July 11 (Bloomberg) -- Marijuana gave Olympic medalist Ross Rebagliati a measure of notoriety. Now the budding Canadian entrepreneur is betting the same drug will give him a shot at redemption.
Rebagliati, who briefly lost his snowboarding gold at the 1998 Winter Games in Japan after testing positive for marijuana, is building up a weed “branding and licensing” company he hopes will rise on a wave of demand for legal pot investments.
“I don’t want it to be like Nagano where it was two minutes one day and then it defined me for the next 16 years,” said Rebagliati, 42, chief executive officer of Green & Hill Industries Inc., a company that operates under the brand name Ross’ Gold and trades over the counter on the U.S. OTC Pink market. “This is something that’s here to stay.”
Rebagliati is tapping into a surge in interest in medical marijuana, which spiked in April when the Canadian government moved to commercialize production. That’s sparked a “dot-bong” boom, or “green rush,” reminiscent of the late ’90s dot-com era or the gold rush in the Klondike a century earlier.
Hundreds of companies have applied to Health Canada for licenses to grow and market medical pot, attracting the likes of former British Columbia Premier Mike Harcourt and John Turner, the former Canadian prime minister who is now a director of a wannabe commercial grower. Still others are seeking to provide related services such as marketing, security, lighting and financial advice.
“It’s gone from non-existent in the legitimate market to one that could be potentially worth several billion dollars in a span of 12 to 24 months,” said Khurram Malik, the Toronto-based co-head of research at Jacob Securities Inc., which is seeking business from weed companies looking to go public.
Rebagliati plans to build a business based on his reputation as an elite athlete and a cannabis “aficionado.”
He and partner Patrick Smyth aim to license the Ross’ Gold brand name to a medical-marijuana distributor that will market pot as Ross’ Platinum, Gold, Silver or Bronze, depending on the weed’s level of tetrahydrocannabinol, the psychoactive constituent of cannabis known as THC.
Rebagliati vaulted to prominence when his gold medal title in Nagano, the first in the Olympics for men’s snowboarding, was briefly revoked after he tested positive for THC. Rebagliati got the title back because THC wasn’t a banned substance at the time.
Looking back, Rebagliati believes the doping controversy cost him potentially lucrative corporate sponsorships.
“I was waiting for a long time to use, or to play, the hand that was dealt to me in Nagano,” he said in an interview in Vancouver.
Opportunity began to take shape as Colorado and Washington state moved to loosen pot laws and Canada unveiled new plans to allow commercial marijuana production that could be sold to patients with a doctor’s prescription.
Unable to attract significant private financial backing, Rebagliati and Smyth in March acquired Green & Hill, a U.S. shell company formerly known as Bluewave Group Inc., and began doing business on the OTC market as Ross’ Gold.
The U.S. Securities and Exchange Commission on its website describes the OTC Pink, a trading venue once known as the pink sheets, as “an open marketplace for a broad spectrum of equity securities, with no financial standards or reporting requirements.”
Like preceding booms, the dangers of the rising cannabis industry may be just as real as the potential rewards. Canadian regulators warned investors last month to be cautious of small publicly traded companies that have announced plans to enter the medical-marijuana industry, echoing a May 16 alert from the SEC.
“The CSA is concerned investors may face financial harm by purchasing such shares at an inflated price before there is a viable business,” Montreal-based Canadian Securities Administrators, an umbrella group for the country’s provincial and territorial regulators, said in a statement.
Ross’ Gold, trading as Green & Hill, rose 8.6 percent to 38 cents in New York, giving it a market value of $38.4 million. Rebagliati said he owns 49.8 million shares, or 49 percent of the company, which would value his stake at about $18.9 million.
Last month, Ross’ Gold drew attention from the British Columbia Securities Commission after a two-day surge in its share price and trading coincided with an apparent promotional campaign by a Florida-based penny stock newsletter writer.
The British Columbia market watchdog has jurisdiction because several Ross’ Gold directors, including Rebagliati and Smyth, live in the province.
In a statement, Ross’ Gold disavowed any connection with the campaign or its sponsor and cited inaccuracies in the promotional message.
There are 20 companies on the Canadian Securities Exchange that are involved in marijuana or exploring opportunities in the business, according to James Black, the exchange’s vice president of listings development. The more senior TSX Venture Exchange lists one.
Medical marijuana “has the potential to be a good money maker -- a legitimate money maker, authorized and supervised by the federal government,” former prime minister Turner, a director of closely held Muileboom Organics Inc. said July 7 in a phone interview from his summer home near Kenora, Ontario. “That’s encouraging people to get involved.”
Still, with more than 140 public companies in North America professing to be involved in the marijuana industry, the onus is on investors to be careful.
Rebagliati said investors should do their research and “make sure that they’re comfortable with losing all of their money.”
“Only the strongest will survive,” Rebagliati said. “We feel we’re one of them.”
To contact the reporter on this story: Christopher Donville in Vancouver at firstname.lastname@example.org