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Dec 28, 2017

‘Can’t ignore the growth’: Canopy forces Bay Street to take notice

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Canopy Growth is asserting itself as a major market driver on Bay Street.

The country’s largest licensed cannabis producer opened higher on Thursday, one day after it shot up 20.1 per cent and helped power the TSX to a new record close  forcing investment professionals to take notice in the process.

“The challenge is you could ignore this sector until six months ago,” said Paul Taylor, chief investment officer of asset allocation at BMO Global Asset Management, in an interview with BNN on Thursday.

“You can’t ignore the growth that there is in this industry and the size of some of these players. If you’re a Canadian equity manager running a serious portfolio you now have to have a view.”



Canopy surged on Wednesday amid no apparent news of its own. Instead, some observers pointed to the Alternative Harvest ETF, which counts Canopy among its top holdings and started trading in New York on Tuesday, as a catalyst.  

Canopy has been closing out the year in style, with its stock up more than 50 per cent this month alone as investors await the legalization of recreation cannabis consumption in Canada.

Meanwhile, CEO Bruce Linton has his eye on a much bigger market.

“We’ve had legalization, which was medical. We’re expanding legalization to be adult access,” he told BNN in an interview last week. “But we still only have 35 million people in our country. What’s going to be next is globalization.”

BMO’s Taylor acknowledged established players like Canopy will presumably emerge as winners in the sector, but said a myriad of unknowns about the regulatory landscape make for difficult investment decisions.  

“It’s the same thing with bitcoin. We’re in the business of managing people’s serious money. We’re investors, not speculators,” he said.

“It’s still early, I think, for serious money to jump in. In investing, there are a lot of ships that you let go by.”

 

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