Kevin Murphy, CEO of Acreage Holdings, a soon to be public company on the Canadian Securities Exchange, gives his outlook on the cannabis industry during the first day of MJBiz in Las Vegas.
With Acreage Holdings launching its initial public offering soon, the company’s CEO Kevin Murphy said that Canada is an attractive place for US-based cannabis companies to list their common shares.
During a “Fireside Chat” on the first day of the MJBizCon in Las Vegas on Tuesday (November 14), the executive offered his view on where the sector is heading and why Canadian exchanges is the place to go for US companies making public debuts.
Ahead of its listing, Murphy said he would have been honored to ring the bell in New York for a listing on the New York Stock Exchange (NYSE) or NASDAQ, but that the company is not being offered the chance.
Canada leads the way in terms of raising capital
Murphy confirmed Acreage will start trading publicly on Thursday (November 14) on the Canadian Securities Exchange (CSE) after completing a reverse takeover.
As part of the transaction, the company raised proceeds of just over US$314 million.
When asked about the reasons US companies continue to elect going public in Canada, Murphy said besides the complications on regulations, Canada has another advantage.
“Canadians are leading the capitals market race,” Murphy said.
While Canada has become a powerhouse for raising money in the eyes of cannabis businesses, Murphy explained the US market remains the “prize” for all companies.
The executive said approximately 71 percent of the global marijuana consumed will be in the US. That’s why Acreage is targeting the US market, Murphy added. The company currently operates in 18 states in the fractured American cannabis market.
Public companies operating the US have elected to raise funds through the CSE since the TMX-operated exchanges abstain from allowing companies touching the plant in the US.
Despite several states electing to allow the use of marijuana, on a federal scale the drug remains illegal.
Murphy said he is pushing very hard to get a proposed states act, which would remove bans on banking and create a tax system for current companies, passed through Congress.
The legislation introduced by Sens. Elizabeth Warren (D-MA) and Cory Gardner (R-CO) would make it so cannabis is not part of the Controlled Substances Act at the state level.
In addition to those assets, the cannabis industry would gain the option to set a standard on regulation for the entire market, according to Murphy.
The executive also guessed when the legislation is approved US-based companies will begin listing on US exchanges rather than look in Canada.
At a talk during the Arcview Investor Forum in Las Vegas, Richard Carleton, CEO of the CSE, said there were over 52 US-based cannabis companies on the exchange.
The exchange executive told the investor audience over C$1.5 billion had been raised in 2018 through to October for US cannabis companies.
The money-raising doesn’t stop there: Carleton told the Investing News Network (INN) the exchange is currently looking at approximately 140 applications under review for listing with 60 percent of those being cannabis.
When asked if a sweeping legalization act in the US would change the favorable landscape for the CSE in terms of US cannabis companies, Carleton said it will remain difficult for early-stage companies to publicly list in the US.
“A lot of the companies we are talking to are bigger… but a lot of them are significantly smaller than that,” the executive said.
Acreage has hired former political figures as advisors such as former Canadian Prime Minister Brian Mulroney and ex-speaker of the House of Representatives John Boehner.
Murphy said hiring these politicians was done since he views the entire cannabis industry as a crossroads between politics and commerce.
Don’t forget to follow us @INN_Cannabis for real-time news updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.