The cannabis industry is set to reach yet another milestone this week. While we won’t see the passing of any new legislation or any states announcing legalization, the plant has still managed to nudge its way further into the mainstream, with one Canadian marijuana company to be listed on the NASDAQ, beginning Tuesday.
Cronos Makes History
Cronos Group Inc., a cannabis company that already trades on the Canadian Stock Exchange, is set to become the first marijuana company to appear on a major U.S. exchange. Shares will be available to trade on the NASDAQ beginning Tuesday.
Cronos founder and chief executive officer Mike Gorenstein believe this isn’t just a massive victory for his own company, but for the industry as a whole.
“It’s very significant for the company and the whole industry,” Gorenstein said in an interview with the Financial Post. “It’s a huge moment—just shows the stigma is continuing to erode on cannabis.”
In Canada, medical marijuana has been federally legal since 2001, and the country is set to legalize recreational marijuana sometime in the fall after the original July 1st deadline was pushed back by lawmakers. On the flip side, the plant remains federally illegal in the U.S., with 29 individual states allowing it for medicinal purposes, and just nine states (as well as the District of Columbia) recreationally.
Not to mention the fact that Jeff Sessions recently nixed Obama-era protections that allowed state-legal industries to create cannabis laws without government interferences. This has caused some prominent U.S. investors to think twice about investing in the Green Rush. According to Gorenstein, U.S. sanctions are what caused him to relocate his company to Canada in the first place.
However, Gorenstein expects that his company’s move to the NASDAQ could cause hesitant investors to change their tune.
“A lot of U.S. investors still are unsure about the legality: There’s not a lot of awareness about the fact that it’s federally legal in Canada versus the U.S.,” he said. “By listing on Nasdaq, it will open up the opportunities for a lot of U.S. investors that otherwise were unsure—even on the institutional level.”
Final Hit: Canadian Marijuana Company To Be Listed On The NASDAQ
Despite its current federal status in the U.S., Gorenstein hopes to eventually expand his business into the U.S. Currently, Cronos is working on building a growing facility in Israel and has received a license through a joint venture in Australia.
And while Cronos will become the first to trade on the U.S. Stock Exchange, it isn’t the first Canadian cannabis stock with U.S. ties. Back in October, Constellation Brands, which brews Corona beer, invested a whopping $191 million in the Canadian cannabis company Canopy growth.
“This move is a complete game changer, not only for Canopy but also for the entire industry,” Eight Capital analyst Daniel Pearlstein said at the time.
He certainly wasn’t wrong. After falling 7.3 percentage points over the fiscal year, Cronos shares were up as much as 11 percent following Mondays’ news. U.S. investors are clearly interested in getting in on the Green Rush from the ground floor. If more and more legal Canadian cannabis companies continue to make its way on to the U.S. exchange, it could prime marijuana investors for a big payday.
But right now, it’s up to the federal government to allow that happen.
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