January 9, 2017

Toronto-based Green Acre Capital, a private equity firm focused on investments in the Canadian medical and recreational cannabis industry, has announced the launch of Green Acre Capital Fund I – a new equity fund committed to investments in the legal cannabis sector in the Canadian, U.S., and international markets.

Led by managing directors Matt Shalhoub and Tyler Stuart, Green Acre Capital has received lead commitments from York Plains Investment Corp. and Aphria Inc. – a Toronto-based producer of 100 percent greenhouse-grown, high-quality medical marijuana.

“The goal of the fund is to build a diversified portfolio of the most compelling cannabis investment opportunities across numerous verticals within the industry. The focus will predominantly be on investing in private companies,” said Stuart.

O Canada

On April 20, 2016, Canada’s Federal Health Minister, Jane Philpott issued an announcement regarding the eventual federal legalization of the regulated sale of marijuana while leading the Canadian delegation to the United National General Assembly special session on drugs.

“Today, I stand before you as Canada’s Minister of Health, to acknowledge that we must do better for our citizens,” said Philpott in a speech delivered to the United Nations.

“Our approach to drugs must be comprehensive, collaborative and compassionate. It must respect human rights while promoting shared responsibility. And it must have a firm scientific foundation. In Canada, we will apply these principles with regard to marijuana. To that end, we will introduce legislation in Spring 2017 that ensures we keep marijuana out of the hands of children, and profits out of the hands of criminals.”

Pursuant to this announcement, the Canadian government is on pace to introduce legislation this coming spring to legalize the industry, while Health Canada with the support from Justice and Public Safety, is working to develop a regulatory framework that will establish a level of control over the sector.

As normalization of the space approaches this year, analysts estimate that demand in Canada in 2018 could top 400,000 kilograms, or 882,000 pounds, and that by 2021 the country could see an industry worth $4.5 billion with 3.8 million legal recreational users and demand reaching 575,000 kilograms or 1.27 million pounds reports The Cannabist.

“The legalization of cannabis offers a rare opportunity to invest in what will quickly become a multi-billion-dollar industry, as demand shifts away from the black market,” said Green Acre Capital Managing Director Matt Shalhoub. “The fund plans to deploy capital, and leverage the experience of its leaders and advisors to help companies in the space succeed.”

It is numbers such as these, along with pending federal-level legalization that are drawing investors north.

In October 2015, GAI News reported that San Francisco-based hedge fund, Poseidon Asset Management, which is a pure play investment vehicle focused on the legal cannabis space, said that following the Trudeau win, it is exploring the option to increase its Canadian holdings.

Although legalization in the U.S. is advancing, the discrepancy between state-level and federal level regulations are causing concern for investors.

“We wouldn’t want to put our (investors) at risk with that exposure in the United States,” said Morgan Paxhia, Poseidon’s founding partner and chief investor. “That’s why Canada is of interest to us, because we can then participate in that growth.”