Marijuana investors have looked forward to Oct. 17 for a long time. That's the date on which Canada will legalize the sale of recreational cannabis products, and that's prompted those who have followed the budding marijuana industry to invest more money than ever in the companies that stand to gain the most when the Canadian cannabis revolution goes live.
One company that's gotten particular attention from cannabis-savvy investors is Canopy Growth (NASDAQ:CGC). One reason has to do with the fact that beer giant Constellation Brands (NYSE:STZ) put its own money where its mouth is, spending $4 billion to boost its stake in Canopy dramatically. Canopy co-founder and co-CEO Bruce Linton is one of the most colorful executives in the business, and he recently revealed a surprising comment that shows just how exciting Oct. 17 could be for the cannabis industry.
He's not just the founder -- he's also a client
Linton recently told investors about his own personal history with marijuana. His revelation likely came as a surprise to some of those attending the industry conference at which he spoke:
I'm going to be, on October 17, a first-time buyer of cannabis. I'm probably the only person who has ever started a cannabis company who never bought cannabis. I really like rules.
Now that's not to say that Linton doesn't have any experience with the product. As he told the conference audience, he smoked cannabis, and he saw plenty of people when he was attending college who also used marijuana.
Yet the experience wasn't entirely positive for the Canopy co-founder. What he found was that, in his words, "I was extraordinarily able to get stoned and not really able to get unstoned."
Why Canada's answer is Canopy's opportunity
Those words are what you might expect to hear from an antimarijuana activist seeking to limit cannabis legalization. But Linton believes that his experience actually explains why the Canadian solution to decriminalize recreational cannabis is a smart one.
Linton believes that the best reason to have retail stores is to allow consumers to try out products at whatever pace they choose. In an environment in which it's illegal to buy or use cannabis, users have few choices and can't shop for quality or reputation. By contrast, having well-established retail cannabis outlets lets people try things out at whatever pace they're comfortable taking.
In the Canopy co-CEO's opinion, that means that "everyone should actually go slow." For instance, in introducing cannabis-derived medicinal oils, Linton has suggested starting out with small doses and then working to find whatever usage works best for the patient's particular problems. That strategy has paid off with greater customer loyalty, because it allows users to find their comfort level and avoid getting themselves in over their heads. With the greater educational efforts that Canopy has put in place to give information to clients, its co-chief executive sees the company building a competitive advantage that should translate into the widest possible range of products -- including not only leaf cannabis but also ingestables like cannabis-containing snacks and drinks as well as medicinal oils and other specialty medical items.
Selling cannabis in a digital world
Just because each individual customer should use moderation with cannabis doesn't mean that Canopy itself is moving slowly. The marijuana grower is implementing extensive e-commerce capabilities in its ordering processes, making it possible for customers in certain Canadian provinces to order products online and have them shipped within just hours. With a solid inventory-management system and a rigorous ability to monitor and maintain a chain of custody over the products in order to satisfy regulators, Canopy Growth sees itself as a cutting-edge technological giant in the industry.
Linton didn't say whether he'd be buying his first cannabis online or in person at a retail store. But the executive clearly sees benefits in having both avenues available for customers. Canopy is working at a furious pace to get stores set up for Oct. 17, and with a foothold in most provinces, the company sees plenty of expansion potential over the next year and beyond.
Keep your eyes on the starting line
Oct. 17 promises to be an interesting day for marijuana investors, as early demand for cannabis in Canada will play a vital role in determining the fate of companies like Canopy Growth. For Bruce Linton, the end of a historic day for his company might well come with a break to partake in the products that could make him -- and Canopy Growth shareholders -- a lot wealthier over the long run.