Investment Dealer Cormark Securities Looks To Build More Cannabis Relationships In The US

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The cannabis industry has garnered plenty of attention in recent years with the advance toward legalization in the United States, a full-blown legalization in Canada, and a bumper crop of cannabis companies helping to develop the industry more aggressively. In fact, cannabis stocks have been on fire in recent months and investment companies have set forth bold strategies to attract new partners within the budding industry in the United States.

One company that is making a name for itself as a leading investment dealer with particular expertise in cannabis is Cormark Securities. The Toronto-based investment dealer is eyeing the potential for more growth and firmer connections with companies and investors that can now operate in CBD or THC markets in the United States.

“We have been involved in the cannabis sector for several years and have been actively expanding our focus and coverage to the U.S.,” notes analyst Jesse Pytlak. “There’s very clearly a large opportunity that is developing and by being early on the theme, we have established our self as a thought leader in the space.”

Opened for business in Toronto in 1981, Cormark focuses on mid-cap and emerging market growth opportunities within a number of industries, not just cannabis. At this point, the company holds relationships with nearly 900 institutional investors across the globe.

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But if you were to ask Cormark about the possibility for growth in the cannabis industry within the United States last year, things may have looked bleak. Former U.S. Attorney General Jeff Sessions, a stalwart opponent of legalizing anything related to marijuana, was seen as a large threat to the domestic cannabis market for both consumers living in states where cannabis was decriminalized as well as growers of either cannabis or hemp, which contains negligible amounts of THC and is primarily used for textile, industrial or medicinal purposes.

However, with his ouster last fall, and the new Farm Bill legislation passed in December, companies like Cormark are getting the green light for the historically taboo cannabis industry.

“We’ve seen a big evolution in political stances in the past year. [Former Speaker of the House] John Boehner is a great example of having turned around. Andrew Cuomo is even legalizing adult use,” comments Pytlak, who also called out the appointment of new AG William Barr as a positive note for the cannabis industry. “Barr looks like an improvement. Based on his commentary he sounds like he will respect the status quo. We don’t think there will be federal enforcement issues and I think he will be supportive of the industry.”

While Cormark is expanding its relationships here in the United States, it’s also keeping an eye on things abroad. Recently, European Parliament passed a resolution recommending nations in the EU revise their laws when it comes to medical marijuana to support more research and access for patients.

“There’s been a wave of legalization around the globe. We’ve seen measures take off in Europe, like in Germany whose market is quickly developing,” says Pytlak.

And when it comes to advising institutional clients, Cormark suggests that investors consider several factors. “We think it is important to look at Management teams and their success in prior careers and approach to corporate governance. We will also look at what a company’s competitive advantage is, and how it plans to differentiate itself. It’s really a combination of a lot of things, but ultimately you want to select companies that are best positioned to emerge as long-term winners.”