Five ways to play the emerging global cannabis industry, from Colombia to Denmark

Victor Ferreira - thegrowthop.com Posted 5 years ago
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Since recreational cannabis was legalized in Canada in October 2018, most investors looking to catch a ride on the green wave, bumpy as it may be, have focussed on the opportunities available at home and in the United States. But while Canada may have taken the biggest leap into the legal realm, it is not the only country in which attitudes toward cannabis are changing. Here’s a look at five internationally focussed stocks that investors can look to for exposure to the emerging global cannabis industry.

Pharmacielo Ltd.

Pharmacielo has its head office in Vancouver but operates in Colombia, where it’s building itself up as an outdoor producer of medicinal cannabis. What’s most appealing about the company for an investor, according to Horizons ETFs president Steve Hawkins, is its ability to grow cannabis at an extreme discount in comparison to Canadian growers. Pharmacielo reports that it can grow at five cents per gram instead of around $2 per gram in Canada. With a distribution channel that includes export licences to more than 15 countries, Pharmacielo can access other markets without needing to worry about what it’s paying to ship its product there because it’s growing costs are so minimal. That also means they’ll have more and more room to continue to grow, he said. Pharmacielo is listed in Canada on the Canadian Venture Exchange.

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Khiron Life Sciences Corp.

Like Pharmacielo, Khiron also primarily operates in Colombia. It’s nearly half the size of Pharmacielo, based on market cap alone, but Hawkins finds value in the diversification of medicinal products the company is beginning to offer. Pharmacielo is mostly in natural medical grade cannabis oil, but Khiron has branched out and is also producing products for trauma treatment facilities. “Khiron has branched almost into a pharmaceutical company,” Hawkins said. The company has also been aggressive with its expansion plans, acquiring both an Italian and a Uruguayan firm in the first four months of the year. Khiron is listed in Canada on the Canadian Venture Exchange.

GW Pharmaceuticals Plc

GW Pharmaceuticals is not a traditional cannabis company, according to AltaCorp Capital analyst David Kideckel, but still offers investors access to international cannabis markets because its products are all derived from cannabinoids such as CBD and THC. The company operates in the U.K. and is already selling its main product — Epidiolex, a drug that treats two rare forms of epilepsy — in the U.S. Its sales there were primarily responsible, Kideckel said, for the company announcing a 1,200 per cent increase in revenue from the same period last year in its first-quarter earnings. Internationally, GW is waiting for approval from the European Medicines Agency to sell Epidiolex in France, Germany, Italy, Spain and the U.K. and a decision is expected at some point in 2019. What might be most appealing to investors is that the volatility traditional cannabis stocks are known for is not an issue. “What GW is doing is following more of a biotech stock,” Kideckel said. “GW has heavy institutional investor involvement and you’ll see less volatility with stocks that have more institutional investment.” GW is listed in the U.S. on the Nasdaq Exchange.

Stenocare A/S

To gain international exposure, Evolve ETFs portfolio manager Elliot Johnson prefers to invest in Canadian large cap companies that are expanding overseas because legalization is still an ongoing process there. But Johnson acknowledges there are potential growth opportunities in Europe, and Danish medicinal cannabis company Stenocare A/S is one of them. Stenocare went public in October, raising close to $60 million. The company is still in its early days, Johnson said, and is in the process of getting its first seedling plants from Canada even though it is already selling its products — most of them oils — into the Danish market. There’s potential for Stenocare to access the broader European market, Johnson said, and because the company has a clear plan in place, appears to have no issues raising capital and is responsible with its spending, it may just live up to those expectations. Stenocare is traded on the Swedish-Danish Spotlight exchange.

Sativa Investments Plc

Sativa Investments Plc was initially a pure medicinal cannabis investing company — one which actually invested in two Canadian firms: Rapid Dose Therapeutics, and Veritas Pharma Inc. Thanks to regulatory changes in Europe, Sativa has expanded its business model and has acquired two subsidiaries in George Botanicals, a CBD producer, and PhytoVista Laboratories, a CBD tester. Buying Sativa’s stock would give investors exposure to each of these four companies as well as any others it takes under its umbrella in the future. However, Sativa’s identity as a holding company does not mean that it performs differently from traditional cannabis stocks and investors can still expect high volatility. Sativa is traded on the NEX exchange in the U.K.

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