Suddenly Canada has become the first G7 nation to fully legalize the use of recreational marijuana. This has set a news trend into motion with U.S. based pot operations seeking listing via Canada to raise funds.
Some research and a little due diligence indicates to us that C21 Investments (Canada – CXXI.CN) is creating an impressive opportunity with its plans to bring its U.S. medical marijuana operations under a single umbrella, now funded through the public capital markets in Canada. We look at the cannabis space and C21 Investment’s unique potential in this explosive sector.
Before we go over what C21 does as a company, we thought it wold be a good idea to give you some comparable information. We looked at some of the biggest companies in C21’s sector, and the numbers for C21 seem very promising, as outlined below:
C21 Investments Enters a Whole New Greenfield
The Cannabis market has just experienced a major event, one that will forever change the cannabis landscape worldwide: Canada has just legalized the recreational use of marijuana. Yes, the rollout will still take some time and not every region of the country will be ready by the promised deadline (Canada Day, July 1st), but the decision alone is a landmark for the cannabis industry, opening up a wide range of new possibilities and opportunities for both larger and smaller players.
This represents a huge new market. The reviewers who have been looking at the numbers for the last year or more now say that Canada’s pot business can quickly become a $21 Billion dollar industry. That’s according to leading accountants and analysts, including Deloitte’s latest figures. No matter how you slice it, that is a massive new business that expanding like no other.
Major cannabis suppliers, while thankful for the boon that this will without a doubt provide, have already begun to focus on more international targets, primarily those in Europe and Africa. In doing so, they may be making a wise decision as the formal introduction of decriminalization and regulation of a new controlled substance will take a considerable amount of time. The most hopeful projections anticipate everything to be in place in all areas by the end of August.
For US-based companies, however, now that legalization is confirmed they have a bigger opportunity than ever to reach out to companies already in Canada’s cannabis space and reach mutually beneficial deals and partnerships.
Timing for the U.S. Market
Widespread, recreational use of cannabis in the U.S., is some time off. However, this is not slowing the pace of development for producers who see the future in Canada’s recent move to legalization.
In states that have legalized recreational cannabis, binge drinking has gone down an average of 2%. [3A] In California alone, marijuana sales are projected to top beer sales by the end of 2019. Further, the legalization of marijuana has been suggested as a solution to the opioid epidemic plaguing America. In states with legal cannabis use, even just medical, opioid-related deaths have been reduced significantly.[3B]
Acquisitions as a Way Forward
The Cannabis industry has always been a place where acquisitions take place with incredible frequency. However, as recreational legalization in Canada has become imminent, larger companies have stepped up their game.
Leaders in the sector, Aphria and Canopy Growth Corp have both been seemingly focused on international acquisitions as new extraction and preservation techniques have made it cropped up. This growth by acquisition is not limited to smaller companies, either. Recently, Aurora Cannabis, for example, has agreed to buy MedReleaf for $2.2 billion in stock.
C21 Investments: A Plan With Many Parts – (Canada – CXXI.CN)
C21 Investments, (formerly Curlew Lake Resources, Inc.), is a company that is looking to make waves in the cannabis space in both Canada and the U.S. Currently, they are making the most of the stake by gathering as much capital as possible to take advantage of the opportunities opening up as Canada begins the legalization of cannabis for recreational use.
Further, they have acquired three promising Cannabis brands, distributors and/or producers with some current success and plenty of future potential. Each brand has a distinct point of view and aims to appeal to a certain subsection of the cannabis consumer demographic. With these businesses, they have also gained production capacity and broad distribution potential.
The Brands that Make Up C21:
Eco Firma Farms – Eco Firma Farms focuses on cannabis production and the production of “smokes” to the exclusion of all else. They have a high degree of sustainability, using energy from renewable sources almost exclusively and choosing renewable and recyclable options for otherwise “disposable” options during the production process where possible. 
Phantom Farms – Phantom may be the owners of some of the healthiest farms in the world. They have five primary outdoor farms, two dedicated to recreational, three to medical. They also maintain a kitchen and separate extraction facility to process their products. They also have a wholesale distribution facility and a recreational facility. They sell to over 125 dispensaries in the state of Oregon alone and produce an average of 25,000 pre-rolls a month, in addition to offering bulk flower, live resin, cartridges, and CBD Cold Brew. 
Swell Companies – Swell Companies consists of four parts: Dab Society Extracts, Hood Oil, Loud Lab Cannabis Refinement, and Swell itself. All of these companies focus on some form of processed cannabis. They offer everything from distillates to oils, extracts to tinctures. 
Remember, C21 is a public company that trades in the Canadian Markets, you can view a quote for this company by clicking this link: (Canada – CXXI.CN)
Top of the Line Products and Techniques
With these three companies, it seems plain to see that C21 has everything it needs to maintain and grow a large-scale marijuana cultivation, processing, and distribution operation. They have a strong base in their home state of Oregon and are capitalizing on techniques and technologies that larger companies, particularly those in Canada, have not invested in the production of- yet.
They have also have developed at least one hemp-derived CBD product, capitalizing on the fact that, as they contain no THC and are free from federal regulation, they have a wider array of distribution and sales opportunities. CBD is often used for therapeutic purposes, including muscle relaxation. The substance has been gaining in popularity over the last few years and serves as a great cannabis-alternative for anyone looking for the relaxation benefits but no THC.
Sector Watch: Our Feature Company For Comparison
C21 Investments, Inc. (Canada – CXXI.CN)
Market Cap: ~ $115M
C21 is the amalgamation of several companies recently acquired. Together, they cover everything from strain development and growth to retail of medical and recreational products. C21 Investments have the largest interest in the state of Oregon, with all of their companies being both based there and only having distribution channels in Oregon. However, with the recent funding behind C21, this could quickly expand beyond that region.
Five Companies Leading The Way In the Legal Cannabis Space
These companies are front-runners in producing both medical and now recreationally legal marijuana and branded products in the Cannabis space. They offer great examples of the rapid advance of this now booming sector.
Aphria (NASDAQ OTH: APHQF)
Market Cap: $2.69B
Aphria, like most of the larger companies on this list, has been preparing for the potential legalization of recreational marijuana use in Canada by acquiring a number of other assets including fully-functioning businesses as well as the assets needed to create new facilities. In Aphria’s case, those new facilities will expand capacity and focus on oil extraction.
Canopy Growth Corp. (NYSE: CGC)
Market Cap: $6B
Canopy Growth is one of the largest recreational and medical marijuana producers and distributors in the world. They have acquired a number of companies in recent months. They have international ambitions, as these acquisitions would suggest, and have interest in expanding in Europe as well as Africa sooner rather than later.
Aurora Cannabis (NASDAQ OTH: ACBFF)
Market Cap: $5.31B
Aurora Cannabis is a company with ambitions beyond what Canada and the US offer. Like Canopy Growth, above, they have international expansion plans and will use those to even out any risks they may take gearing up to fulfill the demand expected to follow recreational marijuana legalization in Canada.
MedMen (TSX.V: MMEN)
Market Cap: $7.31B
MedMen is based in the United States but, like C21 Investments, has chosen to list in Canada for the fundraising and investment opportunities that will bring. They currently operate in California, Nevada and New York and have an agreement with Cronos Group to build a presence in Canada. MedMen grows, manufactures, and sells high-end marijuana products.
Emerald Health Therapeutics (CVE: EMH)
Market Cap: $576.81M
Emerald Health has always focused on one thing: supplying medical marijuana in Canada. This is stable footing and looks like it’s going to insulate them from most of the effects of hype surrounding legalization. They have no international presence yet and haven’t shown any sign of expansion or acquisition plans for post-legalization.
Financing and the Future of C21 Investments
If C21 knows how to do one thing very well, it’s raise money. The company has recently managed to put together C$33,500,000 out of the gate. This money can be used to develop all of its acquired properties, putting it level with any other company of its scale. Or, if they so choose, they could continue to acquire and expand when the timing is right. This follows the pattern of what larger marijuana manufacturers are already doing and could allow C21 Investments to remain competitive even in the current climate. 
The potential is there for them to C21 the most of their American presence, while with the CSE listing and their new deal with Cronos, they will be poised to enter the fray in Canada just as recreational legalization begins its wide implementation process. Any later or with any other partner and this might be a stumbling block, but for now, for C21, this could be the absolute perfect timing.
C21 Investments may be one of the most sophisticated new companies in the cannabis space based on its combined operations in the state of Oregon. C21 is following the path of other innovative companies who are gaining funding through Canadian markets where recreational use just became legal.
In Short: C21 has Exceptional Timing
Right now, just after legalization, Canadian cannabis stocks, on the whole, have seen a short drop. That’s not a bad thing, nor is it unexpected. (And by the time you’re reading this, that may not register at all.)
The cannabis industry has never been stable. Laws are changing rapidly at the local, territorial, and federal levels. This is not a place for the risk-averse. Not only that, but it’s an industry built around a plant that is cultivated in such a way that it needs exceptional attention and care in order to thrive. Crop failure is a real possibility for any of these companies.
C21 acknowledges these risks and chooses to invest in and acquire properties that have shown they can handle themselves. They are also using creative solutions to tackle some of these problems, like creating and marketing CBD products not derived from Cannabis, but still under the umbrella of their carefully crafted branding.
They are finding ways to make the most of the US market, even as volatile as the legality of the substance is, but they also see the opportunity. And, as evidenced here, C21 is about making the most of any opportunity in any way they can. They have the funding and the drive to make it happen right from the start.
USA News Group
Financial Data Sources used in the comparable chart:
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