From Black to White: Experts discuss the Integrity of Canada’s Imminent Recreational Cannabis Market

Toronto, Ontario: On February 12, 2018, a panel of experts gathered before a discerning audience of professionals to deliberate Canada’s imminent legalisation of recreational marijuana. The discussion, moderated by Andrea Mandel-Campbell of the Canadian Club, navigated the turbid waters surrounding the impending overnight flip of an illicit narcotic into a legal product. The dialogue in particular, turned around how the industry plans to establish integrity in this novice marketplace.

Among the five industry experts sat Hugo Alves. Described as a leading advisor and pioneer of the cannabis industry, Alves currently serves as president and partner of Cannabis Wheaton Income Corp., a significant player in the Canadian cannabis market.

Screen Shot 2018-04-12 at 16.18.59.pngHugo Alves (second from left) speaks at the Canadian Club panel discussion.


Mandell-Campbell began by probing her panel about industry integrity concerning valuation. She commented on the plethora of marijuana companies listed on the TSX that boast hefty revenues, yet a negative cash flow. These companies also list value at, “two hundred times their earnings.”

“How do we really value these companies?” asked Mandel-Campbell, directing her rhetoric to Alves, who sat casually in an open-necked shirt before a sea of suited men.

“Can you seriously go from throwing around numbers like 200 billion and then still giving a particular company a 200 times earning value: is that really, I mean, when you look at a lot of these companies, what they are offering is their value proposition and they don’t have a lot of revenue – they are losing money and yet what they are talking about is, I just signed an export licence, I have 16 export licences, I have 20,000 square metres of production capacity, but there is no ‘there’ there yet, so should we be at all nervous, Hugo?”

Hugo Alves appeared undeterred by Mandell-Campbell’s summation of Cannabis Wheaton’s business model. Cannabis Wheaton is the first marijuana streaming company, a concept that acquires partners in the production, distribution and export sectors, and who, despite boasting scores of business deals, reported zero revenue for their first 9 months of operation.

“Well, I think that, well, leaving aside how the market values companies, because by and large that is a function of who is willing to sell and who is willing to buy…I think when you see those announcements about an acquisition, what you are seeing is, and that it is a very exciting thing for the Canadian investor…what we are looking at is a once in a lifetime opportunity: we really have no analogy in our industrial history for this shift away from prohibition to regulation, so it’s an exciting opportunity, whether those valuations are sustainable or not,” responded Alves.

In effect, the legalisation of recreational marijuana represents a milestone in Canadian, and even world history. But flipping a business estimated between six to ten billion dollars almost overnight from the black to the white market poses innumerable issues that Mandel-Campbell continued to scrutinise.

“I want to drill down on some flags that I think go to the heart of the integrity of the sector,” she stated, first speaking of the illegal pesticides found recently in so-called organic medical marijuana products. She then referred to industry accounting regulatory dilemmas: no current industry standards are in place, meaning companies can value their plants as they wish, creating inflated profitability.

Mandell-Campbell also questioned the government’s angle on branding, taxation and pricing: issues they must tackle before this summer, when some twenty-nine million Canadian citizens will presumably receive legal access to recreational marijuana. To date, the Canadian government provides no clarification on future quality measures, or consumer education. And no one knows how the government plans to entice black market buyers over to the legal, but likely more expensive white market place.

“What will it take to still be here five years from now?” concluded Mandell-Campbell’s questioning.

“ I think the winners are the ones that establish a very robust and diverse cultivation platform, both in terns of geography and methodology, and that includes international, and that create and licence strong intellectual property, whether that be brands or a particular process, and those that open up diverse distribution channels,” asserted Alves, outlining Cannabis Wheaton’s objectives.

Although changes to Canada’s cannabis legislation changes appear imminent, no one knows for sure how the rollout of industry practice will play out, or what the future really holds for cannabis companies, despite the multi-billion dollar hype and promised potential.

On February 15, just three days after the panel debate, the Canadian government announced delays in legislative processes, pushing the earliest possible sale date for recreational marijuana back to August 2018. The Canadian Medical Association announced the same day their concerns regarding marijuana dependency and the risks of impaired driving.

Cannabis Wheaton shares dropped to $1.60, their lowest for 2018, following the announced delays. The company, while boasting news of each acquisition on their website, lists minimal financial information and all inquiries divert to Everton Murdoch, an investor relations agent from IRTH Communications, in Los Angeles. When I called Murdoch, he revealed he knew little about Cannabis Wheaton and, “has never even been to Canada.”

 Screen Shot 2018-04-12 at 16.18.47.pngCannabis Wheaton Stocks dropped to $1.60 following announced delays in recreational cannabis legislation.




Andrea Mandell-Campbell. (Moderator). (2018, February 12). Cannabis in Canada: will the market meet the hype? Canadian Club Toronto.

CBC News (2018, February 13). Doctors highlight marijuana’s health effects. CBC News. Retrieved from

E Murdock. Personal communication. 16 February 2018.

Tasker, J. (2018, February 15). Senate deal on cannabis means no sales before August. CBC News. Retrieved from