Pot entrepreneurs like Canada as place for global headquarters
Cannabis companies with their sights on an expanding global market are still finding it makes financial sense to keep Canada as their home base.
Cannapharma Inc., for example, whose founders' native Turkey strictly limits marijuana use, is growing through acquisitions and ventures in the U.S., Jamaica, Portugal and Abu Dhabi. But even though it plans to sell extracts around the world, it's keeping its headquarters in Toronto, where the company was founded in 2019.
That's because Canada's early legalization of cannabis has resulted in financial support that's not available anywhere else, said Okan Altug, Cannapharma's co-founder, a former investment banker in Istanbul. In addition to access to financial services, cannabis-related companies can list on Canada's exchanges, and it's easier for them to raise funds. That's just not possible in the U.S., where cannabis is still illegal on the federal level.
All in all, no other country offers the same package to fuel Cannapharma's aspirations. In one year, Cannapharma has reached a valuation of US$37 million and attracted venture capital funds and individual investors from the Netherlands and Turkey, Altug said.
“We want to grow in everything cannabis,” Altug said in an interview.
Another example of a company with global aspirations choosing Canada as home base is British Columbia-based Silverpeak Life Sciences Uruguay, which produces cannabis is the South American nation. The company seeks to raise US$20 million by early next year, which could be the last round of private funding before a public offering, according to Chief Executive Officer Jordan Lewis.
Clever Leaves, meanwhile, a marijuana grower that went public through a combination with a special-purpose acquisition corporation, was formed under British Columbia law, even though it's headquartered in New York and most of its employees are in Colombia.
While the bulk of its operations are elsewhere, Clever Leaves wants to remain Canadian, chief executive Kyle Detwiler said in an interview. There's a clear benefit to this: Canadian companies can list on U.S. exchanges because they're not violating U.S. law against dealing in controlled substances.
So Clever Leaves can trade on the Nasdaq. Ironically, if the company was U.s.-based, it wouldn't be able to do this, or attract as many U.S. investors.
Pots' prospects are looking up in the U.S., which is seen as much closer to decriminalizing cannabis with the incoming administration of U.S. President Joe Biden. But for now, Cannapharma still sees the path to wealth generation through Canada. After building up its investments, the company plans to cash out by listing them on Canadian markets, Altug said.
“Canada, at first glance, is the backyard of the U.S., and it is easier to grow in the backyard,” he said.