Canopy ready to enter U.S. market — if Congress lets states decide on cannabis

Canopy Growth Corp. is prepared to enter the U.S. market if new legislation forces the federal government to respect state laws on marijuana, according to its chief executive officer.

The STATES Act, which stands for Strengthening the Tenth Amendment Through Entrusting States, is a bipartisan bill that would clear up the uncertainty created when Attorney General Jeff Sessions revoked the Obama-era policy that allowed states to set their own pot policies.

“The U.S. has had a history of, ‘When we can’t agree, let’s just allocate the authority to the state, and if they say it’s OK, it’s OK,”’ Bruce Linton said in a question-and-answer session at the MJBizCon marijuana conference in Toronto Thursday. “That would be an outcome which would allow us to move ahead.”

Canopy announced a $3.8 billion investment by alcohol giant Constellation Brands Inc. Wednesday, a move that will allow the company to finance its international growth plans, including expansion into the U.S.

Canopy, based in Smiths Falls, Ontario, doesn’t currently have any operations south of the border, where marijuana is illegal federally. Both companies said they have no plans to sell pot products in any market unless it is permitted at all applicable government levels.

Pot Google

Linton may have secured the biggest investment yet in the cannabis industry, but he predicted survival won’t be so easy for some of the smaller players in Canada, where recreational pot will be legalized on Oct. 17.

Cannabis growers that haven’t secured sales agreements are in a precarious position, he said Thursday.

“I get asked all the time, is there going to be consolidation? And I think there’s going to be disintegration,” he said. “Disintegration will happen when people make promises at valuations they can’t possibly meet.”

He predicted that there will be one “Google-like company” in the cannabis industry and a battle for the top five spots. There will also be an opportunity for smaller “craft players” who can take advantage of consumer demand for bespoke products, he said.

So far, that Google-like company may be Canopy, whose shares surged 31 percent after the Constellation deal on Wednesday, giving the company a market value of C$9.3 billion ($7.1 billion), more than C$3 billion higher than it’s nearest competitor Aurora Cannabis Inc.

Linton’s not so worried about his legal competitors; his main competitor is the black market, he said.