Gauging the Growth of the Cannabis Industry in Canada
One way to gauge the growth in the cannabis investing is to examine the number of public companies. Based on our recent survey, there are now 119 public companies listed on the Canadian stock exchanges of which 7 are listed on the Toronto Stock Exchange (TSX), 24 are listed on the Toronto Stock Exchange Venture Exchange (TSXV) and 85 are listed on the Canadian Stock Exchange (CSE). Of the total on the CSE, three companies list a warrant so there are 88 securities listed.
As we explained in the past, the philosophic differences between the Toronto and the Canadian exchanges influences where companies choose to list. The Toronto exchanges do not list companies that are in conflict with the Federal laws of a country. This means because cannabis is still illegal under U.S. federal law, a company that opts to participate in ways that conflict with U.S. cannabis laws cannot list on Toronto. The Canadian Stock Exchange takes the approach they will list companies that make full disclosure of the risks involved. The Canadian Securities Administrators has adopted a similar stance and has laid out the disclosure requirements.
The stance applied by the TSX and TSXV has forced companies to jump through hoops. Namaste sold its U.S. assets in order to qualify for listing on the TSXV. Lexaria has set up subsidiaries to take ownership of its intellectual property to avoid the conflict. Sunniva plans to split the company in two: a U.S. and Canadian to remove the conflict for investors. Larger companies such as Aphria and Aurora have made similar moves in an attempt to maintain their Toronto listings. Canopy Growth did not purse conflicting U.S. assets. Of course, the entire issue would disappear if the Americans reschedule cannabis.