The legal status of cannabis in the U.S. is still extremely difficult to decipher and looks as though it could be changing shortly. This has left a large amount of room for other markets to develop such as the large industry in Canada. There is a large amount of room to grow given the legal issues in the U.S., but many companies have decided to forgo the waiting and move their companies up north. This has meant that a large amount of U.S. companies have been listing throughout various Canadian stock exchanges as opposed to domestic listings.
Canada currently stands as a very good place to begin a company in the cannabis industry due to the combination of a positive sentiment from the public as well as a changing legal system in favor of the drug. Medical marijuana is currently legal nationwide in Canada, and the country is currently going through the steps to make recreational cannabis legal nationwide as well. All of these factors have led to Canadian stock exchanges becoming growing spaces for U.S. companies that cannot grow domestically.
Marijuana may currently be legal in as many as thirty states in the U.S. medicinally, with around nine of those being recreationally legal. U.S. companies are still not allowed to list on stock exchanges in the country or receive any financial assistance or basic services due to this blockade by the federal government. As far as the U.S. is concerned, cannabis is known as a Schedule I drug which means that it has no potential for medical treatment as well as a high potential for abuse. Both of these claims have been refuted by various scientific journals as well as many publications, but the government has yet to do anything about it.
Companies like the Los Angeles based MedMen have been working to provide a new way to grow in the dispensary industry by marketing their stores as a nationwide brand. The CEO of the company, Adam Bierman has stated that the process of becoming a legal marijuana business is not easy in any way. He stated that “there are no straight roads and there are no clear paths.”
One of the most popular exchanges in Canada is the CSE, which has seen a high amount of its stocks be marijuana based in the past years. The exchange has also been jokingly referred to as the “cannabis stock exchange” due to the prevalence of marijuana companies on the listing. The CEO of the exchange stated that “operating within the boundaries of what is a tightly regulated state framework” has been extremely difficult, but they have managed to make it work.
This is not to say that there have been several companies that have moved south into the U.S. exchanges such as Canopy Growth (NYSE:CGC) among others. The tight U.S. regulations have made it extremely difficult to do this though, which has provided a high barrier to entry for companies wishing to bring their business to the U.S. The CEO of the cannabis research group known as Arcview stated recently that “if the U.S. doesn’t get its act together and resolve the federal-state conflict, we’re going to lose a business that should be rightfully ours.”
The hopes are that Canada’s potential legalization of cannabis nationwide will help to change the paradigm across North America, showing the U.S. that a large cannabis network can work and will, in the end, benefit the people who need it most.