There's probably no more mainstream company than Procter & Gamble (PG) . So naturally my curiosity was boundless today when I got to interview Brian Athaide, CEO of the Green Organic Dutchman (TGODF) , a Canadian cannabis company, who toiled at P&G for 25 years holding senior positions in Europe before he departed.
Athaide, who was in New York to present at the Green Market Report's fascinating cannabis conference today, told me that even two years ago, when he was CFO of Andrew Peller Limited (ADWPF) , Canada's largest publicly traded wine and craft alcohol company, he would never have imagined working at a pot company. But that was then, before Canada moved forward to legalize cannabis, with full repeal a little more than one month away.
Now, though, he said, the opportunity was just too great, particularly in Green Organic Dutchman's niche, organic cannabis, where he hopes to become the Whole Foods of marijuana.
I fretted openly to him that I have watched these stocks trade wildly of late and that I thought people would get hurt in them if they grew too aggressive chasing the group. He didn't want to talk short term -- and I don't blame him -- because even though Green Organic has more than $300 million in capital, it has no sales.
But he said something fascinating that really resonated with me: the whole universe of cannabis stocks is worth about $30 billion but the disruption could be huge, as much as $500 billion worldwide when you tally the markets for oils, pharmaceuticals, pet health, edibles and most important the beverages. He's talking about teas, coffees and alcoholic drinks that will displace, perhaps easily displace, billions of dollars of current sales.
That's something Rob Sands, the hard-nosed CEO of Constellation Brands (STZ) , the company that owns Modelo and Corona in this country, has been telling us ever since he started buying a stake in Canopy (CGC) , the biggest cannabis company, with a roadmap toward domination of this nascent industry.
However, just like a P&G vet, Athaide also made the point of tempering enthusiasm for the stocks. Yes, the group's becoming more investible; he's been making the rounds seeing institutional investors for a company that's been an individual investor favorite.
But he cautioned that you should not expect huge profits or even a big surge in sales when Canada repeals prohibition because there's still going to be so many rules and so little infrastructure for cannabis derived goods. He says don't think you can belly up to the bar and get a shot of cannabis liquor. Some provinces are ahead of others and the business won't just be in cash -- as it is in the states where it is legalized here -- but the country has authorized credit, too. That will enable bigger chains to carry his products.
That said, a longer-term view can make a ton of sense when you consider the size of the opportunity.
I asked him what's the prospects for sales in the United States, the really big market, and he said that it's an eventuality. But he says the pharmaceutical companies and the private prison companies have waged a behind-the-scenes campaign to keep this country's ban in place.
Me? I want to introduce all of the good companies to our viewers but I also want to echo Brian's concern. Do not get ahead of yourselves. I think most people believe that sales will take off immediately upon repeal. If they don't, then investors and traders will be disappointed. So pay close attention, dabble if you want -- my favorite is Canopy because of Constellation's involvement -- but don't get all caught up in the hype. You don't want your money to go up in smoke.