgeoning opportunity

Going forward, there are a number of factors that will drive the global cannabis market higher. Many eyes are on the United States, which we believe represents the most significant opportunity. California is the largest legal cannabis market in the world following the legalization of recreational cannabis on July 1 and we are very excited by the United States opportunity.

The emergence of multi-state operators in the United States is a major theme and we have been monitoring companies like Green Thumb Industries Inc. (GTII.CN) (GTBIF), MedMen Enterprises (MMEN.CN) (MMNFF), and iAnthus Capital Holdings, Inc. (IAN.CN) (ITHUF). These companies have cannabis operations in states like California, Florida, Massachusetts and New York, and have been recording incredible growth.

The CEO of Green Thumb Industries is the heir to Jim Beam and the company has received an investment from Leon Cooperman.

There are a lot of exciting trends going on in the cannabis industry and technical420.com is a top destination if you want to learn more!

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