{"id":7334,"date":"2017-04-08T12:09:27","date_gmt":"2017-04-08T12:09:27","guid":{"rendered":"http:\/\/www.denverpost.com?p=2608357&amp;preview_id=2608357"},"modified":"2017-04-08T12:09:27","modified_gmt":"2017-04-08T12:09:27","slug":"cannabis-companies-flock-to-canada-as-us-laws-keep-them-off-stock-exchange","status":"publish","type":"post","link":"https:\/\/cannitrol.com\/blog\/cannabis-companies-flock-to-canada-as-us-laws-keep-them-off-stock-exchange\/","title":{"rendered":"Cannabis companies flock to Canada as US laws keep them off stock exchange"},"content":{"rendered":"<div id=\"wp_fb_like_button\" style=\"margin:5px 0 5px 5px;float:right;height:100px;\"><script src=\"http:\/\/connect.facebook.net\/en_US\/all.js#xfbml=1\"><\/script><fb:like href=\"https:\/\/cannitrol.com\/blog\/cannabis-companies-flock-to-canada-as-us-laws-keep-them-off-stock-exchange\/\" send=\"true\" layout=\"standard\" width=\"450\" show_faces=\"false\" font=\"arial\" action=\"like\" colorscheme=\"light\"><\/fb:like><\/div><div class=\"row\" id=\"sticky-outer\">\n<div class=\"large-11 small-12 columns\">\n<div class=\"entry-meta-date\">Published: Apr 6, 2017, 11:17 am \u2022 Updated: Apr 6, 2017, 11:17 am<span class=\"single-comments-link\"><a href=\"http:\/\/www.thecannabist.co\/2017\/04\/06\/cannabis-stock-exchange-shares-canada-united-states\/76785\/#disqus_thread\" class=\"commentsNameLink\" \/><\/span><\/div>\n<p class=\"byline\">By <strong>Jack Kaskey<\/strong>, <em> Bloomberg<\/em><\/p>\n<p>When Hadley Ford created a company for investing in the fast-growing business of legal marijuana, the former Goldman Sachs Group Inc. investment banker left New York and headed north of the border.<\/p>\n<p>While more than half of U.S. states allow marijuana for medical or recreational use, the drug is still outlawed by the federal government, starving pot entrepreneurs of institutional capital. Major stock exchanges won\u2019t accept listings for businesses that Washington deems illegal, and banks and other lenders have stayed mostly on the sidelines.<\/p>\n<p>So Ford created a public company that raises money in Canada, where medical marijuana is allowed, Prime Minister Justin Trudeau supports full legalization and bankers, lawyers and accountants operate without fear of prosecution. The move gave Ford entree into a vibrant public market for cannabis and a way to fund investments in the U.S.<\/p>\n<p>\u201cWe have a $50 billion playing field all to ourselves, and the prices are ridiculously cheap,\u201d Ford said in an interview. \u201dYou could not have created a better business model for a reformed Goldman Sachs banker to wade into.\u201d<\/p>\n<p>Ford, 57, is among a growing list of entrepreneurs who are capitalizing on the difference between the two nations when it comes to marijuana. Two other U.S.-focused pot companies have followed him to the Canadian Securities Exchange, which caters mostly to small-cap mining, technology and biotech firms. CannaRoyalty Corp. began trading in December, and Canadian Bioceutical Corp. started in January.<\/p>\n<p>\u201cThe industry has gone from a Ziploc bag with a hoodie on the corner to now where you\u2019ve got publicly listed companies in Canada acquiring assets in the United States using European money,\u201d said Canadian Bioceutical Chief Executive Officer Scott Boyes. London-based investors bought the majority of the company\u2019s recent $27 million private placement of shares, he said.<\/p>\n<p><a href=\"http:\/\/www.thecannabist.co\/2016\/12\/08\/cannabis-investment-firm-canada-roots\/68943\/\">IAnthus Capital Holdings Inc.<\/a>, the company Ford leads, listed shares on the CSE in September. It\u2019s raised more than $50 million Canadian ($37 million), including C$20 million from a public offering underwritten by Canaccord Genuity Group Inc., Canada\u2019s largest nonbank brokerage. IAnthus uses the money to invest in cannabis growers and retailers in the U.S., including dispensaries in Colorado, Massachusetts, Vermont and New Mexico.<\/p>\n<p>Shares of Vancouver-based iAnthus have gained 16 percent this year, and are up 86 percent since they began trading in 2016. The company has a market capitalization of C$43 million.<\/p>\n<p>The legal marijuana industry in North America grew 34 percent last year to $6.7 billion, and sales topped $56 billion with the black market included, according to Arcview Market Research.<\/p>\n<p>Although Canada is beating the U.S. on the road to full legalization, states such as Colorado, Oregon and Washington \u2013 where recreational use is allowed \u2013 are leading the world in development of new cannabis products, said Don Robinson, CEO of Golden Leaf Holdings Inc. The CSE-listed company focuses on edibles, concentrates and other products sold in the U.S. recreational market, with plans for international expansion.<\/p>\n<p>CannaRoyalty also focuses on the U.S., said CEO Marc Lustig. That\u2019s because states with recreational use are at the leading edge of a market that Trudeau promises to bring to Canada, he said. Companies in Canada are currently barred from opening dispensaries and instead supply buds to customers through the mail. High-margin products like edibles and extracts that can be used in a vaporizer are all banned.<\/p>\n<p>That will change if <a href=\"http:\/\/www.thecannabist.co\/2017\/03\/27\/canada-marijuana-legalization-stocks\/76173\/\">Canada legalizes recreational cannabis<\/a>, which is likely. Since winning election in 2015, Trudeau and the ruling Liberal Party have vowed to legalize and regulate pot use for adults. Legislation is due next week to get it done by July 2018.<\/p>\n<p>With that in mind, CannaRoyalty invests in U.S. marijuana products such as transdermal patches, infused candy, disposable vape pens and metered-dose inhalers, Lustig said. It also licenses its intellectual property to larger Canadian companies, such as Aphria Inc., to help it prepare for the Canadian recreational market, he said.<\/p>\n<p>Before the surprise election of President Donald Trump in November, U.S. companies that cater to the legal marijuana market were surging, including pot packager Kush Bottles Inc. Trump\u2019s appointment of ardent marijuana foe Jeff Sessions as attorney general, however, tempered some of the industry\u2019s enthusiasm. Since the election, Kush shares have dropped 43 percent.<\/p>\n<p>Because of the U.S. prohibition, companies that grow or sell pot rely on private investors to finance expansions or acquisitions. Most publicly traded companies in the U.S. that cater to the marijuana industry, including Kush Bottles and <a href=\"http:\/\/www.thecannabist.co\/2017\/01\/31\/scotts-miracle-gro-marijuana-hydroponics\/72676\/\">Scotts Miracle Gro Co<\/a>., are careful to say they don\u2019t \u201ctouch the plant\u201d \u2013 even if they provide growers with fertilizers, lighting and other ancillary products.<\/p>\n<p>At least one U.S. marijuana grower, <a href=\"http:\/\/www.thecannabist.co\/2016\/07\/11\/marijuana-life-insurance-policies\/57940\/\">Terra Tec<\/a>h, has been able to list its shares domestically, though only over the counter. The Securities and Exchange Commission accepted the company\u2019s stock-registration filings, even though Terra Tech cultivates marijuana in California and Nevada and sells through licensed stores. Terra Tech has raised more than $40 million since it began life as a publicly traded company five years ago, CEO Derek Peterson said.<\/p>\n<p>Even so, Terra Tech faces obstacles. The shares trade over the counter because Nasdaq won\u2019t accept a marijuana listing. It took a year to hire a new auditor, a process that would normally take a day, Peterson said. And landlords are hesitant to rent space for corporate offices, while attorneys are reluctant to provide services, he said.<\/p>\n<p>Peterson, 42, said he went to the public markets because that\u2019s how he knew to raise money from his prior career at Morgan Stanley, Wachovia Securities and Crowell Weedon &amp; Co. While the federal ban in the U.S. creates headaches, he said there are also major benefits.<\/p>\n<p>\u201cIt\u2019s kept the big players out, which has allowed companies like ours to actually build,\u201d Peterson said. \u201cIf this weren\u2019t the situation, we might have woken up and it would be Constellation Brands or Phillip Morris. Who knows? It just wouldn\u2019t have been us.\u201d<\/p>\n<p>For Ford, the U.S. prohibition is a dream come true because it keeps asset values down and successful companies seeking investment capital. He was a vice president at Goldman Sachs and a managing director at Bank of America Corp. before becoming CEO of ProCure Treatment Centers Inc., a closely held provider of proton therapy for cancer patients.<\/p>\n<p>\u201cThe long-term trend is cannabis is going to be legal in all 50 states,\u201d Ford said. \u201cThe increase in asset value as the industry becomes legal is going to be tremendous.\u201d<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<p><!-- .row --> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>While more than half of U.S. states allow marijuana for medical or recreational use, the drug is still outlawed by the federal government, starving pot entrepreneurs of institutional capital. <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[6913,5062,146,1547,6813,77,5577,6826,9,6833,6855,5019,441,7060,7061,1,3,61,1736],"tags":[6914,5063,2724,4115,6818,2655,5580,6828,6835,6856,5022,3015,7062,7063],"_links":{"self":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/7334"}],"collection":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/comments?post=7334"}],"version-history":[{"count":0,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/posts\/7334\/revisions"}],"wp:attachment":[{"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/media?parent=7334"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/categories?post=7334"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannitrol.com\/blog\/wp-json\/wp\/v2\/tags?post=7334"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}