Quebec Update: Weed Investing, Energy Metals and The Passion of St. Jerome

01/10/2018

Hey it’s time to see what our francophone friends in Quebec are up to in the last little while.

How do you say Bubble in french?

Starting off with this January 6th piece in the Journal de Montreal, ‘The Masked Investor’ takes on the subject of whether or not investing in Cannabis is a good idea.

Here’s a translation of their pro and con list (Translation mine:)

PRO:

  • Being a part of the cannabis market has obvious benefits at first glance
  • Pot is the most consumed illicit substance in Canada.
  • Online sales [in Quebec] will be allowed
  • Only a limited number of producers will be authorized
  • The market size his large, about 4 million Canadians (over 12% of the population)
  • Recreational and Medicinal cannabis represents a $5 billion market in Canada and a 23 billion dollar market in North America

CON:

  • Producer stocks have already seen huge gains
  • Too many players in a small market
  • The legal framework varies in each province
  • Distribution will be limited at the beginning (Quebec only has 15 points of sale)
  • The price point could be high enough to make the black market viable
  • Federal law allows adults to grow their own marijuana
  • A future conservative government could recriminalize possession and use of cannabis.

So all-in-all a big ol’ duh-doy to anyone who has been reading this site for the last little while.

The actual takeaway for you in this piece is that it exists at all. This is a sign the Quebec retail investor has cannabis on the radar. Another nudge in the cultural acceptance of weed. In terms of investing moves, I’d keep an eye on the list of companies they mention in the article.

Canopy Growth –Aurora Cannabis –Aphria inc. – Supreme Pharma – OrganiGram Holdings – Emblem Corp – PharmaCan Capital/Cronos Group – Emerald Health Therapeutics – THC BioMed International – iAnthus Capital.

Surprisingly Hydropothecary isn’t on this list…. which is really weird, because they are on every other Quebec list usually.

In terms of Cannabis, Quebec is well entrenched in the production side of things, but i think the retail investment is still a sleeping giant. Lots of cash in this province to invest here, and pieces like this could act as a wakeup call.

Nemaska Lithium( NMX.T) sees gold… in Lithium

Pierre Couture in the Journal de Quebec reports the latest news from mining company, Nemaska Lithium.

The company has already added 20% capacity over last year, and expects to be producing over 16,000 tonnes of of lithium carbonate to be processed directly into lithium hydroxide for sale.

They have one plant in the Quebec town of Shawinigan already and expect to expand that facility soon.

Even with all the good news, the stock fell today by 13 cents to $2.26.

With the exploding demand for energy metals and the Quebec governments deep commitment to keeping the north shore of the St. Lawrence on economic life support, I think a hard look at all of these companies operating in the area can provide some nice gems. (I’ve spoken about Mason Graphite (LLG.V) and Berkwood Resources (BKR.V) before, both are also operating mines in the area.)

Cuture War on Quebec Cannabis – Battle of St. Jerome

Finally There’s a piece by Davide Gentile on Radio Canada about the efforts of the local town of St. Jerome to ban cannabis smoking in all public places.

(Full disclosure, my first serious girlfriend in high school came from St. Jerome. I have erm, fond memories of the place.)

The piece is a bog-standard pearl-clutching we saw in Ontario and BC as decriminalization became a thing in the political discourse.

The piece quotes the mayor Stephane Maher (translation mine):

“We will immediately reccomend   banning smoking cannabis in all public spaces.”

Uh-huh.

Amusingly the piece goes on to say other towns are being much more relaxed about the whole thing, including name checking Gatineau (Home of major producers – so there’s that).

Finally they get a quote from a local health clinic who is refreshingly frank:

“It’s a relatively good decision… ….but its prevention at a young age that actually works.” – Jean Robert, Clinique Sante Amitie

He’s right, and this is some easy political points to score with the dwindling population of folks who bought into the last 80 years of drug war paranoia around weed.

Finally the piece has a really nifty summary of the positions of each political party. Here’s my translation:

The CAQ (Coalition Avenir du Quebec) says ban weed in all public spaces.

The Parti Quebecois wants cannabis to follow the same rules as booze and cigarettes. If you cant smoke or drink here, you can’t toke.

Quebec Solidaire says consumption should be banned if a municipality can show a danger to public health, as long as these sorts of bans aren’t a way to introduce prohibition again through the back door.

The Liberal Party of Quebec is the government. We know their position 🙂

Welp, that’s my round up for today. Take care and Bonhomme on.

FULL DISCLOSURE: Berkwood Resources is an EG client, but I don’t own any stock some of the other folks here do, however.

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