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Taking Stock: Which Companies are Heading for the Border?

Many cannabis companies are heading across the border to list their stocks – here’s the rundown.

Photo by Blake Guidry on Unsplash

There is a growing trend among both U.S. and Canadian companies listing securities. U.S. cannabis-related companies are listing in Canada on the TSX, and some of Canada’s biggest cannabis companies are listing on U.S. on the New York Stock Exchange *NYSE) and NASDAQ.

Courting global investors

Most recently, the NYSE approved another TSX-listed pot company; Aurora Cannabis Inc. (TSX: ACB.TO) (NYSE: ACB). The stock started trading October 23, 2018 under the symbol ACB. In spite of increased volumes and access to institutional money that may come with listing on NYSE, ACB stock tumbled after listing.

According to reps at the company , “Our NYSE listing represents another important milestone that reflects our commitment to all stakeholders as we continue advancing domestic and international growth initiatives, which includes expanding our base of global institutional and retail investors,” said Terry Booth, CEO of Aurora.

“Aurora has rapidly developed into a globally mature organization with industry leading and technologically advanced production facilities available to produce at unprecedented scale to meet the growing demand for high-quality cannabis both in Canada and abroad,” he continued.

“We are also uniquely committed to leveraging our deep knowledge base to further scientific research into medical applications of cannabis, and developing novel, higher-margin product offerings that strongly differentiate Aurora from our competition.”

U.S. companies look north

However, it’s not only Canadian companies that are listing south of the border. The Canadian Securities Exchange (CSE) released data recently showing there are 106 listed companies in the cannabis sector, and of those, 49 are U.S. related companies. Furthermore, U.S. cannabis companies raised CAD $760 Million, and Canadians $780 million.

DirectView Holdings, Inc. (OTC: DIRV) recently arrived in the cannabis space. The company specializes in security technology, and announced “DirectView executives are exploring the possibility of bringing DirectView, Inc. to the TSX or CSE in Canada, while still remaining on the OTC Markets in America.”

“In light of the recent legalization of Cannabis in Canada and the ever-growing demand for surveillance and security equipment in the industry, DirectView is actively  consulting with its legal team to dual list the Company’s stock on a Canadian stock exchange. The benefits of dual listing include a larger pool of investors, greater visibility, and exposure to macroeconomic factors.”

Roger Ralston, CEO and Chairman of DirectView also said “In the cannabis industry, security is required. For them to open their doors they have to have what we sell. Looking at all the industry verticals his company sells into he also noted, “We have had a record first half in 2018, growing organically and through acquisitions.”

Canada has the future in mind

Furthermore, MedMen, one of the most recognizable U.S. cannabis names, listed on the Canadian Stock Exchange (CSE: MMEN.CN) (OTC: MMNFF). Medmen is one of the largest U.S. marijuana companies and is based out of California.

Adam Bierman, CEO of MedMen, told BNN Bloomberg Wednesday that Canada is attractive because of its “forward-thinking mentality. Canada has shown forward-thinking mentality on many issues and many industries and marijuana is just the latest. We found an amazing partner with the CSE. We believe that we’re kind of blazing a trail here, there’ll be many to follow.”

The first Cannabis stock listed south of the border was Cronos Group Inc. (NASDAQ: CRON),  (TSX: CRON.TO.)

Mike Gorenstein, CEO of Cronos said, “I think the main thing was building our company in a compliant, institutional and respectable way and approaching the NASDAQ and being able to present our business not as a “pot” company. We are a medicinal cannabis company; this is what our business model is and they were receptive. It’s the way we approached it that worked.”

Of course, Canopy Growth Corp (NYSE: CGC) listed on the NYSE in May using symbol CGC.  Of the U.S. listing, the company said “this listing follows a history of firsts for the Company including being the first publicly traded, federally regulated cannabis company in North America, and the first to be included in the S&P/TSX Composite index.”

Lastly, Aphria Inc. (TSX: APH.TO) trades on the TSX but also recently applied to list on the New York Stock Exchange.

The reasons for “uplisting” are manifold, as we outlined in our piece about another company looking to move up in the world of public markets.

Written by Jason Bagg

Mr Bagg has over 20 years experience in financial services ranging from Capital Markets to Private Equity. Mr Bagg has helped clients build wealth, reduce taxes and plan for retirement. Drawing on his experience, Mr Bagg has spoken on different panels regarding investing and has written numerous due diligence reports and white papers in this area.

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