Pot Companies Pitch Their Products to Investors in Calgary

By Reid Southwick, Postmedia

Amid the hype surrounding Canada's budding legal marijuana industry, a top executive at an investment fund focused on early-stage cannabis companies says investors are looking for the next big play.

"We're on the precipice of a massive industry being turned on," Tyler Stuart, managing director at Green Acre Capital, said Tuesday after a marijuana conference wrapped up in Calgary.

Stuart's company is raising a $25-million venture capital fund that will invest in 25 to 30 companies, and he was on the hunt for promising startups.

"We want to be there early and we want to be aggressive in structuring investments in this industry," he said.

Licensed growers, biotechnology firms and vape retailers pitched their products and management teams in front of a room filled with investors at the downtown Calgary conference, hosted by investment dealer Dundee Capital Partners.

No longer the sole domain of pot-smoking activists, the marijuana industry has gone corporate, though it continues to deal with critics.

"Every greenhouse supplier thinks that all of us people who are involved in cannabis have tonnes of money and are idiots," said Ben Ward, chief executive of Ontario-based grower MariCann Inc., laying out his plans to aggressively cut costs.

Company executives at the event said they were ideally positioned to cash in on what they called a multibillion-dollar medical pot industry they say will only blossom with legalization of recreational use.

Investor frenzy over the nascent industry has triggered chaos in financial markets. In November, regulators halted trading of several Canadian marijuana stocks after share prices swung wildly.

Aurora Cannabis Inc., a Vancouver producer with a 55,000-square-foot greenhouse north of Calgary, saw its stock soar by 46 per cent in a half-hour. Canopy Growth Corp., the country's largest pot company, was valued at $2 billion at one point, even though it hadn't yet posted a profit.

The Calgary conference revealed the industry, while still emerging, is attracting a range of players, from companies extracting proteins for food to those seeking to treat rare diseases, with clinical trials all over the world.

Vancouver-based Lexaria Bioscience Corp.'s technology eliminates the bitter taste of pot in edibles and allows active ingredients to absorb into the bloodstream faster, from an hour or two to as short as 15 minutes, with greater potency, said president John Docherty.

Executives at HempCo, a grower from Burnaby, B.C., are looking at infusing hemp proteins into veggie burgers and snacks.

Still, licensed pot producers — which continue to grow in number — are likely best suited to sell their technologies abroad as medicinal marijuana becomes more accepted, said Daniel Pearlstein, analyst at Dundee.

The growers have navigated onerous regulations, invested in large-scale operations and run them with much more sophisticated technologies and processes than illicit grow ops running out of household basements, Pearlstein said.

"Institutional investors are paying serious attention and time to opportunities not just in Canada but really on a global scale," he said.

The rounds of executives standing before the podium attempted to sway investors by highlighting that their management teams and boards of directors have deep experience in mainstream industries.

A board member at an Ontario grower awaiting licensing has served in senior executive roles at Canadian Tire Corp. and Hudson's Bay Co., bringing with him expertise in retail. Another Ontario producer's pharmaceutical division is headed by a former chief executive at Purdue Pharma.

"Cannabis is a mainstream product consumed by mainstream people around the world," said Brendan Kennedy, chief executive of Privateer Holdings, a Seattle-based pot producer and retailer that owns a cannabis news outlet.

"Because of that, the end of prohibition is inevitable, and brands will shape the future of this industry, just like they shape every other industry."

Graham Sorkin