Canopy Growth CEO bets pot users will pay more for its legal products than go back to street dealers

  • "'Better' will be a big argument," Bruce Linton says as Canada becomes the largest country in the world with a legal national marijuana marketplace.
  • Linton says unregulated marijuana products can come with risks, including being sprayed with unnecessary chemicals.

Canopy Growth CEO Bruce Linton is betting that marijuana consumers will be willing to shell out more cash for his company's products now that they're legal for recreational use in Canada, instead of going back to illegal street dealers.

"'Better' will be a big argument," Linton told CNBC's Deirdre Bosa from a Canopy store in Newfoundland on Wednesday as Canada became the world's largest country with a legal national marijuana marketplace. "People are going to start realizing that the product that they get from the illegal dealer comes from officially, nowhere."

Linton, whose Canada-based pot firm's partners include rapper Snoop Dogg and alcohol giant Constellation Brands, said unregulated marijuana products can come with risks, including being sprayed with unnecessary chemicals.

In August, U.S.-based Constellation upped its bet on the cannabis industry, announcing an additional $4 billion stake in Canopy. At the time, the maker of Corona and Modelo beers and top shelf liquors said it does not planning to sell cannabis drinkables in its home country before legalization happens everywhere.

As more governments legalize cannabis, Linton told CNBC earlier this month, cannabis-related products could disrupt $500 billion worth of existing industries, ranging from alcohol, cigarettes and pharmaceuticals.

Marijuana stocks have been booming in advance Canada's legalization, with Canopy's U.S. shares soaring more than 400 percent over the past 12 months. But share prices of Canopy and another high-flying Canadian pot company, Tilray, were down 3 and 6 percent, respectively, on Wednesday.