This morning, the cannabis industry has entered into the old guard New York Stock Exchange with the market debut of Canopy Growth Corp (CGC), the largest provider of medical marijuana in Canada.
Investors clambered to get a piece of the biggest pot stock in the world now that it’s more widely available to Americans. Over a million shares traded in the first hour after market open, as shares fell from an opening price of $30.85.
But price wasn’t the most important indicator of the day, experts said, as much as the mere fact of the debut.
“An event like this is massive,” said Jason Spatafora of MarijuanaStocks.com. “When a company like Canopy goes to the New York Stock Exchange, it shines a big spotlight on this industry that’s still so young.”
Two days ago on the Toronto Stock Exchange, said Spatafora, Canopy shares traded $216 million Canadian: “It pretty much already traded that in the first hour and a half on the NYSE.”
Canopy founding chairman and CEO Bruce Linton told TheStreet.com that while the stock performance was a little disappointing, “we didn’t go there for one day of trading.”
Industry players explained why Canopy’s move to the big board–the world’s oldest and largest stock exchange– matters to the wider mainstream acceptance of the business.
“The ability for cannabis to access real capital and markets has never happened,” said Joshua Laterman, chief executive of the National Association of Cannabis Businesses. “The industry has been historically unable to access capital because cannabis is federally illegal. This is going to bring in capital. With institutional money, comes intelligence and acceptance.” It might also goad federal lawmakers to step up on the issue of national regulation, he said.
Canopy’s already attracted mainstream attention in the form of a $245 million investment by publicly traded beverage giant Constellation Brands last fall. Now, Canopy isn’t the first Canadian cannabis company to go public on the US markets. Medical marijuana provider Cronos Group Inc. (CRON) debuted on the NASDAQ exchange in late February, marking the first time US investors could grab a direct piece of the $30 billion dollar Canadian pot industry.
Other Canadian publicly traded companies are growing, like Aurora Cannabis, which announced the acquisition ten days ago of MedReleaf. US-based MedMen is poised for a reverse takeover which will allow it to debut on the Canadian markets. This company’s parent, High Times Holding Corporation, is itself preparing for an IPO later this year.
North of the border, news coverage of pot has become routine, said consultant Steven Feldman of Canada Pot Stocks, though that was hardly the case four years ago.
Owning a piece of the pot business is its own form of activism, he explained: “People feel they’re participating in a political movement by being a shareholder in a cannabis industry.”
The business news comes as Canada poises for a major vote on the legal cannabis industry, set to take place on June 7th. Legal recreational weed sales could start as early as late summer, which some say could boost sales by $5 billion. Said industry analyst Feldman of pot’s road to acceptance, “At the end of the day, it’s always about money.”