For the first time in 2018, US pot companies have surpassed its Canadian Counterpart on Canadian Securities Exchange. The former raised a whopping $1.5 billion compared to the Canadian-based cannabis with $1 billion in gains.
With the recent escalation of numbers in the US-based pot companies, investors are starting to pivot their attention south of the border. In the federal level, marijuana is still illegal, but political and social beliefs are warming up to it.
Potential Market in the U.S
Cannabis is legal for recreational and medical use in some states. However, federally, it is still deemed a Schedule 1 drug. Meanwhile, Canada is the second country in the world to legalize recreational use for adults on October 17. This year Despite being forefront in the world, the American market has more potential than the Canadian borders.
Inclusive of illicit demand, the United States have a market worth of $65 billion. It is ten times bigger than that of Canada, reported by Scotia Capital, Inc.
Due to the looser listing regulations in the CSE, which is bigger than the Toronto Stock Exchange, pot companies congregated to the former exchange. Marijuana is also rated at 70 percent of the financial activities from January to October 2018 amounting to $3.6 billion.
The CSE also has a significant amount of financing in pot trades, accumulating $2.5 billion from 212 pot industries. Its worth of $691 million was gathered through 156 deals and transactions. It is a total of 50 percent of capitalizing deals in 2017.
According to the exchange, they now also have listings from Israel. So far, it is in a total of six listing. It is the first time that issuer outside Canada and the US has gotten involved.
Curaleaf, a retailer and producer of a U.S medical pot, with CSE hit their monthly fundraising in October. Through reverse-takeover, they raised a sum amount of $520 million in financing. The company with the largest completed deals on the CSE is based in Massachusetts.
On Tuesday, the alternative exchange had seen more listings for the U.S-based pot companies than when Green Growth Brands Inc. launched on the Canadian Stock Exchange for the first time. On Thursday, Acreage Holdings Inc. joined the listings. Its board includes Brian Mulroney, the former Prime Minister of Canada. By the end of the month, the company known for cannabis-infused commodities expects to be listed via reverse-takeover on the CSE as well.
Richard Carleton, the CSE chief executive, expects a massive number of consolidations, acquisitions, and mergers in the United States.
Pot companies’ expansion and growth in the global market is due to the cannabis policy of Canada. For now, they can keep their competition with the U.S-based cannabis companies at bay as long there are conflicting issues of legality south of the border.
CSE serves as the primary beneficiary in the financing of these U.S-based companies because of the drug being illegal federally. They can’t raise domestic capital yet within its borders.
However, TMX group notified that the pot industry with cross-border transactions in progress has no assent from the biggest exchange operator in Canada of face delisting and requirements.
On the other hand, Tilary Inc, and Canopy Growth Corp, which are Canadian companies that have no direct exposure to its southern border’s market, are still listing on the United States’ exchanges. Once the cannabis becomes legal in the United States, these players might enter the market too.
Moreover, STATES, a bill established to act amendment towards Controlled Substances Act where recreational is lawful, has been passed over a Senate committee. This could have made marijuana federally illicit in the US.
By the time comes and the United States legalizes cannabis, American pot companies already have more pull in the market than their legal Canadian counterparts.