On October 9, 2018, Aurora Cannabis Inc. (ACB) announced that it has filed an application to list its shares on the New York Stock Exchange (NSYE). The company said that it expects to begin trading on the NYSE by the end of October under the symbol “ACB.”
“Through our NYSE listing, Aurora joins an established group of mature global brands with improved access and exposure to an engaged international institutional investor audience,” said Aurora CEO, Terry Booth. “Aurora’s high-paced execution has made it one of the world’s leading cannabis companies. We have grown from being a licensed producer with a single facility, to a horizontality differentiated and vertically integrated global organization with a funded production capacity in excess of 500,000 kg a year, sales and operations on five continents, and a team of more than 1,500 employees.”
If approved by the NYSE, Aurora will join a small but growing number of cannabis companies that are trading on major U.S. stock exchanges. Earlier this year, Cronos Group (CRON) became one of the first cannabis companies to list on the NASDAQ, Canopy Growth Corp. (CGC) followed several months later by listing its shares on the NYSE.
One of the most successful U.S. cannabis stocks in recent months has been Tilray (TLRY), whose stock has been on somewhat of a wild ride over the last several weeks but has since stabilized at or around $136. Hoping to join this list of companies, along with Aurora Cannabis, is High Times Media. In anticipation of going public on the NASDAQ later this month, High Times has been going through a Regulation A+ offering, selling shares to over 9,000 small-time investors and raising approximately $12.5 million.
Aurora will continue to trade on the Toronto Stock Exchange using the “ACB” symbol. The company will also continue to trade on the OTCQX under the ticker symbol “ACBFF” until the NYSE is completed, upon which Aurora will voluntarily delist itself from the exchange.
The NYSE has been conflicted with its listing of cannabis companies. It didn’t allow Canopy Growth to ring the opening bell, an honor bestowed on many new listing companies. It also won’t allow Green Market Report to deliver news from the floor due to its commitment to covering only cannabis financial news. Clearly, the tide is turning as more cannabis companies begin listing on the exchange and the exchange is happy to take their money.
Part 2 of 8 of the Cannabis Trends for 2018: U.S. companies run north of the border and IPOs are on the rise.
Over the next year expect an increase of cannabis companies to start going public in Canada instead of the United States. Although the U.S. market has great potential in the long run, there are a lot of short term advantages to going public in Canada.
The first, and most obvious reason, is that Canada has legalized recreational cannabis sales.
Sure, nine states have legalized recreational cannabis, but it’s still federally illegal. US cannabis companies continuously have to look over their shoulders, hoping that the federal government isn’t about to kick down their door and make their business close its doors for good. Not to mention the fact that the entire U.S. market still operates as cash-only, with extremely limited access to banking services.
Put yourself in the position of a cannabis business owner: Would you rather operate in a market that has the *potential* of being more profitable but has no access to banking services and puts you at risk of being arrested? Or would you want to operate in a market that carries little legal risk and you can actually open a bank account? For many entrepreneurs, it’s a pretty simply choice.
One company that is not afraid to do business in both the United States and Canada is Sunniva. Headquartered in Calgary, Canada, Sunniva is on the fast track to becoming one of the first cannabis companies to be licensed in both Canada and California, which is one of the world’s largest cannabis markets.
Legality aside, there’s also the issue listing requirements in the U.S. Companies have to be meet very strict requirements in order to become listed on the New York Stock Exchange (NYSE) or NASDAQ. For example, in order to become listed on the NYSE you need to have publicly held securities that are valued at a minimum of $100 million. Likewise, companies hoping to go on NASDAQ need a pre-tax income of $11 million for an aggregate of three years.
Contrast that with the Canadian exchanges, where companies on the TSX only need a pre-tax income from the previous year totaling $300,000. Those are not the only requirements, of course, but from there you can get a pretty clear idea of how difficult it is to make it on the NYSE or NASDAQ compared to the CSE or TSX.
The vast majority of “cannabis companies” listed on the NYSE and NASDAQ are biopharmaceutical companies, like GW Pharmaceuticals, that aren’t primarily cannabis companies. The only two companies that are purely cannabis companies that are publicly listed in the United States is Cronos Group and Canopy Growth.
With fewer barriers and fewer risks, numerous companies that previously started as U.S. based companies have begun moving operations north of the border and are making preparations to go public. Some of those companies include Acreage Holdings, Dixie Brands Inc., and MJIC Inc.
In the short term, expect an exodus of cannabis companies either going public or completely moving their operations to Canada and expect them to stay there until the United States finally decides to tackle federal cannabis reform.
Canadian-based medical marijuana company Canopy Growth (TWMJF) announced that it has applied to the New York Stock Exchange (ICE) to list its shares. The company said that it expects to begin trading at the exchange by the end of May using the ticker symbol CGC. The company currently trades in Canada on the Toronto Stock Exchange using the symbol WEED and also on the OTC Markets with the symbol TWMJF.
“Since becoming the first regulated cannabis producer to list their shares in North America in 2014 our team has focused on building credibility through consistent execution,” said Chief Executive Bruce Linton. “Once finalized, listing our shares on the NYSE will represent a continuation of our upward trajectory as we build the global cannabis industry.” The company said it will maintain its share on the TSE.
The New York Stock Exchange has been reluctant to engage with cannabis companies citing the legality of marijuana in the United States, although a handful of entities like Innovative Industrial Properties (IIPR) and India Globalization Corp. (IGC) have squeaked in. It seems Canadian-based companies pass the smell test since marijuana is legal in that country.
“It makes tremendous sense and will further open institutional pockets,” said Sean Stiefel, Portfolio Manager and CIO at Navy Capital. “With companies like Scott’s Miracle-Gro (SMG) investing in cannabis, you’re getting where there’s no discernable line. How can you let Constellation Brands (STZ) list, but then not Canopy when they’ve invested in Canopy?”
The company statement said that Canopy Growth will file a Form 40-F Registration Statement with the United States Securities and Exchange Commission and that the listing of the company’s common shares on the NYSE remains subject to the approval of the NYSE and the satisfaction of all applicable listing and regulatory requirements.
In other news, Canopy said that it planned to acquire 33% of BC Tweed Joint Venture Inc., which are the shares that it didn’t already own. That deal is expected to close in July and as a result, Canopy said it will issue $374 million worth of its common stock.
Just last month, Canopy signed definitive agreements to acquire the Czech Republic’s Annabis Medical. This company currently imports and distributes cannabis products pursuant to federal Czech licenses, with products for sale through pharmacy channels across the Czech Republic. Its founder and CEO, Dr. Robin Kazík, will lead the Czech subsidiary as part of the larger Canopy Growth family. The deal is valued at C$2.5 million.
The acquisition of Annabis Medical will build on Canopy Growth’s position in the European medical cannabis space and follows the recent agreement with Spain’s Alcaliber S.A. Additionally, Canopy Growth currently supplies the German market through its subsidiary, Spektrum Cannabis GmbH, and has formed a partnership, Spectrum Cannabis Denmark ApS, which is licensed to cultivate cannabis in a 40,000 square meter greenhouse production facility located in Odense, Denmark.
Canopy’s Canadian stock was lately trading at C$30.30, down from its year’s high of C$44, but way about its 52-week low of C$6.58. The OTC stock last closed at $23.71, also below its year high of $35.88, but above the year’s low of $4.90
The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis