PharmaCan Capital, a holding company focusing on the Canadian medical marijuana market, is set to go public next week, opening up for investors a basket of licensed producers and signaling the appetite for a growing industry.
The Toronto-based company has significant stakes of eight medical marijuana producers, including five licensed by regulator Health Canada. It will go public through a reverse takeover of a listed entity, with a ticker symbol on the TSX venture exchange of "MJN".
The move shines a light on the Canadian medical marijuana industry, which is expected to reach C$1.3 billion (US$1.12 billion) in a decade, though investors are also aware of the risks of betting on a new, untested market.
PharmaCan acquires large stakes, typically ranging from 10 to 30 percent, in medical marijuana producers and is engaged in discussions to make more such investments. It also tends to look for seats on the boards of those companies.
"An investor that seeks exposure to the fast-growing medical marijuana industry would be interested in PharmaCan because it mitigates the risk of investing in the industry," said Paul Rosen, chief executive of PharmaCan.
"We've created a diversified, regionally based portfolio of licensed producers," he added. "We're the only company in Canada that has this significant an investment in this many licensed producers."
PharmaCan's stable of licensed medical marijuana producers includes British Columbia-based Whistler Medical Marijuana Co and Simcoe County, Ontario-based Peace Naturals Project. PharmaCan also owns 100 percent of In The Zone Produce, a licensed producer based in Okanagan Valley, British Columbia.
Buying into the company means an investor does not have the hassle of trying to decide which licensed producer to invest in, said Daniel Pearlstein, life sciences analyst at M Partners.
He said PharmaCan's listing could benefit the broader industry. Marijuana companies that have gone public this year include T-Bird Pharma Inc, Tweed Marijuana Inc, OrganiGram Holdings Inc and Bedrocan Cannabis Corp . Earlier this week, Leamington, Ontario-based Aphria Inc listed on the venture exchange.
"The medical marijuana industry in Canada is in a state of competitive capitalism," Pearlstein said.
"Everyone is elbowing for a position, but everyone needs everyone else to succeed up to the point where supply and demand reach an equilibrium, and then the players can start battling it out."
