Marijuana Insiders Cash in on Reefer Madness Before Canadian Legalization Report

Article by Bloomberg News

Marijuana insiders cash in on reefer madness before Canadian legalization report 'Insiders are surprised at the value of their holdings and are monetizing part of their position'

Insiders with two of Canada’s largest marijuana companies are cashing in on the industry’s reefer madness before the country introduces its plans for legalized recreational pot.

Since March 1, five directors, officers and board members with Canopy Growth Corp. sold 3.2 million shares worth at least $7.5 million, including Chief Executive Officer Bruce Linton, who sold $3.7 million worth of his holdings, according to data compiled by Bloomberg. Between March 1 and April 10, eight executives and the chief cultivator for Aurora Cannabis Inc. sold a total of 4.9 million shares worth $11.8 million, data show.

The sales were a mix of shares insiders already held and the exercise of options. The profit taking comes as the country’s burgeoning marijuana market has ballooned in value in recent months and just as Prime Minister Justin Trudeau’s government introduces legislation to legalize marijuana.

The value of Canada’s nascent marijuana industry has surged amid investor optimism over recreational sales, which Cannacord Genuity Group Inc. said in November could reach $6 billion annually by 2021. Smith Falls, Ontario-based Canopy Growth has seen its share price rise more than 300 percent in the past 12 months, while Aurora has climbed more than 500 percent.

‘Surprised’ Insiders

“Insiders are surprised at the value of their holdings and are monetizing part of their position,” said Jason Zandberg, an analyst at PI Financial Corp. who has a buy rating on marijuana companies including Canopy Growth, Emblem Corp., OrganiGram Holdings Inc., and Aphria Inc. “I don’t think this means the market has peaked, but the current wave of capital entering has pushed prices higher very quickly.”

Linton remains Canopy’s third-biggest shareholder, with 2.8 million shares. Company Spokesman Jordan Sinclair declined to comment when contacted by Bloomberg News.

Aurora has been engaged in so many transactions, including acquisitions and raising funds, that shares have been in “almost constant lockdown for officers and directors for the last year,” said Cam Battley, the company’s executive vice president. Shares have appreciated “significantly” and a recent window opened up for officers and directors to sell, he said.

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