CSE Looks to Grow US Cannabis Listings in 2019
The Canadian Securities Exchange (CSE) continues its steady increase in the cannabis market thanks to growing number of companies the space.
In an exclusive interview with the Investing News Network (INN) Richard Carleton, CEO of the CSE, said the exchange is currently eyeing about 140 applications to list on the exchange with 60 percent of those being marijuana related.
“That’s essentially a whole year’s worth of business at this point,” Carleton told INN following his panel at the Arcview Investor Forum in Las Vegas on November 13.
The exchange has increased its presence in the cannabis space thanks to the decision from the TMX Group exchanges not allowing US operations or activities to its listings.
When the first US-focussed cannabis company to approach the CSE explained the difficulties it faced listing on those exchanges, Carleton told the audience he didn’t see the big issue.
“We said ‘will your law firm provide an opinion that you are operating a business in accordance with applicable law?’ They said ‘yes,’ we said ‘fine you’re in.’ Seemed pretty straightforward. Not a hard question,” Carleton added.
This regulation difference has effectively made it so any company looking to raise capital and be involved in the US cannabis market will head to the CSE.
Canadian investors have proven to have an appetite for these stocks and have seized the opportunity in gaining exposure to the fractured US market.
However, the CSE has still faced challenges as explained by Carleton during his panel at the Arcview forum. Carleton said during his talk:
For those of you who are Canadian policy-wonks you may understand that the Canadian clearing and settlement organization, which is owned by our biggest competitor, tried to squeeze us out of the market by refusing to provide clearing and settlement services for cannabis issuers stocks. We managed to squelch that but again, we’ve been fighting.
The executive told the audience the CSE has 52 US-related current cannabis listings and had been able to raise C$1.5 billion for US cannabis companies throughout the year to the month of October.
The executive added that figure would be outdated by the end of the week as more US-related players seek listings on the exchange.
Could CSE be facing competition for US cannabis company listings soon?
During a panel at the MJBizCon in Las Vegas Kevin Murphy, CEO of the soon to be CSE listed company Acreage Holdings, said US companies elect to raise capital in Canada due to the current regulation on a federal level.
“Canadians are leading the capitals market race,” the cannabis executive told the audience.
Murphy added he would have been honored to launch on the New York Stock Exchange (NYSE) or NASDAQ but is forced to go on the CSE for now.
He expects companies in the US to start launching on US exchanges if the “states act,” a bill looking to remove the cannabis federal ban at the state level, is passed.
When asked about the possibility for this migration of existing or soon to launch companies from the CSE, Carleton told INN the exchange is focussed on the smaller scale companies.
“A lot of the companies that we’re talking to, yes, they are bigger and some of them are actually at that stage now [ready to launch on the NYSE or NASDAQ]. But, a lot of them are significantly smaller than that. They need to raise additional growth capital to get to that level,” the executive said.
“Is there a competitive threat coming at some point? That will be a good problem to have.”
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.