Ottawa-area pot firm Canopy Growth gains ‘clarity’ from marijuana legalization report

The Ottawa-based CEO of one of Canada’s largest marijuana firms is lauding yesterday’s federal report that recommends how the Liberal government proceed with its plans to legalize pot.

Several of the task force’s key suggestions – such as plain packaging and allowing mail-order sales – are aligned with Canopy Growth Corp.’s (TSX:CGC) existing business model that’s seen the Smiths Falls-based company capture a significant share of the country’s current medical marijuana market.

Meanwhile, the recommendation that customers as young as 18 be allowed to purchase marijuana for recreational use means there are more potential customers for companies such as Canopy than if the task force adopted the advice of the Canadian Medical Association to restrict sales to individuals above the age of 21.

Prime Minister Justin Trudeau stopped short yesterday of promising to adopt all of the report’s recommendations but defended his government's policy direction while speaking in the House of Commons.

In the wake of the federal pot task force’s recommendations, which yesterday sent shares of Canopy Growth Corp. upwards, Canopy Growth CEO Bruce Linton is feeling pleased about the future of legal marijuana in Canada.

“I think for us in the sector, it gave more clarity and certainty to the people who want it,” he says. “In our world, certainty is a helpful thing.”

Investors, however, still appear to be somewhat in a haze.

Canopy shares started the trading day with a spark, jumping 3.5 per cent at the opening bell. After see-sawing throughout most of the morning, the company’s stock entered negative territory just before noon, falling to $10.58, or 2.2 per cent below Tuesday’s closing price.

That’s still up from the $10 price recorded before the report’s release.

Mr. Linton lauded the efforts of the task force in producing a report that is “almost entirely, quite sensible.”

“Here’s a panel of quite elite experts from all walks of society, from policing to psychiatry to doctors, they said here’s how we’re going to do it, and this is why we should do it,” he says.

While he agrees with most of the recommendations, Mr. Linton did say he was pleasantly surprised to see the access age so be low.

The 106-page report, containing more than 80 recommendations for legalizing cannabis, stated that its motivations for a lower access age were to keep younger consumers away from black market sources, and that a higher age restriction would not dissuade youth from obtaining the drug.

The recommended age barrier signals to Mr. Linton that cannabis access will likely align regionally with laws surrounding alcohol age limits.

Recommendations around plain packaging don’t concern him either. He says that an informational packages with the Tweed brand and cannabis varieties is enough for its products to stand out on the shelves.

The company is currently prohibited from advertising, but has still found ways of raising its brand awareness through social media, interviews with journalists and a partnership with rapper Snoop Dogg.

The closer Canada comes to marijuana legalization, anticipated to begin in spring 2017, the more Mr. Linton sees Canopy Growth’s potential grow.

“This little (company) that began in downtown, Little Italy, probably has a chance of being quite relevant globally,” he says.