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A new milestone for cannabis investing in the U.S.?

Mar 14, 2018

For the first time, the Nasdaq has allowed common shares of a Canadian cannabis cultivator, Cronos Group Inc., to be cross-listed on the Nasdaq Global Market. 

This cross-listing for Cronos (TSX-V: MJN; Nasdaq: CRON) marks the first time a cannabis cultivator was allowed to list on any U.S. exchange.  In 2015 and 2016, Nasdaq famously rejected the Colorado cannabis-focused social media company MassRoots Inc.’s applications to list on the Nasdaq Capital Market (a lower tier of Nasdaq’s exchange than the Global Market). 

While there are several cannabis cultivators quoted on the OTC Markets Group, Inc.’s marketplaces, only companies (such as GW Pharmaceuticals (Nasdaq: GWPH) and Innovative Industrial Properties (NYSE:IIPR)) with business models that were ancillary to the cultivation and production of cannabis have been successful in listing on United States’ national exchanges. 

CRON’s cross-listing signals a potential paradigm shift for the Canadian cannabis industry, which has largely been able to only raise funds in Canada’s capital markets.  

While access to U.S. capital markets brings the promise of significantly larger financing opportunities, it also carries significant uncertainty since the cultivation, possession, and sale of cannabis in the U.S. remains illegal under the Controlled Substances Act of 1970.

It remains to be seen whether U.S. investment banks will underwrite offerings of Canadian and other foreign cannabis companies as they begin to cross-list on the U.S.’s national exchanges.  

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