4 questions to a cannabis trader

While the Canadian cannabis market has recently seen several huge mergers and acquisitions, cannabis stocks are doing rather well. So we put 4 questions to one of France's experts on the subject, Antoine Quesnel.

How is the market evolving today?

A.Q. Apart from the indecent price of the acquisition of Cannimed by Aurora, Today, the market still functions as it did in the days of the first Web start-ups. The market leader has not been found, and when the big companies go up, so do the small ones.

Aurora Cannabis may end up like AOL, or Canopy like the future Blackberry (both were flagships in their fields before almost disappearing). They have the first-to-market advantage and the world-leading position of Canada's legalization. But there may only be 3 or 4 major medical cannabis producers left in the short term.

Cannimed is a good example of how the market is evolving, and there will be many acquisitions in the coming months (editor's note: the day after the interview, Aphria acquires Nuuvera for +800 million dollars).

If the U.S. legalizes, what are the consequences for Canadian values?

The day the USA legalizes, the most likely outcome is that an American company could buy out a Canadian one to catch up. As in the pharmaceutical or alcohol industries, a $50 billion buyout is entirely possible.

What about Europe?

Realistically, most of the medical cannabis business today is done with Canadian money or products. Even Bedrocan, originally a Dutch company, sold its Canadian subsidiary to Tweed, which then became Canopy Growth.

In Europe, the main good news is that the number of patients in Germany has exploded. The industry is responding to a need, with a commission that studies on a case-by-case basis whether the patient really needs it or not. For the moment, however, the money is going back to Canada, where most of the cannabis distributed comes from.

Any advice for someone looking to invest in cannabis?

In my opinion, it's better to look for safety than yield, with an ETF. If your capital is small and your financial knowledge limited, the easiest thing to do is to put it all into an ETF. It was introduced at less than 10$ and is now worth 18TP4T.

With a deadline Canada on July 1 due to the of future legalization, Between now and then, values should rise by between 50 and 200%. As things stand today, they are bound to rise.

Cannabis unicorns are already appearing (editor's note: companies valued at over $1 billion). Canopy Growth was the first to be listed on the Toronto Stock Exchange, the equivalent of the CAC40. Today we also have Aurora, Aphria...

Taken together, this represents a market capitalization of over 20 billion Canadian dollars on the Canadian stock exchange. The Canadian flower-selling market is estimated at $4.5 billion. Shares are therefore underpriced at the moment, based on recreational consumption alone. estimated by Deloitte of flowers with the opening of the legal market. We can aim for a x5 in the next 5 years.

The main risk remains political decisions, or big competitors like China or the USA. But not Europe, because of the lack of fiscal and legal harmony.

However, the market has understood that the move towards legalization is definitive, and that we'll have to rely on it from July 1.

What about out-of-frame positions?

It's a more strategic move. The biggest deals will be made the day a pharmaceutical company, a veterinary laboratory or a food company comes to see a medical cannabis producer.

These sectors need an ultra-reliable raw material supplier, and production reliability is on the Canadian side, not the American.

There may also be major outlets for hemp. It's a less visible market for the moment, but one with greater outlets: it's a plant that consumes little water and whose fibre can be used in thousands of different ways.

Investing from France

If you don't have a lot of money, you don't go through your banker because there are too many fees. Today, stock market trading is simplified by applications that allow you to manage your securities accounts, such as Saxo, Lynx or IG.

To open an account, all you need is proof of identity, a bank details slip and proof of address. The account is then credited with X€ and you can buy directly from the app.

From an ethical point of view, I think it's better to buy canna than Monsanto (laughs). I'd advise investing rather than trading, because the curves aren't easy to read and it's dangerous with a small capital, especially for the uninitiated. To minimize risk in a speculative sector, you stick to the ETF or the four or five biggest companies.

On the other hand, I see an interesting parallel today between the Bitcoin price and the valuation of cannabis stocks: when the Bitcoin price falls, the Marijuana Index tends to rise, but there isn't enough hindsight to make a serious statement.

What's certain is that we have similar investor profiles, who are looking for high returns on unusual products. For those interested in crypto-currencies, it can be a good way to diversify your portfolio.