Turns out, it may be easier to strike gold by growing green.
Just ask Jay Wilgar, a former wind power developer who started a medical marijuana company with friend Travis Kanellos after hatching the idea while lifting weights at a gym. When they began looking at ways to take their startup public, advisers suggested partnering with Newstrike Resources Inc., a Toronto-based firm that had been looking for gold in Ontario and Wyoming without much luck.
“I think they had given up on what they were pursuing from a mining point of view,” Wilgar said by phone. He also wanted to work with “people that understand capital markets, and that was really how the Newstrike transaction came about.”
Newstrike, backed by The Tragically Hip, one of Canada’s most iconic bands, was reborn last year through a reverse takeover by Wilgar’s startup and has since shot higher. While the company has no revenue, it’s valued at C$612 million ($467 million) and became a takeover target itself by rival producer CanniMed Therapeutics Inc. in November.
The number of companies that started in the mining or oil and gas sectors that are now part of Canada’s burgeoning marijuana industry has jumped to more than 40. In all, almost half of the country’s marijuana firms started out in the resource sector before many converted to pot via reverse takeovers and spinoffs.
The listings reflect a surge of investor optimism as Canada moves to legalize recreational pot this year. Market values for the four largest publicly-traded firms, Canopy Growth Corp., Aurora Cannabis Inc., Aphria Inc. and MedReleaf Corp., have all ballooned to more than C$1 billion. The pot companies on Canadian exchanges have a combined market value of about C$32 billion.
While the surge is being fueled by estimates that retail sales of recreational