IT IS rare to see the words “Canada” and “world domination” in the same sentence. The country’s cannabis producers want to change that. With an eye on October 17th, the date on which recreational marijuana will become legal, medical-cannabis firms have been expanding at home and talking up their global ambitions in a most un-Canadian way. Lots of joint ventures—in the legal sense—are being signed abroad. The hope is that having a base in the first large country to make pot legal for adults (Uruguay legalised cannabis in 2017) will give them an unbeatable lead.
To date firms have financed their expansion plans largely by selling shares, supplemented by funding from smaller investment banks and credit unions. Enthusiastic investors have pushed share prices to stratospheric levels (see chart)—many warn of a bubble. But the biggest banks, without whom nothing substantial is financed in Canada, have been wary. That changed on June 26th when the Bank of Montreal agreed to loan Aurora Cannabis up to C$200m ($147m), with the possibility of an additional C$45m following legalisation.
The funds will allow the Alberta firm to keep pushing in its quest to have “boots on the ground in countries across the world”, Terry Booth, its boss, told Bloomberg, a news provider. European demand for medical cannabis is much stronger than anticipated, he says, citing Germany, Denmark, Italy, Poland and Malta as particularly hot markets.
The Canadian strategy is to establish a beachhead in the medical-marijuana market in other countries, which can be exploited if recreational pot becomes legal. Aurora, which exports to Germany, Italy and Malta, plans to build a 1m square feet (93,000 square metres) greenhouse in Denmark in a joint venture with a European tomato producer. Another Canadian firm, Canopy Growth, which bills itself as a “world-leading diversified cannabis and hemp company”, operates in 12 countries, including Australia, Germany, South Africa and Denmark.
But the Canadians will not have things all their own way. Firms in Australia, Israel and Colombia have expressed similar global ambitions. And their first-mover advantage could dissipate if America clarifies its policy. More than half of states have legalised medical or recreational marijuana use, both of which remain a crime under federal law. Paul Rosen, who co-founded The Cronos Group, which owns a number of cannabis producers, says that America will be “the next great cannabis economy”, although legalisation at a federal level is unlikely anytime soon. Canadian producers may yet discover that conquering the globe is just a pipe dream.