Echelon Wealth Partners Equity Analyst Russell Stanley joins James West to chat about the Canopy Growth-Constellation deal and the mainstreaming of the cannabis industry globally. Stanley acknowledges that the Constellation deal, in combination with the partnership between Molson and Hydropothecary, “confirms the big beverage players have an interest in cannabis, and those without a dance partner are going to have to find one soon.” Stanley suggests Aurora Cannabis Inc (TSE:ACB), CannTrust Holdings Inc (TSE:TRST), Hydropothecary Corp (TSE:HEXO), and OrganiGram Holdings Inc (CVE:OGI) are potential candidates for the next big deal between cannabis and brewing industries because these companies have large-scale, fully-financed production platforms and sales agreements with multiple provinces. Stanley regards US valuation multiples as too low compared to Canadian multiples, and believes cannabis investors are going to take advantage of lower American valuations.
https://youtu.be/rTomSYLLG-kVideo can’t be loaded: Echelon Wealth Partners on Potential Cannabis-Brewing Partnerships (https://youtu.be/rTomSYLLG-k)
Transcript:
James West: Hey, welcome back to Midas Letter Live. My guest in this segment is Russell Stanley; he’s the equity analyst with Echelon Wealth Partners. Russell, welcome to the show.
Russell Stanley: Thank you for having me.
James West: Russell, the main flavour of the day in our universe is cannabis, cannabis, cannabis, cannabis. What have you got to say for yourself about cannabis?
Russell Stanley: I could say a lot.
Russell Stanley: Every day is a new adventure. As I’ve said to a number of people, there’s no groundhog days in cannabis; every day is something new.
James West: Yeah, no kidding. Let’s start with the elephant that still persists in the room, is the $5 billion – I call it a takeover, people like to correct me – but with four seats out of seven on the Board, it’s a takeover in my book, especially with the 50 percent that they’re going to end up owning, Constellation I mean, in reference to Canopy Growth, if they were to exercise their full warrant. The whole sector has been taken higher by this event, so is it safe to categorize this as, essentially, a mainstreaming of the cannabis industry globally?
Russell Stanley: I think it is. I think, you know, what we saw is the start, and what started as a product development joint venture, if you will, back last October, has become with Constellation’s investment a recognition that this is a global business. And the opportunity goes beyond just one product, and goes beyond just Canada or the United States; this has become a global p