Live on Bloomberg TV

00:00Shares of canopy growth jumped today after the marijuana producers Second Quarter Earnings topped expectations. The company became Canada's first marijuana unicorn when its valuation climbed to a billion dollars on Friday. The stock has soared at a blistering two hundred and sixty five percent pace for this year with more on the company's plans for growth. We turn to CEO Bruce Lynton in Ottawa. Well Bruce you're the Green unicorn I guess a billion dollars in valuation Did you ever think you'd get there and get there this quickly . And I don't mean to sound pompous but really I began the year by talking to people about why it was possible we could become a billion dollar company by the end of the year. And it seemed a little bit less likely when our market cap was just over 100 million. But the reason for it is you know you're a liberal and you want to run for re-election . You need to make sure that this wreck access happens then it happens with enough runway to show the results. And suppose you're running Germany or Brazil. They are transforming how they manage medical cannabis the same way candidates but four or five years ago and so I think if we can be dominant and successful here participating effectively in those markets while also creating a really large brand and platform for rec those markets add up to billions and billions so to have a market cap for the leader of a billion doesn't seem quite as crazy as it might on the surface. Bruce you mentioned runway. How do you think about as you're running canopy How do you think about the balance of the kind of the industry tailwind that exists just growth overall. And then how you carve out that strategy specifically for your company how do you how do you think about the balance between those two. Yes so what I see you know I must admit I spend far too little time looking at stocks. I haven't yet even built a ticker group of everybody in the sector . But I do get snippets. I think what's happening is there is a hot sector right. But I think that sometimes people are actually deciding to buy a basket rather than pick a couple of winners or one winner. And so that's driving everybody up . What's happening a little bit with the sector at large is that with us specifically what I'm finding is you know when you move to the TSX from the venture when you start trading today I think we traded about 12 million shares. And the effect of that is you start to attract institutions and when you start attracting institutions it's quite remarkable the US interest has actually been I think more aggressive and assertive than the Canadian institutional. And part of it is in February it began when we announced Snoop Dogg as this partner if you will how could snoop dogg drive us institutional. Well he's American and he's pretty iconic. And when he does something in Canada that causes a lot of people to look and so the effect has been we're hosting every week ever bigger into more interesting sorts of portfolios of money and they like the sector. And I guess part of the tough job of people watching your show is are you going to let this sector go by and put all your money in the other sort of high growth not affected by inflation not affected by hydrocarbon pricing not affected by the rate of growth in China sectors because you know this is something that is going to grow. And the question is what else do you have this kind of got that prospect. So I think we're catching a bunch of folks looking at this a little bit long not just a short right now. Bruce you say you don't look too closely at the stock and yet you've got a valuation there of one point two billion which gives you almost an A.T.M. really an ability to to finance acquisitions or international growth as you mentioned using equity at the same time you've mentioned in the past that you wouldn't mind turning to more to more traditional lenders to take on debt loans . How's that going. What are your options for so long FTSE this growth. Yes. So you can always imagine that your phone gets pretty busy as far as people who want to do bad deals. We're always looking at these things. But really what we're trying to do is take the fact that we have a lot of tangible assets. You know we've raised about two hundred forty three million dollars across the three platforms and deployed about ninety five of it to create what we have. And so what I want to be able to do is take some of that asset base and roll it over into traditional lenders. And what happened in August over this past year was that the banks felt that they didn't want to deal with folks in the marijuana business. And I understand there are some who are legal and there are quite a few who are illegal but it's fairly easy to see who the legal participants are we're on a health canada list and we're sanctioned and run by the federal government and so I'm hopeful that that will come back home which will really reduce our delusion as we look internationally . We'll probably find uses of capital that are for I'll call it creating infrastructure in other countries and whether or not that comes from Canadian sources or in country sources will sort of be sorted out in 2017. How do you think about competitive advantage in this industry. You just mentioned obviously there's a role regulators play and the government plays in the industry. How do you think about the movie not the niche but the lane that you carve out at Canopy. Do you envision that I mean if we're that we're here today talking about getting to a billion market cap is the next billion come through an expansion into new types of business lines or is it just again kind of more or more so riding the wave. It's actually the the first one in that what's going to happen is you're going to find that there are almost like marijuana platforms from production. So whether it's a greenhouse or indoor and that for methodology was quite novel and difficult to establish three years ago. It's not going to become a commodity but it's going to become an input and then you go to the next step which is to extract the oil. So when you take the oils out you've now gone from a dried plant which people might associate with rolling a joint or vaporizing to an oil and the oil you could then think about putting inside a gel capsule. Or you could think about infusing it into a liquid fraction and making it in some kind of a really interesting competitor she distilled spirits and what happens is when you get to that level you start doing medical research and you start doing market branding and so where the next layers of value the next billions if it's going to happen are going to come from our medical efficacy trials and from brands that fit into the consumer's expectation of purchase. And I think you're going to find that that's where we've put a lot of our push and what do people pay for. They pay for an expectation it's going to be fulfilled and not always attached to a brand. And so I suspect over 2017 you're going to see a lot of positioning for people trying to create brands. When I started four years ago Tweed was a pretty good name because it actually carried some time and you know as we've added certain actors like Snoop they've pronounced sort of what we're about and the effect is we have about 25 percent market share in the current market even though there are far more than 30 participants .

No schedule data available.

Canopy Growth Is Attracting Institutional Investors: CEO

Bruce Linton, CEO of Canopy Growth, joins Dave Scanlan to discuss the company's fiscal second-quarter earnings and skyrocketing valuation. (Source: Bloomberg)

Bloomberg Technology
The only daily news program focused exclusively on technology, innovation and the future of business from San Francisco. Hosted by Emily Chang.
More episodes and clips