Click on the link for the full report from our Responsible Investing Association
"On June 20, 2018, Bill C-45 – The Cannabis Act – was passed,with the expectation that Canadians will be able to legally consume recreational cannabis without criminal penalties by October 17, 2018. Canadian cannabis stocks surged on the news, with Canopy Growth gaining almost 6% in one day. Year to date,2 Aurora Cannabis Inc. and Canopy Growth Corp. have been the second- and fourth-most active stocks, respectively, on the TSX.3 Over the same period, stock prices for both companies have been volatile — Canopy’s price has ranged from as high as $47.76 to as low as $24.11. All this suggests that investors should exercise caution before jumping onto this bandwagon. But beyond concerns about volatility and returns, should responsible investors climb aboard?
NEI’s ESG Services Team has developed a position on cannabis by examining:
Where cannabis fits under our evaluation process by comparing it to products with some similarities, including tobacco, alcohol and prescription medicine.
The state of the regulatory and market environments.
The environmental, social and governance (ESG) risks that are most material to cannabis companies.
As responsible investors, we seek to generate sustainable value for shareholders and other company stakeholders, as well as for society as a whole. As such, we need to determine whether the cannabis industry has the potential to create sustainable value, which ESG risks are inherent to the industry and whether cannabis companies are adequately positioned to be responsible stewards of their products and services."
There is lots more in the report for consideration, 9 pages of
Material Risks tht cannabis companies will have to prioritize ESG concerns top of mind
Environmental: Growing cannabis requires optimal conditions of temperature, humidity and light intensity; hence the bulk of cannabis is grown indoors (without natural sunlight) or in greenhouses. Both methods are extremely energy intensive, resulting in potentially large carbon footprints; and water intensive, resulting in environmental and social risk from wastewater discharge and drawing excessive groundwater in water scarce regions. Most cannabis companies that acknowledge ESG risk in their MD&A disclosure focus on environmental and climate change risks, which we view positively. Social: Quality control and product safety are the most significant social risks for cannabis producers. Cannabis has to meet certain quality standards — tested and monitored by Health Canada and the FDA — and must not contain pesticides, heavy metals, fungi or bacteria. Product safety has been under greater public scrutiny since medical cannabis provider Organigram (recently acquired by Canopy Growth) had to recall some of its products because of contamination with a banned pesticide.19 The company faces several class-action lawsuits as a result, after patients reported suffering from severe nausea after daily use of the contaminated product.The nature of the product presents a second significant social risk. The Canadian Medical Association has stressed the need for access to substance abuse and mental health services to be expanded. The federal government has committed $62.5 million to cannabis education programs for youth.22 In addition to federal and provincial contributions, cannabis producers will likely be required to contribute to education and addiction treatment programs, in the way that producers of alcoholic beverages participate in and spearhead programs for alcohol addiction and impaired driving education. Thirdly, cannabis companies state that a positive public perception is crucial to achieving the social licence to operate. We agree and, as such, identify responsible marketing and post marketing co-vigilance policies and practices as another key issue for cannabis producers. Governance: As stated earlier, cannabis companies have experienced unprecedented growth over the last year and, as a result, have found it challenging to scale up their corporate governance controls to keep pace with that growth. As the industry will be heavily scrutinized by regulators and may be prone to criticism from the public, cannabis companies need independent and qualified board oversight to provide accountability to stakeholders, including investors. Proper corporate governance controls can assist in bridging the credibility gap in this new industry.
I came across another commentary that wasn't focusing on the ESG aspects but the "new industry component" from Gaurdian that was recently put out, it's an interesting read ...... https://www.guardiancapital.com/media/61435/gca-q3-2018-commentary.pdf
"By now every reader will likely be aware that Canada is about to legalize the recreational consumption of cannabis in October, becoming one of just a handful of nations to have done so. A level of buzz (pun intended) surrounds the industry, currently with 118 licensed medical cannabis producers, of which several dozen are publicly-traded in Canada. The largest of these have posted spectacular returns, rising between 200% and 500% over the past year alone. One, by virtue of uniquely gaining a NASDAQ listing south of the border during the quarter, rose more than tenfold in its initial two months of trading. At its heights, the company, yet to turn a profit, had a market valuation greater than household Canadian names such as Loblaw, Fortis, Husky Energy and Canadian Tire. To a degree, the euphoria is understandable: it is uncommon to witness the birth of an entirely new industry. There are, however, periodic historical reference points, such as the rise of the automobile at the start of the 1900’s and the dot. com euphoria near the end of that century, and like all other precedents, the legalization of recreational cannabis shows potential. It is also worth revisiting how these prior episodes all played out, with an initial period of excitement that results in sharply rising stock prices, and a growing list of participant companies able to fairly easily attract investors into newly listed shares. Almost invariably, a level of industry overbuilding results, with too much capacity added from this initial group. From there, an interval of re-sorting takes place, as stock prices subside, weaker competitors exit or merge, and a much smaller collection of survivors move forward. For example, in the early 1900’s, during the initial days of transition from horse to car, there were an estimated 2,000 automobile manufacturers in America, but the list had been winnowed to essentially three over the next twenty years. Another example might be, the estimated 90 million miles of fiber-optic cable installed across America during 1999, in anticipation of a coming internet boom. The boom eventually did materialize, but for the first three years, 95% of this network lay “dark” and unused, and the major players backing its installation had ceased to exist. At this point, valuing these recreational cannabis producers requires making some assumptions on end market demand, wholesale pricing, and production costs. Beyond this, factors such as consumption growth, regulatory regime and international factors – both in terms of possible demand, and new competition – must be weighed. Finally, once all of this is considered, a view on valuation is required. Given the list of risks at the current stage, an ample margin for error should be demanded before moving forward with an investment. Simply basing an investment on an optimistic industry view alone can backfire, even picking the eventual winners is no guarantee of short-term profits. Consider those who bought shares in technology hardware company Cisco, commonly considered a provider of the “plumbing of the internet”, in the late 1990’s. These investors were correct in their estimation that the company would go on to prosper from rapidly growing data consumption: company revenues, at just over $12 billion in fiscal 1999, had risen to over $49 billion in the most recent annual set of results. However, a lack of discretion on valuation means these buyers near the peak are still looking to recoup their initial investment, over fifteen years later.
At Guardian, we look to invest in companies with sustainable competitive advantages, strong management teams, and a proven record of superior financial performance. These are necessary ingredients when attempting to value securities for consideration. By definition, this makes it difficult to commit to investments in brand new industries where there is an absence of reference points regarding pricing, costs, end market demand, to say nothing of regulatory constraints. Until these materialize, it is certainly possible that a chosen cohort of stocks continues to levitate, supported by faith and a lack of data to refute speculation. This therefore, is the essential difference: pot stocks – like cars and tech companies – represent a speculative bet rather than an investment. There will be winners and losers in this space; companies that learn how to operate publicly, stay onside with regulations, balance growth and stability, will be the winners. Which constituents of this new subset of healthcare companies will operate profitably and sustainably is unknown today. We want our clients investments to go up, just not “Up in Smoke”.
Reading all this, I know a few people who have done very well speculating on their own in our community, so far. It reminds me of this song from Rascal Flatt's , it could be a two edged sword, out too late or staying too long. Courting pot stocks has a lot of ..... these days
For here are some neat highlights that this charting company puts out that maybe of interest. http://www.visualcapitalist.com/medical-marijuana-in-canada/ http://www.visualcapitalist.com/california-cannabis-golden-opportunity-unique-challenges/ http://www.visualcapitalist.com/story-of-cannabis-investors/ http://www.visualcapitalist.com/green-rush-cannabis-legalization-will-impact-california/ http://www.visualcapitalist.com/9-things-cannabis-investors-should-know/ Happy Reading Tim Ross, Family Advisor ® Family Office providing Omega Stewardship ® Www.BrockShoresFinancial.ca 613-345-0016 Office 613-213-4625 Cell/Text advisor@timothyross.com Helping Families Achieve ...Life’s Major Goals ® OMEGA STEWARDSHIP ® * One Stop Process Driven Approach for Retirement & Income Planning * Personalized Tax Management Solutions for Individuals & Business Owners * Confidential Wealth Management Solutions Mutual Funds through Professional Investments Brock Shores Financial #ImprovingFutures
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Hong added that the anticipated proceeds from the sales are expected to improve Canopy Growth’s balance sheet.
The first deal covers the sale of BioSteel Canada to DC Holdings Ltd., while a second agreement includes the sale of the BioSteel Manufacturing business to Gregory Packaging Inc.
Canopy put BioSteel up for sale when the sports drink business was placed under court protection from creditors under the Companies’ Creditors Arrangement Act in September.
https://obj.ca/canopy-growth-ontario-court-approved-sale-biosteel
I am not a big fan of weed, fyi, however for those that do, I gather info here on the topic
https://www.fatherly.com/health/parents-guide-getting-high-weed
https://www.fatherly.com/health/how-to-sober-up-from-weed
I wrote about this space in the pot industry in Oct 2018 about it's investment potential in it's the ESG potential , I closed with ... "Reading all this, I know a few people who have done very well speculating on their own in our community, so far. It reminds me of this song from Rascal Flatt's , it could be a two edged sword, out too late or staying too long. Courting pot stocks has a lot of ..... these days " .... I suspect the same can be said this day.
https://www.youtube.com/watch?v=2MTSBcvI9DI&t=3s
I am reminded of my original thoughts when I started this blog posting in Oct 2018, I like this song :) ~TLR
Reading all this, I know a few people who have done very well speculating on their own in our community, so far. It reminds me of this song from Rascal Flatt's , it could be a two edged sword, out too late or staying too long. Courting pot stocks has a lot of ..... these days
Risk Takers, a lot of that has happened in this space, at that place. Jackpots have been won and loss over the years. In 2018 the law changed to allow this industry to pop. The reallity not everyone wanted to waste their brains on this weed. Government regulations probably did not help move the consumers from private secret to open governed, a lot has been written about that. I don't have much more of an opinion on this. Smiths Falls is going to loose some significant jobs , they are not loosing the whole pot line, so it will work out. It's unfortunate for those that have lost their job, who knows may be they will go into the private world of growers, never mind, silly typing.
Canopy Growth to close former Hershey plant
Author of the article:Sabrina Bedford
Published Feb 09, 2023 • Last updated 9 hours ago • 5 minute read
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Staff work in a marijuana grow room that can be viewed at the visitors centre at Canopy Growth's Tweed facility in Smiths Falls, Ontario. (FILE PHOTO)
Staff work in a marijuana grow room that can be viewed at the visitors centre at Canopy Growth's Tweed facility in Smiths Falls, Ontario. (FILE PHOTO)
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SMITHS FALLS – In a massive blow to the local community, Canopy Growth announced it will shutter operations at the former Smiths Falls Hershey plant.
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The company announced Thursday it will close its iconic headquarters at 1 Hershey Drive, a site once considered the epicentre of the Canadian cannabis industry.
The news was included in Canopy’s third-quarter financial results, where it revealed “significant changes” to its Canadian operations.
The local implications of the company-wide restructuring include 350 layoffs in Smiths Falls, a spokesperson confirmed in an email.
Canopy will reduce headcount across the business by 35 per cent, including the 350 positions in Smiths Falls alone, for a total of 800 layoffs across the entire company. Approximately half of these local layoffs will take place immediately, with the remainder to occur over the coming months.
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The company’s footprint in Smiths Falls will be consolidated over the coming months, and all manufacturing will be centralized in the former beverage facility at 99 Lorne Drive – a relatively new facility built by the company across the street from 1 Hershey Drive.
The company will no longer grow cannabis plants in Smiths Falls, either, as it announced the consolidation of all cultivation at its Kincardine and Kelowna facilities.
“The changes announced today are designed to ensure a sustainable future for Canopy in the face of a Canadian cannabis market that has not materialized as many had hoped,” company officials said in an emailed statement Thursday.
“The decision to consolidate our manufacturing operations in Smiths Falls was not easy but is essential for the future of Canopy. We wish to thank the team members departing the organization for their contributions as well as the communities we call home for your continued support.”
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Smiths Falls Mayor Shawn Pankow said local officials had been watching Canopy’s efforts to right itself economically, so the news was not completely unexpected.
“I did not anticipate the magnitude of the announcement,” added the mayor, noting the Hershey Drive site will be closed by mid-summer.
Since first setting up shop in a fraction of the abandoned chocolate factory in 2014, the company poured millions into revamping and expanding the facility.
The company originally occupied just one-third of the 480,000-square-foot plant for its strictly medicinal cannabis operation. Over the years, it eventually filled the whole plant, and even expanded its footprint to accommodate the boom it anticipated from recreational users.
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The company quickly became the largest employer in town. At its height, it employed more than 1,100 people.
Pankow recalled the euphoric atmosphere in town for a few years, including a visit to the Smiths Falls facility by legendary rapper and entrepreneur Snoop Dogg in 2018.
But the company’s presence would dwindle. Pankow noted the COVID-19 pandemic changed the overall picture.
After Thursday’s announcement, 370 people will remain employed in Smiths Falls, the company confirmed.
“Canopy must reach profitability to achieve our ambition of long-term North American cannabis market leadership,” CEO David Klein said in a press release.
“We are transforming our Canadian business to an asset-light model and significantly reducing the overall size of our organization. These changes are difficult but necessary to drive our business to profitability and growth.”
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Also announced Thursday was the fact it will stop sourcing cannabis flower from the Mirabel, Quebec facility, and will move to a third-party sourcing model for cannabis beverages, edibles, vapes, and extracts.
The company has made several other cuts in recent months, it said, including its divestiture from Canadian retail operations, the “organizational restructuring of certain corporate functions,” and the closure of its Scarborough research facility.
In a press release the company said it expects these “cost reduction initiatives” will save them a combined $140-$160 million over the next 12 months.
“The right-sizing of our Canadian business is expected to significantly reduce our cash costs,” said CFO Judy Hong in the press release.
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She added the company is “firmly on the path” to breaking even.
In a prepared statement, Lanark-Frontenac-Kingston MP Scott Reid, noting the layoffs represent 46 per cent of Canopy’s Smiths Falls workforce, laid the blame on the Liberal government.
“While there are many reasons that this industry is retrenching, the overwhelming factors are the direct responsibility of the incumbent federal government: Unreasonably high taxation and a high-cost regulatory burden that drives up the compliance costs of licensed cannabis producers without a commensurate benefit for public safety,” said Reid.
The Conservative MP said cannabis producers have for five years lobbied “for a more reasonable and business-friendly approach to regulating their industry,” to no avail.
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Reid blamed the federal government for a burden that has resulted in Canada squandering a global “first-mover advantage” it should have enjoyed because it legalized cannabis ahead of other major economies.
“This momentum has now been lost, and the present round of job losses is just one more example of the damage,” said Reid.
“Until today, Canopy was the largest single private-sector employer in the constituency that I represent, and it continues to be a leader in the industry. What a shame that our government has destroyed the potential that it had, to bring prosperity to this corner of small-town Ontario, and to the Canadian economy as a whole,” added Reid.
In an email, Laurie Bouchard, a spokesperson for Industry Minister François-Philippe Champagne, said the federal government wants to listen to cannabis industry leaders.
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“Our government recognizes the importance of understanding the challenges and opportunities facing Canada’s legal cannabis industry and are engaging with stakeholders on a regular basis,” she said in a prepared statement.
“Our government is committed to launch a new cannabis strategy table that will support an ongoing dialogue with businesses and stakeholders in the sector.”
In a statement of his own, John Jordan, the MPP for Lanark-Frontenac Kingston, said the province’s Ministry of Labour, Training and Skills Development has reached out to Canopy Growth to deploy a “Rapid Re-Employment and Training Service,” a move aimed at informing employees “of available resources and programming to find their next job.”
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Jordan added he will be working with the town “to advise and support on all the available options for continued economic growth and employment prospects.”
Pankow, who has been in touch with federal and provincial officials, said people in town are “disappointed and discouraged,” and his immediate concern is the well-being of the employees and their families.
But Pankow also pointed to the community’s resilience, noting the latest economic blow, although severe, does not compare to the damage done in the economic downturn that saw the Hershey plant close in 2008.
The mayor was expecting to hear soon from Canopy about its plans for the Hershey Drive building, and town officials are eager to seize on the opportunity to find a new occupant.
When the cannabis operation took over the site from Hershey, said Pankow, it inherited a “shell.”
“Today we have a world-class, modern, energy-efficient (facility), all the factors … to attract some major industry to take advantage of this,” said Pankow.
“I don’t think that it’ll sit vacant for very long.”
With files from Ronald Zajac.
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David FitzSimmons
11 HRS AGO
The trudeau liberals legalized pot, oh well.
Can anyone name one trudeau liberal policy that helped the "majority" of Canadians?
I cannot.
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Peter Northe
12 HRS AGO
Can you imagine a more ridiculous business plan that this? Talk about snatching defeat from the hands of victory! Imagine... building an industry around the hope that the laws in another country will suddenly change in your favour. And investing millions and millions of dollars based on this presumption! Epic miscalculation of market and demographic.
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