The all time lows in cannabis sector investor sentiment that seem to have dragged on interminably haven’t yet effected Matthew Nordgren. Following a morning full of industry panels at the Lift and Co. business conference in Vancouver, where guests were still visibly coming to terms with an environment in which risk capital is no longer falling from the sky, the Arcadian Capital Partners Partner brought some very welcome enthusiasm to a talk about capital raising.

Nordgren came off like a time traveler from 2017; visibly enthusiastic about the once-in-a-lifetime opportunity to commercialize an industry with 2,000 years of cultural heritage as a successful business, then expand that industry. He stressed how much further the industry has to grow, and how it will take a long time yet. Despite being a natural hype man, it took Nordgren a while to get a shell-shocked crowd warmed up. As much as they wanted to believe, enthusiasm doesn’t stack with a bad market that is clearly getting worse. The jubilance came off like a trap to strung-out investors whose recent bias is to temper their expectations and remain realistic. The paradox of it all is: He’s the realist.

In contrast to the army of retail bag-holders trying to trade their way out of a jam the sell side put them in, institutional capital of Arcadian’s profile didn’t get involved in cannabis for the momentum. They’ve selected businesses that they believe can be grown, and consider the machinations of the capital markets to mostly be noise. According to Nordgren, the value potential that was being chased during the melt-up is still there in almost all of the cannabis verticals. None of the major consumer markets have matured, and the ancillary businesses supporting them can’t even begin to take shape until it does.

When I suggested to Nordgren that Private Equity’s advantage was that they’re prepared to operate on longer timelines, he told me that wasn’t it. “The timelines don’t really matter. The growth can happen slowly or quickly, and we don’t mind making subsequent investments further along the growth cycle in good businesses.” Acracdian understands that over-valuations during melt-ups are as much a part of the cycle as the prolonged bloodletting. It isn’t something they try to time, because they’re confident in their ability to identify growth opportunities.

For Matt, the equities markets getting carried away is just one of these things that happens along the way. So is the coming era of predatory debt financing set to take advantage of businesses who were more interested in selling paper than developing a business. The vultures presently circling cash-thirsty cannabis companies, ready to strike with poison debt, are eventually going to burn the fat off the balance sheets in a fire ritual, and leave only the skeleton of a working business, with a clean cap table, suitable for sale to equity investors interested in their practical growth.

The advice he gave small cannabis businesses, formed in consensus with panel-mate Narb Alexandrian of Canopy Rivers (TSX:RIV), was that they ought to take care of their cap tables. A messy, poorly tracked share structure scattered across a landscape of boutique hedge funds and retail pockets isn’t something serious equities investors can work with. It’s part of the reason these companies can’t get any institutional support at the moment. Private investors are setting up for the day it comes. Nordgren is certain that, when it makes sense, they will.

“There’s enough money in US institutions to stroke a check for the entire cannabis industry.” And he’s right. There is. At such a time that enough of that money is in position in operating cannabis businesses outside of bubble valuations, the sections of US institutional capital presently using their considerable lobbying ability to shape legislation for pharma and banking interests may consider using it to effect federal US legalization, inviting in the multi trillion dollar US equities markets to get involved in cannabis.

But there’s no sense going to bat in Washington for pre-money cannabis companies with atrocious capital structures. Even the largest cannabis companies are a long ways away from positive earnings; Canopy Growth is operating at a negative growth margin. This particular fire is not one to throw gasoline on. Better off letting it die down to the embers, build it up carefully.

The Lift & Co. Cannabis Expo continues today and tomorrow at the Vancouver Trade and Convention Center.