Aurora Cannabis, Cronos, Canopy Growth or Tilray? – The crazy fool

The Canadian market for recreational marijuana and the medical cannabis market in Europe tend to be the main topics of discussion for the leaders of the largest marijuana growers. That makes sense, since almost all of the big marijuana companies' revenues are generated in Canada and Europe.

But what about the United States, the largest cannabis market in the world? The biggest marijuana producer in terms of market capitalization – Cover growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB), Tilray (NASDAQ: TLRY), and Cronos Group (NASDAQ: CRON) – can not enter the US Marijuana market and keep their shares on the major stock exchanges as long as marijuana remains illegal at the federal level in the United States.

However, entering the US hemp market is a different story, thanks to the legalization of hemp in the United States in December 2018. Which of Canada's top marijuana growers is best placed to enter the US market? Here's what the prospects look like for Canopy, Aurora, Tilray and Cronos.

The leaders

Two of Canada's leading marijuana growers stand out as leaders in the US market. Canopy Growth and Tilray have already taken significant steps to enter the United States.

Canopy Growth took its first steps in October 2018 by acquiring the Colorado-based hemp research company, ebbu. Canopy was able to remain in compliance with the listing requirements of the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX), even though hemp was not technically legal in the United States at the time. The company was able to do this only by conducting research and development on its ebullies activities and by not manufacturing any products for sale.

In January, Canopy Growth announced an even bigger announcement. The company revealed that she had obtained a license to produce and process hemp in the state of New York. Canopy is investing between $ 100 million and $ 150 million to build a hemp-based industrial park in New York.

Canopy Growth founder and co-CEO Bruce Linton said at his company's third quarter teleconference in February that he hoped the company would market hemp-based CBD products in the US market. here the end of the year. Linton also hinted that Canopy could build hemp production facilities in other US states.

Tilray was not too far behind. In February, the company announced the acquisition of Manitoba Harvest, the world's largest manufacturer of hemp foods, for approximately $ 318 million. Manitoba Harvest's hemp food products are sold in more than 16,000 stores in North America, including approximately 13,000 in the United States.

The acquisition of Manitoba Harvest is part of another recent agreement by Tilray. The company announced in January that it is partnering with the US-based Authentic Brands Group (ABG) to develop and market cannabis products for the general public around the world. Tilray's CEO, Brendan Kennedy, confirmed in the company's quarterly update a few weeks ago that this partnership "will initially focus on CBD products in the US". The acquisition of Manitoba Harvest provides Tilray with an integrated supply chain for the supply of CBD to ABG.

The latecomers

While Canopy Growth and Tilray appear to be the first to enter the United States, Aurora Cannabis and Cronos Group are laggards. Neither company has yet announced firm plans for its expansion strategies in the United States.

Asked about the advisability of hemp on the company's call for profit in February, Terry Booth, CEO of Aurora Cannabis, said there was some confusion about the distribution of hemp-based CBD. in the USA. He added that "Aurora" would come at the right time, and when it would be legal to enter the US market ".

To be fair, Aurora has significant hemp abilities. The company owns Agropro, the largest producer of hemp in Europe. Aurora holds a majority interest in a Canadian hemp producer Hempco Food and Fiber. And he acquired ICC Labs, a hemp producer based in Uruguay.

Cronos Group was the first Canadian marijuana stock to appear on the list Nasdaq. CEO Michael Gorenstein said last year that the Cronos intended to "play a significant role in the US market". Until now, however, the company has not taken any visible steps to expand in the United States. Gorenstein, however, said during Cronos Group's fourth-quarter conference call that Cronos had "done an excellent job building strong relationships with stakeholders in the US cannabis industry." and will continue to "closely monitor" the opportunity of US hemp.

More likely to succeed

There are current leaders and laggards among Canada's leading marijuana growers in the US market, but the momentum could change rapidly. It is quite possible that Aurora and the Cronos group will make announcements in the near future about their expansion in the United States.

Cam Battley, chief executive of Aurora, said during the company's conference call: "We do not want to reveal too much about our strategy in the United States." Similarly, Mr. Gorenstein of the Cronos Group said that his company "will not telegraph our strategy" for the US market, unlike some of his peers.

Which of the four companies seems most likely to succeed in the United States? I will give a nuanced answer.

In my opinion, Tilray will have more success in the early US hemp CBD market. The company will be on the right track with Manitoba Harvest in its fold. Canopy Growth will take months to launch its first CBD hemp-based products. Tilray will immediately have strong relationships with retailers and customers with its acquisition of Manitoba Harvest and its deal with ABG.

But Canopy Growth will definitely play to win. The company also has a great partner with proven track record in the United States, Constellation Brands (NYSE: STZ). Canopy also has a large stock of cash to fund its efforts through the $ 4 billion Constellation investment. When the US Food and Drug Administration finalizes the regulation of CBD-based beverages, Canopy's relationship with Constellation should give it an edge over its competitors.

I also think that hemp will only be a beginning. The chances of the United States allowing states to enforce their own marijuana laws are increasing. Sooner or later, major Canadian marijuana growers will likely be able to enter the US marijuana market.

At this point, I think the partnership between Canopy and Constellation money will be a key factor. My point of view is that Canopy Growth remains the most likely to succeed in the global cannabis market in the United States in the long run.