Investor attention is pivoting toward U.S. cannabis industry,
Attention pivoting toward cannabis industry in U.S., where there’s far more potential
U.S. cannabis companies raised $1.5 billion on the Canadian Securities Exchange during the first 10 months of this year, surpassing their Canadian counterparts for the first time as investor interest shifts south of the border.
Data from the alternative exchange shows that U.S.-based pot companies raised roughly $1.5 billion between January and October 2018, usurping the $1 billion raised by Canadianbased cannabis issuers during that period.
Investor attention is pivoting toward the cannabis industry in the U.S., where marijuana remains illegal at the federal level but political sentiment is warming up.
“The Canadian side of the business, it’s capitalized at this point,” CSE chief executive Richard Carleton said.
“There’s obviously more work to be done, but the real activity yet to come is obviously in the United States.”
Cannabis is legal for medical or recreational use in several U.S. states, but it is considered a Schedule 1 drug federally south of the border. Although Canada is at the forefront and became the second country in the world to legalize pot for adult use on Oct. 17, the U.S. market has far more potential.
The U.S. market for cannabis could be worth more than $65 billion, including illicit demand, more than ten times the size of Canada’s, according to a recent Scotia Capital Inc. report. Pot companies have flocked to the CSE due to its looser listing rules than the bigger Toronto Stock Exchange, and marijuana listings accounted for 70 per cent of the $3.6 billion in financing activity dur- ing the first 10 months of 2018. The CSE had 212 pot industry financings and $2.5 billion raised in that period, up from 156 deals worth $691 million or 50 per cent of financing deals in all of 2017. Also, for the first time, cannabis issuers from outside of the U.S. and Canada are looking to the CSE, with six listings from Israel thus far in 2018, the exchange says.
The CSE hit a monthly fundraising record last month, led by U.S. medical pot producer and retailer Curaleaf which raised $520 million in a financing via a reverse-takeover. The Massachusetts-based company’s deal was the largest completed on the CSE to date, the exchange says.
“There’s expected to be significant consolidation in the United States, mergers and acquisitions,” Carleton said. “And clearly having the liquid currency of a public company as one of the tools in your kit is a huge advantage.”