Canada braces for cannabis gold rush
When Canada legalizes recreational pot Wednesday, market watchers predict the birth of a new industry -- creating thousands of jobs, investor euphoria, a new tax source for governments and maybe even tourism.Hundreds of licensed growers have sprouted in anticipation of the end of pot prohibition, attracting major investment. In just the past year, the market capitalization of firms including Canopy Growth and Tilray has increased fivefold, to a total of more than US$10 billion on the New York stock market. And with significant know-how gained since Canada's legalization of medical marijuana in 2001, others including Aurora and Aphria are making inroads abroad as more and more foreign markets allow therapeutic cannabis use and research. Beverage makers and pharmaceutical companies are also partnering in the sector, hoping to develop new products infused with THC or cannabidiol (CBD). Constellation Brands, the North American distributor of Corona beer and Robert Mondavi wine, recently invested about Can$5 billion ($3.8 billion US) in Canopy Growth for a 38 percent stake in the company. And soft drinks giant Coca-Cola is looking into using CBD, the non-psychoactive molecule in cannabis believed to provide health benefits, as an ingredient in some drinks. Experts like John-Kurt Pliniussen, a marketing professor at Queen's University in Kingston, Ontario, are also predicting a bump in tourism worth several billion dollars, citing as examples Amsterdam and a handful of US states where pot is legal. "The same can happen in Canada, because one of the things we have going for us and that no other country in the world has, is the name of our country -- it is almost spelled very similar to cannabis," Pliniussen told AFP. "And so you could have Canatourism -- from a marketing point of view, it lends itself very well." In the meantime, an investor frenzy is fueling mergers and acquisitions, with 48 deals worth a total of Can$5.2 billion announced in the first six months of this year alone, according to Price Waterhouse Cooper (PwC). The consolidation will continue after legalization, says PwC, as an "expected oversupply takes its toll and forces undercapitalized players into bankruptcy" and firms "look to fuel further growth by tapping emerging foreign medical markets."