Icon Exploration Inc. (TSX.V: IEX.H) Set to Capture High Margins with Vertical Integration Strategy in Canadian Cannabis

January 7, 2019 12:39:58
  • Canadian cannabis market set for CAGR of 77.9 percent to 2021
  • Icon’s Vertical integration strategy could capture high margins
  • Company will have operations in cultivation, extraction and retail

The legalization of recreational cannabis in Canada has made analysts project rapid growth for the industry. Spending on adult-use marijuana (http://nnw.fm/l1fIX) is “estimated to reach over $3 billion in 2021, driving a CAGR of 77.9 percent from 2018-2021.” Eventually, Canada’s legal cannabis market will likely be comparable in size to the hard liquor or wine market. Growing organically, some sectors will be profitable (others, perhaps, less so), but telling which may not be so easy. Consequently, the vertical integration strategy that Icon Exploration Inc. (TSX.V: IEX.H) is employing, by straddling the value chain, seems best for capturing the highest margins. The company will have a finger in many pies. It has been stocking up on talent as it prepares to commence operations in cannabis cultivation, refining and extraction and retail.

Even before the legalization of recreational cannabis on October 17, 2018, the cannabis market in Canada had been growing at a healthy clip. The number of medical marijuana patients has been increasing by 10 percent monthly, sales of dried cannabis have risen at…

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