Armina Ligaia, The Canadian Press
Published on Thursday, November 15, 2018. 10:42 PM EST
Last Updated on Thursday, 15. November 2018 11:00 EST
TORONTO – American Cannabis companies raised $ 1.5 billion to the Canadian Stock Exchange for the first 10 months of this year, for the first time surpassing their Canadian counterparts when investor interest moves south of the border.
Alternative exchange data show that companies that were in the US were raised about $ 1.5 billion in the period from January to October 2018, taking into account billions of dollars of Canadian cannabis issued during that period.
The investor's concern turns to the cannabis industry in the United States, where marijuana remains illegal at the federal level, but political feelings are warming up.
"The Canadian side of the business is capitalized at this time," said CSE executive director Richard Carleton.
"Obviously there are more work to be done, but the real activity still to be done is obvious in the United States."
Cannabis is legal for medical or recreational use in several states in the United States, but is considered to be guidelines from a schedule 1 federally south of the border. Although Canada was in the foreground and became the second country in the world that legalized an adult pot on 17 October, the US market has much more potential.
The US cannabis market could be worth more than $ 65 billion, including an unauthorized demand, more than ten times higher than Canada, according to a recent Scotia Capital Inc. report.
Barter companies entered the CSE due to their weaker listing rules than the larger Toronto Stock Exchange, and the list of marijuana accounts for 70 percent of the $ 3.6 billion in financing activities during the first 10 months of 2018.
CSE had 212 financial assets for industry and $ 2.5 billion in that period, out of 156 contracts worth $ 691 million or 50 percent of financial contracts throughout the year 2017. Also, for the first time, cannabis publishers outside the US and Canada are looking at the CSE, with six lists from Israel to now 2018, it says in exchange.
CSE published a monthly fund-raising record last month, led by US-based drug maker and retailer Curaleaf, which raised $ 520 million in financing through a reverse takeover. The Massachusetts deal was the biggest ending to CSE to date, it is being exchanged.
In November, alternative exchanges also saw more US companies from cannabis. Green Grovth Brands Inc. he was debuting in CSE on Tuesday and Acreage Holdings Inc., which also includes former Prime Minister Brian Mulronei in his committee, began trading on CSE on Thursday. Dick Brands Inc., known for its cannabis products, noticed a CSE listing by reverse download by the end of the month.
"It is expected that there will be significant consolidation, mergers and acquisitions in the United States," Carleton said. "And it's clear that the currency of a public company as one of the tools in your kit represents a huge advantage."
Canadian Cannabis policy has allowed domestic markets to grow and expand to the global market, while the substantive legal status of the factory south of the border retains US competitors for the time being.
Cannabis companies in the United States that are unable to raise public capital at home because the drugs are illegally federal, have sought Canada for funding, and the CSE is the main user.
TMKS Group, the largest Canadian exchange operator, warned last year that companies with difficulties during cross-border activities are not in line with the requirements of the CCSF and are facing removal. It strengthened the CSE as a replacement for companies with US interests, as it allows issuers exposure, provided they reveal risks to investors.
In the meantime, Canadian companies such as Canopi Grovth Corp. and Tilrai Inc., which do not have a direct exposure to the US market, are listed on the United States stock exchanges. These major players also look to enter the US market when federally legalized as chances of increasing policy change. During the high school elections in the United States earlier this month, Michigan became the newest who approved the legalization of recreational pots, and Utah and Missouri approved a medication for medical needs.
Two main political opponents of federal legalization of cannabis in the United States have also been removed this month. The Texas representative Pete Sessions, a major medical opponent of marijuana, was defeated and Jeff Sessions resigned as General Attorney at the request of US President Donald Trump.
Legislation that would allow full legalization of industrial cannabis in the United States and ease the limitation of the Canadian composition of the CBD also went through a legislative process in the United States.
In addition, a law known as the law of the State, amending the Law on Controlled Substances, which could effectively make marijuana federal legal in countries where recreational consumption is legal, was referred to the Senate Committee.
Companies in the United States operating in legally-based countries have the advantage of being on the ground, but also from a larger scale, to promote brands and develop intellectual property from their Canadian counterparts.
This latitude in the United States offers more for investors, said Peter Horvath, CEO of Green Growth Brands.
"We all have some level of cultivation that takes place in our jobs, but the real focus is the consumer … In Canada, it's pretty good to buy soft drinks from government alone, there are not many opportunities to differentiate."