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TMX POV - Cannabis in 2019: Transition to consumer products

March 1, 2019

By Dani Lipkin, Innovation Sector Head

October 17, 2018 will be a date written in history books, the date recreational cannabis was legalized in Canada. And while that date is an important milestone in this burgeoning industry, it is also important to note the foundation set by the Canadian capital markets to provide a marketplace to support the growth of the legal cannabis industry.

What started as six cannabis issuers on TSX Venture Exchange (TSXV) at the end of 2014, has grown to 45 Cannabis issuers on both Toronto Stock Exchange (TSX) and TSXV as at the end of 2018 with a total market capitalization of $32B. The capital raised by these issuers, over $9B, enabled by their listing on TSX or TSXV, has allowed companies on our marketplace to build world leading growing facilities with state of the art technology and security.

The world is watching as Canada is just the second country (and the first G7 nation) to allow for the consumption and sale of recreational cannabis on a national level (Uruguay legalized cannabis in 2013). Over the past few years, governments at all levels have had much work to do in determining appropriate laws and regulations, and many of these, such as Ontario's retail licenses, are still works in progress that will continue to evolve with the industry. Many jurisdictions will be looking to the regulatory example set by Canada and how we have progressed from medical to recreational use.

Canadian consumers appear to have a strong appetite for edibles, which are expected to be introduced later this year. With this new segment, we will likely continue to see traditional food and beverage companies get involved in this space into 2019 and beyond. With new segments coming to market, ensuring safeguards are in place, growers are properly licensed, and educational campaigns on the effects of cannabis, are all necessary steps for creating a healthy industry.

Over the coming months, producers and retail stores will collect useful data on the actual size of the Canadian market, these findings will help to better understand consumer and market trends in Canada. This data will also be integral for understanding the potential global sales, especially as more countries explore the notion of legalization. By some estimates, the global cannabis market could become a $200B market within a few years.

2018 was a momentous year for the cannabis industry, and 2019 is on track to be another pivotal year for the continued growth of the Canadian cannabis sector.

This article is provided for information purposes only and is not intended to provide any type of advice. This article is not an endorsement or recommendation of any specific securities in any industry nor is it an invitation to purchase securities listed on TSX Venture Exchange or Toronto Stock Exchange. Listing on TSX Venture Exchange or Toronto Stock Exchange does not guarantee the future performance of a security or an issuer.