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What will legalized cannabis mean for investors? We asked two analysts who have been watching Canada’s marijuana sector closely – both the companies that grow and sell medical cannabis, which is already legal, and those that are poised to serve the coming recreational market.

Darren Calabrese/The Canadian Press

Our roundup of Canadian small-caps of between $100-million and $2.5-billion in market capitalization making news and on the move today.

Marijuana stocks are expected to move today after Ottawa says it will impose a 10-per-cent tax on recreational marijuana when it becomes legalized, possibly next year. The announcement came out of yesterday's first ministers' meeting in Ottawa.

Beacon Securities analyst Vahan Ajamian views the tax proposal "favourably."

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"While it is unclear to us if GST and/or provincial taxes will also be levied on recreational marijuana, and we will have to see exactly how it all plays out, the $1/g (10 per cent) proposed excise tax is lower than we expected," he said in a note. "Based on our calculations, and commentary from LP [licensed producer] executives, we believe LPs should be able to prosper under such a regime."

Mr. Ajamian also said the marijuana sector has been "melting up" in recent weeks.

"On the back of several macro developments, such as rollout plans from many provinces, 23 out of 27 investments tracked have recorded double-digit gains since the end of August 2017.  We believe this news will prompt more gains in today's session."

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NorthWest Healthcare Properties Real Estate Investment Trust (NWH.UN-T) says it's raising $125-million in a bought-deal financing.

The offering — for 1.4 million trust units at $10.95 each — is being made through a syndicate of underwriters led by BMO Capital Markets and RBC Capital Markets.

NorthWest said it intends to use the net proceeds of the offering, together with existing resources, to repay the $125-million secured operating line used to partially fund the acquisition of Generation Healthcare REIT. Any remaining funds will be used for future acquisitions, repayment of additional high-cost revolving debt and for general trust purposes, the REIT said.

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Stingray Digital Group Inc. (RAY.A-T; RAY.B-T) says it's raising $40-million in a bought-deal financing.

It has entered into an agreement with a syndicate of underwriters co-led by National Bank Financial Inc. and GMP Securities L.P., which will purchase 4.3 million subordinate voting shares of the company at a price of $9.20 each.

The company said it intends to use the net proceeds for working capital and general corporate purposes, "including to provide further flexibility for future acquisitions."

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Novagold Resources Inc. (NG-T; NG-N) reported a net loss of $10.4-million (U.S.) or 3 cents per share in the third quarter. 

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Analysts were expecting a loss of 4 cents.

That compared to a net loss of $7.4-million or 2 cents per share in 2016.

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Gazit-Globe (GZT-N; GZT-T) says its Gazit Horizons Inc. subsidiary has acquired its first asset in the New York market for $73.3-million (U.S). The property is a three-level, 92,000-square-foot retail condominium on Manhattan's upper east side.

"We are excited to acquire our first Manhattan asset, in a neighbourhood that we know very well," said Jeff Mooallem, CEO of Gazit Horizons.

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Goldmoney Inc. (XAU-T) says it's raising $30-million in a bought-deal private placement.

It has an agreement with a syndicate of underwriters led by GMP Securities L.P., which has agreed to purchase 6.9 million shares at $4.30 each.

The net proceeds are expected to be used for general corporate purposes, the company said.

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About the Author
Contributor

Brenda Bouw is a freelance writer and editor based in Vancouver. She has more than 20 years of experience as a business reporter, including at The Globe and Mail, The Canadian Press, the Financial Post and was executive producer at BNN (formerly ROBTv). Brenda was also part of the Globe and Mail reporting team that won the 2010 National Newspaper Award for business journalism. More

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