U.S. Producer Cannex Began Trading on The Canadian Stock Exchange This Week
The largest marijuana company in the United States, Cannex Capital Group Inc. (TSX:CNNX) began trading on the Toronto market this week”, according to Bloomberg Quint.
Cannex, like other American companies, is looking to cash in on the Canadian cannabis market.
According to the company’s website, the Washington state-based company “provides a range of comprehensive and flexible growth options for licensed cannabis cultivators, processors and/or dispensaries domestically and internationally.” They also focus on the real estate aspect of the industry by “providing turn-key real estate with operational infrastructure. “
The company announced that they were “looking to expand its footprint in states such as California and Arizona, becoming the latest company with United States operations to list in Canada.”
Canadian Cannabis Cash Cow
More cannabis companies based in the United States, especially those who would like to expand their operations, are heading north to Canada for funding. The industry experienced a significant blow when Donald Trump was elected president, and he appointed Jeff Sessions to U.S. Attorney General. While Sessions has softened his stance on cannabis, fear still permeates the legal U.S. marijuana industry.
U.S. banks have not done business with marijuana groups for the most part due to federal law. This has been a real issue for a very profitable industry. Cannabis business owners struggle with everyday banking issues, so finding ways to expand and grow in the same way every other business does, has been challenging with the banking restrictions.
The Canadian market has offered some respite for marijuana businesses in the U.S. market by giving them an opportunity for additional investors.
The Canadian Alternative
Other companies appear to be taking the same approach as Cannex where they will use the Canadian markets to help them expand their overall businesses.
Even companies like MedMen, who already has a strong presence in the legal U.S. market, have gone to Canada to raise money. In a Marijuana Business Daily report, MedMen spokesman Daniel Yi said the move to the Canadian market would “add jet fuel” to the company’s growth strategy.
MedMen Chief Executive Officer described to CNBC United States cannabis companies draw to do business with the neighbors to the north.
“The Canadian public markets offer access to a lot of capital, with a lot of certainty and a lot of speed, and there is this appetite among global investors to invest in a U.S. play.”
While in recent months there have been some large Canadian banks who have entered the cannabis game like BMO, others continue to sit on the sidelines due to their relationships in America.
According to CNBC the Canadian Stock Exchange “trades close to 60 cannabis-related companies” and “many are headquartered in the U.S.”