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Although the legal cannabis industry in the U.S. is hotly tipped to expand its market share to $75 billion by 2030, American canna-businesses find themselves restricted from the same financial opportunities that other companies can avail themselves of without controversy. Federal law blocks banks from servicing businesses dealing in illegal substances, preventing canna-companies from opening bank accounts, receiving loans, or getting listed on the stock market.
A number of bills have been proposed in Congress that would make it easier for American marijuana firms to operate legally, but rather than wait for the legislative process, many stateside businesses are looking to Canada, where adult-use cannabis is expected to be fully legal as of this summer. Federal prohibition makes it extremely difficult for a U.S. pot company to expand to other canna-legal states, but moving to a country where cannabis is completely legal is a different prospect altogether.
Los Angeles-based cannabis firm MedMen — which runs 18 state-licensed marijuana operations throughout California, New York, and Nevada — has recently made a deal that would allow them to go public on the Canadian Securities Exchange (CSE). The company raised $110 million for a reverse takeover — a process by which a private company can go public by acquiring a listed company. The company’s shares are currently valued at $1.65 billion, and 5% of these shares will initially trade on the CSE.
David Buzkin, vice chairman of accounting firm Marcum LLP (which recently established a group specializing in cannabis), told Bloomberg that the CSE is currently the best option for U.S. canna-businesses who want to go public. “Fortunately — or unfortunately — it’s the only place to list, really, if you’re a U.S. company touching the plant,” said Buzkin. “I believe a number of those companies will hibernate there, if you will, until things change here in the States. Then they will either re-domesticate or do a listing onto either the Nasdaq or the [New York Stock Exchange].”
While the American cannabis industry is looking north, several Canadian marijuana firms have been exploring their options in the U.S. This February, Canadian company Cronos Group became the first cannabis firm to ever be approved by the Securities and Exchange Commission (SEC) to trade on the U.S. stock market. Every American business even tangentially involved with the cannabis industry has had their attempts at entering the stock market rebuffed, but Cronos was approved due to the fact that they will not be operating on U.S. soil.
Last week, Canopy Growth Corp., Canada's largest weed company, announced their plans to go public on the New York Stock Exchange (NYSE) this year. The company originally planned to apply for a listing on NASDAQ, but decided to wait for a shot at the NYSE due to its greater prestige. If successful, the company could be trading by the end of this month.