Canadian Trading Markets Bolster Their Role as Legal Marijuana Industry’s Top Financier

By Gillian Flaccus

PORTLAND, Ore. (AP) — Green Thumb Industries had a marketing strategy, experience and loads of ambition to develop its hashish enterprise. What the Chicago-based firm didn’t have was entry to sufficient capital to make all of it occur.

So, the corporate with $20 million in income from pot outlets in seven states turned its gaze north and went public in June 2018 in Canada, the place marijuana was set to be broadly legalized nationwide Oct 17, 2018.

The Canadian Securities Exchange is shortly turning into the go-to place for U.S. hashish corporations orphaned by their very own inventory exchanges as a result of the U.S. authorities nonetheless considers marijuana an unlawful drug.

Green Thumb took over a publicly traded Canadian firm, added an “Inc.” to its identify and went public. The firm raised $67 million U.S. dollars, cash that may permit Green Thumb to get licenses in new states and open extra retail shops throughout America.

“The phone rings more, we’re talking to more people, and business has expanded,” firm founder Ben Kovler stated. “We’re just excited about what’s happening.”

In current months, outstanding US pot corporations together with MedMen, Liberty Health Care and Chalice Farms have listed on the Canadian Securities Exchange, elevating capital and drawing consideration from rich buyers in Asia, Europe, and Australia who need to make a play within the hashish business however are spooked by the US federal prohibition.

Many extra US marijuana corporations are lined as much as be a part of them as the US business shortly expands. Acreage Holdings, one of many United States’ largest vertically built-in hashish corporations, introduced Monday, July 23, 2018, that it’ll record on the Canadian Securities Exchange this fall as a result of it’s grow to be the “exchange of choice for U.S. companies like ours.”

Two-thirds of US states now permit medical marijuana, and 9 of them and Washington, D.C., have legalized leisure use. On June 26, 2018, voters in Oklahoma authorised medical marijuana, additional proof of the eroding opposition even in conservative states.

US corporations want fast entry to cash to snap up restricted manufacturing and retail licenses to allow them to shortly set up themselves in new markets.

“If you don’t get in and get on, you’re out,” stated William Simpson, founding father of Chalice Farms, an Oregon firm that was acquired final yr by a publicly traded Canadian firm referred to as Golden Leaf Holdings. “Time is of the essence. You need money now, and you need it yesterday.”

Mid-July 2018 offered proof of American buyers’ willingness to leap into the marijuana market if given the prospect. US inventory exchanges won’t listing corporations that do enterprise the place marijuana is against the law, however a number of Canadian corporations commerce within the US as a result of their enterprise is authorized within the nation the place they’re based mostly.

Tilray Inc., a British Columbia-based medical marijuana firm, turned the primary hashish enterprise to finish an preliminary public providing on a serious US inventory trade when it started buying and selling on Nasdaq. It raised $153 million and the inventory jumped almost 33 % on its first day of buying and selling.

Chris Barry, a companion on the Dorsey and Whitney regulation agency in Seattle, handles marijuana funding offers and mergers within the US and Canada. He famous that main institutional buyers, together with the century-old New York funding financial institution Cowen, have been concerned in Tilray’s IPO.

“The lesson is that the institutions will be there if you have a good business plan and your business is 100 percent legal in the jurisdiction you’re in,” he stated.

That’s the issue within the US. While extra states approve authorized marijuana, the federal authorities — and particularly US Attorney General Jeff Sessions — stay opposed, creating uncertainty for banks and buyers.

“There’s pent-up demand all over the world, and all over in the US, and it’s all getting forced into Canada,” stated Troy Dayton, chief government of The Arcview Group, an Oakland, California-based hashish funding and market analysis agency. “Every large investor and every large company is salivating over this market now, but they’re held back because of the uncertainty.”

In the meantime, US shopper spending on marijuana is exploding. It was $eight.5 billion in 2017 — the yr earlier than California turned the world’s largest authorized marijuana market — and is projected to succeed in almost $24 billion within the subsequent 4 years, in line with Arcview.

US corporations that record in Canada are seeing eyebrow-raising valuations as a result of buyers hungry to get a bit of the hashish motion have nowhere else to go, Dayton stated.

Some of these corporations will implode, however the ones which are well-positioned will be capable of use the brand new money move to organize to compete with the multinational alcohol and cigarette conglomerates positioning themselves to swoop in, he stated.

“You look at California by itself, Florida by itself, they are both larger alone than the entire Canadian cannabis marketplace,” stated Simpson, founding father of Oregon’s Chalice Farms. “It is a massive opportunity.”

Chalice was acquired final yr by Canadian-based Golden Leaf Holdings. Almost all the firm’s enterprise stays within the American West, and it’s utilizing the $19.5 million from its public itemizing to pursue cultivation offers in Nevada and California.

Simpson stated it’s irritating he couldn’t go public as an American firm.

“The people have spoken. We voted for this,” Simpson stated. “Allow the banks and the investors to get on board.”


Associated Press Writer Gene Johnson in Seattle contributed to this report.


Flaccus is a member of AP’s marijuana beat staff. Follow her at Follow AP’s full marijuana protection:


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