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US cannabis companies look to Canada when going public


MedMen operates sleek, airy dispensaries that are designed to attract marijuana customers of all types — a far cry from the psychedelic-style head shops of days past. The company also has two funds with about $150 million to encourage investment in marijuana businesses. They caught the attention of some big names in finance, such as former BlackRock Chief Investment Officer Chris Leavy, who chaired the first fund, and former Goldman Sachs investment banker Ruth Epstein.

Most of these assets have been rolled into MedMen Enterprises in preparation for a reverse takeover to list on the Canadian Securities Exchange (CSE), an alternative exchange. Bierman anticipates MedMen will list sometime in the second quarter of 2018. MedMen is currently searching for a partner.

Canada’s largest exchange, the Toronto Stock Exchange (TSX), lists few cannabis companies, according to information provided by the exchange. The combined capitalization of big names that are listed there, such as Canopy Growth and Aphria, among others, exceeds $20 billion. All companies currently listed on TSX are based in Canada.

The CSE is a bit more lenient. The exchange currently trades close to 60 cannabis-related companies, many that are headquartered in the U.S. The market caps for these companies are significantly smaller. U.S. companies listed on the CSE, such as Alternate Health and iAnthus Capital, have a combined market cap of about $230 million, according to public information on the CSE’s website.

In the U.S., the major exchanges have stringent listing requirements, including revenue and market capitalization hurdles.

This poses a major problem for marijuana companies. Until recently most investors viewed the entire cannabis industry as far too risky. Some creative investment solutions have emerged, such as ETF Managers Group’s Alternative Harvest ETF, but most institutional investors still won’t touch the stuff.

About George Hecht

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