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It has become a frequent occurrence as Bruce Linton's fame has grown: At an Ottawa Senators hockey game in late January, besotted fans asked him to pose for selfies."That selfie thing, I'm more than happy to oblige, but I don't comprehend it," he said.

His popularity comes from the fact that he is the founder and chief executive officer of Canopy Growth Corp., Canada's largest cannabis company and a central player within a hot sector that has been making piles of money for many early investors.

Despite this week's downturn, Canopy's share price has gone up 137 per cent over the past year.

But Mr. Linton invested earlier than most, diving in as an entrepreneur in 2012, which explains another aspect to his fame – sudden wealth. With more than 2.5 million Canopy shares, his stake in the company is worth about $62-million. Add in stock options and his fortune rises to more than $75-million.

He's not the only one getting rich. Dozens of key insiders within Canada's publicly traded cannabis sector have become multimillionaires within the past year – on paper, at least – as share prices have surged and the theoretical value of stock options has exploded.

The Globe and Mail looked at a sample of 27 top executives and directors at eight pot companies. Public filings reveal their combined shareholdings are worth $1.2-billion, before factoring in options. This enormous wealth arguably makes these stakeholders the biggest beneficiaries of the move toward marijuana legalization in this country, expected this summer.

But the value of their dazzling fortunes can rise or fall by millions of dollars each day. This past week alone wiped $5-billion from the combined market capitalization of Canada's top three cannabis companies, and our sample of 27 executives and directors lost a combined $400-million in the value of their stakes.

What's more, profits in the sector are scarce and investor interest in cannabis stocks has reached a fever pitch, raising concerns that share prices could implode – and much of that paper wealth could vanish. Investing fans could sour on their heroes.

How does a marijuana mogul cope? Rather than cashing out, most remain committed to the wild ride ahead under the belief that their sector has more in common with the flight path of Google Inc. than the scattered remains of the dot-com bust nearly two decades ago.

Neil Closner had been a health care-focused investment banker with Salomon Smith Barney in New York and vice-president of business development at Toronto's Mount Sinai Hospital when a contact mentioned the opportunity in the cannabis sector as Canadian regulations were changing.

"At that point, I was highly skeptical," he said.

But he was intrigued about the purported medical benefits of cannabis, and decided to learn more. His education included a trip to Israel, which years earlier had given the go-ahead for cannabis for medical use. Mr. Closner soon saw the potential to start a business, while helping people gain access to a product that is increasingly being used to treat symptoms such as pain and nausea.

He launched his first cannabis-related project in 2013, before federal regulations were formalized or licences awarded. He then co-founded MedReleaf Corp., where he is CEO, which began trading on the Toronto Stock Exchange in June, 2017.

The stock price tripled in six months, as some investors embraced the idea that marijuana legalization would lead to tremendous growth. Others, no doubt, simply jumped into the rally in the hope of scoring short-term gains.

Even with the stock price down nearly 40 per cent over the past month, the company is valued at $1.8-billion. And Mr. Closner's 2.8 million shares give him a stake worth about $44-million. He has another 1.8 million options, though it is unclear what these are worth.

"Knowing what I know of the industry and the confidence I have in our business, I'm very comfortable having 99.9 per cent of my net worth tied up in the stock," he said.

He added: "I got a call from one of our board members today, asking me a question about our stock. And my answer was that I hadn't even looked at it today."

Canopy's Mr. Linton said that he, too, doesn't look at his share price very often. And despite his vast wealth in shares and options, he is driving a used Ford Flex.

Mr. Linton lived through the dot-com bubble of the 1990s, and knows what can happen when hype consumes investors – and companies.

In one of the more notorious examples in Canada, investors turned hostile toward Bid.com, a wannabe competitor of Ebay, after its share price declined and an analyst downgraded his recommendation. There were death threats to the executives and underwriters, showing a dark side of the markets when speculative fortunes are lost.

"I remind everybody that Google began at the same time as a variety of companies that you've never heard of," Mr. Linton said, alluding to technology companies that benefited from remarkable investor interest in the 1990s but then failed because of weak business models.

"There are lessons here: If you get caught up in the moment and believe that what you have is brilliant, you're probably toast," Mr. Linton said.

Paul Rosen has taken a slightly different approach to the cannabis sector.

He was CEO of PharmaCan Capital Corp. – now Cronos Group Inc. – which owns stakes in five licensed marijuana producers and is valued at more than $1-billion. He left the company in May, 2016, but he certainly didn't leave the cannabis sector.

With a thorough understanding of the connections between health care, capital markets and cannabis, he formed Breakwater Venture Capital Corp. to invest in early stage cannabis-related companies.

His exposure to the sector shifted from one company (Cronos) to a portfolio of 75 to 100 different investments, with more than $50-million in total assets.

"If I'm not the most invested Canadian in the industry, I'm certainly in a very small group," Mr. Rosen said.

"I have traded stocks as they have breached excited valuations," he added. "But I'm probably the truest believer in the long-term durability of some of these companies."

Eric Paul, CEO of CannTrust Holdings Inc., is also a true believer – but he, too, has taken advantage of recent rallies and sold some of his shares.

A trained pharmacist and the former president of Zellers, the discount arm of Hudson's Bay Co. before it was sold in 2011, Mr. Paul bought into CannTrust in 2014 after he and his business partner recognized the medicinal benefits of cannabis.

"We saw it as a medical business only," he said. "At the time that we went into this thing, we didn't envision recreational use ever being a possibility."

Now, though, his company cites research suggesting that recreational sales will drive Canadian cannabis revenues to nearly $9-billion by 2024, driven by everything from oils to capsules, and sprays to drinks. The company is expanding with a 430,000-square-foot greenhouse in the Niagara region.

In the midst of this growth, CannTrust's share price has more than tripled since the shares debuted on the Canadian Securities Exchange in August at $2.50 each. As a result, Mr. Paul's 13-per-cent stake in the company is now worth $101.4-million.

The steep valuations in the sector don't concern him: "When you are in a startup industry, the multiplier against revenue is non-traditional. It's like the Googles of this world when they started," he said.

However, Mr. Paul sold nearly $4.5-million worth of his shares in January, according to filings, suggesting that he's not averse to taking some money off the table.

The co-founders of marijuana producer Aphria Inc. have also sold some of their holdings while the share price has increased nearly 15-fold over the past three years.

John Cervini, whose stake is valued at $123.5-million, sold one million shares last March at $6.50 each, according to filings. Forget about good timing on this one: He missed out on a subsequent 240-per-cent rally that kicked in later in 2017.

Cole Cacciavillani, Aphria's other co-founder, whose stake is valued at $106.9-million, has also sold some of his shares, to his regret.

"We're very conscious of who supports us. I sold a few shares, and right away everyone was talking about it," he said.

"There is incredible wealth on paper. However, I'll tell you: It's very hard to move it off the paper," Mr. Cacciavillani added, pointing to regulations surrounding blackout periods and quarterly reports, which can bind the hands of insiders.

Anyway, he says, he's less focused on the stock price and more focused on running Aphria, a company that sprang from a family business in Leamington, Ont., growing potted plants for Mother's Day and Easter.

The expected legalization of recreational cannabis should help reduce volatility in the share price, Mr. Cacciavillani says. He expects that the company's efforts to attract more institutional investors – rather than flighty retail investors – will also pay off.

"The volatility is an issue," he acknowledged. "I think it will still be an issue as long as there is a lot of retail here."

Pot of riches

The cannabis boom has made paper millionaires of many executives. Here is what select insiders' shares are approximately worth today.

PersonPosition, companyShare holdings (in millions)Value of shares (in millions)
John CerviniCo-founder and director, Aphria8.90$123.53
Stephen DoblerPresident, Aurora Cannabis14.44$122.76
Cole CacciavillaniCo-founder and director, Aphria7.70$106.85
Murray GoldmanDirector, Canopy Growth4.41$106.26
Nik van HaerenDirector, Newstrike Resources103.88$105.96
Eric PaulCEO, CannTrust11.94$101.40
Terry BoothCEO, Aurora Cannabis11.56$98.29
Bruce LintonChair and CEO, Canopy Growth2.57$61.87
Brent ZettlCEO, CanniMed2.33$61.57
Neil ClosnerCo-founder and CEO, MedReleaf2.81$44.27
Lorne AbonyCEO, Nuuvera7.36$43.57

Source: Bloomberg

Note: Share values as of Feb. 2 close

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