How Are Cannabis IPOs Different In Canada Than In The U.S.?
Marcum recently completed the work on the first special purpose acquisition company (SPAC) in the cannabis space, and is handling an IPO for a cannabis oil extractor in California that intends to list on the Canadian Securities Exchange (CSE).
One of the questions Bukzin answered was about the difference between Cannabis IPOs in the U.S. and Canada.
Question: How are cannabis IPOs different in Canada than in the U.S.?
David Bukzin (Marcum’s vice chairman): “Nobody wants to step on each other’s toes as it relates to what’s legal [federally]. Cronos went public here—they’re on NASDAQ—because they’re not violating any federal laws by having facilities in Canada, Israel and Germany. TSX had taken the stance that they won’t allow U.S.-based companies that are violating federal law by touching [the plant], growing and distributing, so they won’t let U.S. companies go public on the TSX, but the CSE, which is a junior exchange, has agreed to allow these companies to list there. I think it’s a real market opportunity for the CSE because as we all know, the cannabis industry is, in many ways, still at its infancy, and there’s significant growth, and the best way to attract pooled capital and get a fair market value for your equity interest is on an exchange.
It’s unfortunate for U.S. companies that they can’t yet do it on NASDAQ. I’m sure at some point they will because the liquidity and research coverage, [or having analysts track and publish opinions on a company and its stock], are certainly much more available here in the U.S. on NASDAQ than a junior, [or smaller], exchange in Canada.”