Canadian Cannabis Companies on US Exchanges Expand Reach

Leading Canadian cannabis companies are on the move below the border. With the promise of more investors, these companies are migrating their shares to the US as a way of attracting more established capital.

LEGALIZATION COVERAGE

Canada’s decision to legalize the recreational use of cannabis has allowed the rise of an emerging investment market. The cannabis public sector has become one of the most followed industries for investors.

As such, the Investing News Network brings investors a collection of stories on the critical transition and its impact on the public markets.


Canadian cannabis companies are on the move and, as the market continues its maturation thanks to adult-use legalization in the country on October 17, these industry leaders are seeking US investors directly.

Following a securities filing with the US Securities and Exchange Commission (SEC) on Friday (October 5), Canadian licensed producer (LP) Aurora Cannabis (TSX:ACB) is pursuing a listing on the New York Stock Exchange (NYSE). On Tuesday (October 9), the producer confirmed its intentions.

The LP had previously confirmed its intentions to obtain a premier US listing for its shares as part of its Q4 update to shareholders in September.

“This listing provides access to a broader investor audience who gain the opportunity to participate in our continued success,” Aurora CEO Terry Booth said in a press release.

Although the listing is not final, this has been the best indication of where Aurora would list in the US since it made the announcement.

Cannabis companies have been looking to move shares below the border for a long time. Cronos Group (NASDAQ:CRON,TSX:CRON) was the first company to successfully list its shares in a premier US exchange.

“We believe this will increase long-term shareholder value by improving awareness, liquidity, and appeal to institutional investors,” Mike Gorenstein CEO of Cronos said at the time of the company’s announcement.

The company began offering its shares on the NASDAQ in February of this year.

Shortly after Cronos listed on the NASDAQ, Canopy Growth (NYSE:CGC;TSX:WEED) confirmed its intentions to uplist its shares to the US as well. Canopy shares began trading on the NYSE in May 24.

Since launching below the border, shares of Cronos and Canopy on the NASDAQ and NYSE have increased in value 28.22 and 68.40 percent respectively.

Canadian companies reaching US investors had been done so before through listings on the OTC Markets, which consists of three exchanges. These exchanges are viewed as a more smaller scale, riskier options for investors.

American institutional investors and more established investing franchises tend to avoid the smaller stocks found in the OTC in favour of listings on the NYSE and NASDAQ .

Both Aurora and Aphria (TSX:APH) hold OTC listings under the ticker symbols ACBFF and APHQF.

Tilray makes US public debut

One of the most famous US stocks in the cannabis space has been Tilray (NASDAQ:TLRY). Unlike its competitors, the company didn’t uplist from a Canadian exchange but instead went directly to the US market.

Tilray launched its initial public offering (IPO) and made its public debut, after years of private operations, in July.

Tilray’s path on the NASDAQ came into the spotlight after the stock unleashed an unparalleled rush for these producers.

Alan Brochstein, cannabis analyst with 420 Investor, said he viewed the Tilray rush as a perfect storm built on the exact method of the company’s IPO.

The analyst later wrote he viewed the company’s spike as a “big positive” for the cannabis market, alongside the gains from Canopy and Cronos in the US exchanges.

At one point of Tilray’s blitz, which started in August, the company’s shares reached a price of over US$300, accompanied by a market capitalization of over US$10 billion.

As such, cannabis LPs with a leading presence on the Toronto Stock Exchange (TSX) are looking for these premier exchanges to expand the range of shareholders and their presence in the sector.

In a move to clear the company’s path to the coveted listing, Aphria sold its remaining stake in cannabis US multi-state operator Liberty Health Sciences (CSE:LHS). The producer retains a right to buy back its stake for up to a five year period.

Fellow TSX-listed LP CannTrust Holdings (TSX:TRST) has also confirmed possibilities of securing a US listing. Departing CEO Eric Paul told The Globe and Mail the company wasn’t ready to confirm anything.

“It’s a consideration, but we don’t have a definitive plan for it. No decision has been made to list,” he said in September.

It’s unclear whether new management will pursue the US listing more aggressively.

While facing pressure from a large shareholder HEXO (TSX:HEXO) CEO Sébastien St-Louis announced the company was also pursuing a US exchange listing and would reveal more “in the near future.”

Investor takeaway

As these companies gain the attention of US investors, legitimacy and a broader shareholder base is entering the cannabis sector.

“The broader universe of traders in the US, many who have no interest in trading OTC stocks or even TSX-listed or [Canadian Securities Exchange] CSE-listed names, is finally paying attention to the cannabis sector,” Brochstein wrote in a weekly update to investors.

It will be critical for shareholder to see how strong the reaction to the new US listings will have for Aurora and other upcoming companies and how strongly the case can be made for more cannabis companies to share in the US as well.

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.

Featured
WHY: Rosen Law Firm, a global investor rights law firm, announces an investigation of potential securities claims on behalf of shareholders of Cronos Group Inc. resulting from allegations that Cronos may have issued materially misleading business information to the investing public. SO WHAT: If you purchased Cronos securities you may be entitled to compensation without payment of any out of pocket fees or costs ...

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WHY: Rosen Law Firm, a global investor rights law firm, announces an investigation of potential securities claims on behalf of shareholders of Cronos Group Inc. (NASDAQ: CRON) resulting from allegations that Cronos may have issued materially misleading business information to the investing public.

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Cresco Labs a vertically integrated multistate operator and the number one U.S. wholesaler of branded cannabis products, announced today the closing of the Company’s previously announced acquisition of Bay, LLC dba Cure Pennsylvania . This press release features multimedia. View the full release here: Cresco Labs closes acquisition of three Cure Penn dispensaries in Pennsylvania Transaction Highlights Three ...

Cresco Labs (CSE:CL) (OTCQX:CRLBF) ("Cresco Labs" or "the Company"), a vertically integrated multistate operator and the number one U.S. wholesaler of branded cannabis products, announced today the closing of the Company's previously announced acquisition of Bay, LLC d/b/a Cure Pennsylvania ("Cure Penn" or the "Transaction").

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20211125005708/en/

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Company's 38th dispensary in Florida is its first location in Hernando County Curaleaf Holdings, Inc. a leading international provider of consumer products in cannabis, today announced the opening of Curaleaf Spring Hill, the Company's 113th dispensary nationwide and its 38 th in the sunshine state. The new Spring Hill location at 4287 Mariner Blvd. is the Company's fifth dispensary to open in Florida in ...

Company's 38th dispensary in Florida is its first location in Hernando County

Curaleaf Holdings, Inc. (CSE: CURA OTCQX: CURLF) ("Curaleaf" or the "Company"), a leading international provider of consumer products in cannabis, today announced the opening of Curaleaf Spring Hill, the Company's 113th dispensary nationwide and its 38 th in the sunshine state.

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Catch up and get informed with this week's content highlights from Charlotte McLeod, our editorial director.

Top Stories This Week: Powell Gets Fed Nomination, Using Gold in a Market Correction youtu.be

We're back after a break last week with quite a bit to cover in the gold space.

After running up past the US$1,860 per ounce mark midway through November, the yellow metal has taken a tumble. At the time of this writing on Friday (November 26) afternoon, it was sitting just under US$1,790.

Gold's losses this week have been attributed to elements like a stronger US dollar and better Treasury yields, although Jerome Powell's US Federal Reserve chair renomination has pulled other factors into play — some market watchers believe he may move to taper and raise interest rates faster than anticipated.


If the Fed follows its previously laid out timeline for tapering, it will wrap up in mid-2022; the central bank has said it won't raise rates until after that. It has also emphasized that its roadmap may change if necessary.

Looking at the larger picture for gold, I heard recently from Nick Barisheff of BMG Group, who believes the stock market is due for a major correction.

"The market is due for a major correction. What will cause it and when it will happen is anybody's guess — it could be tomorrow, it could be six months from now" — Nick Barisheff, BMG Group

It's impossible to know when this correction will happen, but Nick emphasized the importance of acting before it's too late. He pointed out that investors are typically slow to get out of the market once a crash actually begins — they wait for a turnaround, and by the time it's clear there won't be one, they've experienced big losses.

In his opinion, the solution is to get out of the stock market early and transfer money into gold.

Here's how Nick explained it:

"Instead of taking your money off the table and going into cash … you go to gold (because cash is devaluing daily). Gold will at least hold its own and probably appreciate … so by sitting it out in gold you can wait until the market finishes correcting and then buy back in" — Nick Barisheff, BMG Group

With gold's future in mind, we asked our Twitter followers this week what price they think the metal will be at the end of 2021. By the time the poll closed, most respondents had voted for the US$1,800 to US$1,900 range.

We'll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

Finally, in the cannabis space, INN's Bryan Mc Govern spoke with Dan Ahrens of AdvisorShares to get his thoughts on 2021 trends and what's ahead in 2022.

Dan was candid, and said if he had to choose one word to describe the cannabis market in 2021, it would be "painful." Like many others, he's been disappointed in the industry's performance — while positivity initially ran high due to excitement about potential federal changes in the US, ultimately progress has been slow.

"Cannabis started with a big run-up in January and February ... and things dragged from there" — Dan Ahrens, AdvisorShares

Still, Dan has hope for 2022 and said it will be a "huge year" for cannabis. He believes US reforms will come sooner rather than later, and in his opinion those widely anticipated changes will bring a wave of M&A activity.

Specifically, he expects to see alcohol, tobacco and other consumer packaged goods companies making deals with cannabis players, not just cannabis entities doing transactions with each other.

"Those big alcohol companies, tobacco companies, other consumer packaged goods product companies — they're waiting. They're waiting on the US" — Dan Ahrens, AdvisorShares

Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there's someone you'd like to see us interview, please send an email to cmcleod@investingnews.com.

And don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

gold bars

2020 was a banner year for gold-backed ETF inflows, but interest has lagged this year as investors become more comfortable taking risks.

In 2020, gold-backed exchange-traded fund (ETF) inflows ballooned to an impressive 877 tonnes, marking the largest one year intake in ETF history.

Investor appetite was fueled by economic stimulus mixed with concerns about COVID-19 closures, which together brought risk-averse buyers to the yellow metal in droves, propelling investment demand.

"Over the first three quarters of 2020, gold ETFs accounted for almost two-thirds of total investment demand," notes a monthly ETF report released by the World Gold Council (WGC) in January.


"This is significantly higher than any previous full year. Gold ETF demand was also equivalent to a quarter of the average annual gold mine production over the past five years."

Since then, gold ETF demand has waned as investors become more comfortable taking risks. So far, 2021 has seen outflows of 269.1 tonnes compared to 87.6 tonnes of inflows. Of the first 10 months of the year, six registered net outflows from the ETF segment.

In fact, a large part of gold's muted Q3 price performance has been attributed to a 7 percent decline in demand coming largely from the ETF segment. This trend continued in October, when gold ETF holdings shed 25.5 tonnes.

"Global gold ETF holdings fell to 3,567 tonnes (US$203 billion) during the month — notching year-to-date low levels — as investor appetite for gold diminished in the ETF space following price declines in August and September," an October WGC gold ETF report states.

After two months of pressure pushed the gold price to a six month low at the end of September, October saw the metal begin to rebound from the US$1,750 per ounce range to US$1,819.

Adam Perlaky, senior analyst at the WGC, told the Investing News Network (INN) that gold's price positivity in October was largely driven by growing inflationary tones.

"In recent years, gold has been inversely correlated with nominal interest rates, and yet gold strengthened during the month despite higher nominal rates," he said via email. "This is likely a result of rising inflation expectations, though changes in the relative move in interest rates may have had an impact."

He added, "Though higher rates could be a headwind for gold, broader concerns of inflation and a potential recession highlight gold's value as an effective portfolio hedge."

The role of gold amid uncertainty

Gold's use as a hedge against inflation is likely to come into focus in the coming months, a sentiment that was echoed by Juan Carlos Artigas, head of research at the WGC.

Artigas explained that while some are of the belief that the "elements of high inflation we've seen so far are transitory" and will dissipate, there will be longer-term reverberations from the current inflation, and potential secondary effects from the fiscal and monetary policies that were put in place to restart the economy.

In mid-November, JP Morgan (NYSE:JPM) said it anticipates that the US Federal Reserve will raise rates in September 2022 by 0.25 percent, followed by 25 basis point increases on a quarterly basis until real rates hit zero.

"Gold still can face headwinds from potentially higher interest rates," said Artigas.

"(The) opportunity cost of holding gold is one of the drivers of performance, and especially in the short and the medium term, interest rates tend to influence gold's behavior significantly, especially in a period where investors are looking to understand how central banks will behave."

However, as the head of research at the WGC pointed out, there are also some tailwinds that could move gold higher, including inflation that may not be transient, but more structural.

He also pointed out that interest rates are still historically very low, which has pushed investors to make their portfolios more risky. Hedging against this type of exposure is positive for gold's investment side. Additionally, on the consumer side, US infrastructure spending could also serve as a catalyst to more gold upside.

"What we know historically is that better economic growth tends to support consumption of gold, whether it is in the form of jewelry or technology, and 2021 is a good example of that, where you saw the contraction in gold-backed ETF holdings, you (also) saw an increase in demand coming from jewelry, technology and even bar and coin investment," Artigas commented to INN.

Another factor the researcher is watching is central bank gold holdings, which are on track for a 12th consecutive year of inflows. Artigas noted that a 2021 survey of central bankers conducted by the WGC found that the monetary institutes are interested in "expanding the role that gold has in foreign reserves."

"We do expect central banks to continue to be net buyers," he said, adding, "We have seen investors, especially more strategic longer-term investors, taking advantage of the price pullback that we saw in previous months as an opportunity to add gold to their portfolios."

For investors wanting to look at the strategic role gold has played throughout history, the WGC recently released a five part documentary series titled The Golden Thread.

The price of gold was at the US$1,790 level on November 25.

Don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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