According to a Jefferies analyst, the Nasdaq stock exchange is “warming up” to the idea of listing Canadian cannabis companies even if they have exposure to the U.S. market. A U.S. cannabis company may be the next.
The Nasdaq, which has permitted Canadian cannabis companies Canopy Growth Corp. CGC, -0.97% and SNDL Inc. SNDL, +3.52% to continue trading after both companies acquired U.S. assets, may permit U.S.-based cannabis company Curaleaf Holdings CURA, -0.39%, which presently trades on the Toronto Stock Exchange, to list on its exchange, according to speculation made by Jefferies analyst Owen Bennett on Friday.
Bennett reported that Curaleaf Chair Boris Jordan stated “that a’major U.S. exchange’ had contacted Curaleaf to begin discussions” during a Spaces discussion on the social media platform X, formerly known as Twitter.
In an email to MarketWatch, a Curaleaf representative stated that the company is currently in discussions with “multiple major exchanges” regarding possible plans. The business declined to offer more information.
A spokesman for Nasdaq remained silent.
Exchangeable shares are being used by SNDL and Canopy Growth, which are already listed on the Nasdaq, as part of a strategy Bennett explains as walling off U.S. assets.
The Nasdaq has permitted the two Canadian companies to trade despite pending agreements to enter the U.S. cannabis market, despite the fact that it forbids U.S.-based cannabis companies from trading directly on its exchange.
Bennett remarked, “Nasdaq… seems to be warming up to the idea.”
The Calgary, Alberta-based SNDL announced this week that the Nasdaq has given its company-sponsored joint venture, SunStream USA, the go-ahead to purchase U.S. cannabis assets.
According to the company, “SNDL is confident that the SunStream USA Group structure complies with all applicable laws and is not aware of any circumstance that would cause SNDL to violate Nasdaq listing requirements.”
Bennett claims that the action is similar to the exchangeable-share structure that Canopy Growth authorized recently in order to establish Canopy USA. Wana Brands, Jetty Extracts, and Acreage are the three American cannabis companies that Canopy USA is in the process of acquiring.
For the time being, American cannabis companies are unable to list on the Nasdaq or the New York Stock Exchange due to the federal prohibition on cannabis in the United States.
Currently trading on the Toronto Stock Exchange or the Canadian Securities Exchange are the biggest multistate U.S. cannabis companies: Curaleaf, Green Thumb Industries Inc. GTBIF, -1.20%, Trulieve Cannabis Corp. TCNNF, +1.17%, Verano Holdings Corp. VRNOF, -1.72%, and Cresco Labs Inc. CRLBF, +1.00%.
If they are interested in the space, retail investors frequently have to purchase those companies’ stocks on the less active over-the-counter market, where fewer institutional exchange-traded fund managers trade.
Additionally, this arrangement limits the amount of money that American companies may be able to raise from domestic investors who might otherwise be shying away from the industry.
The U.S. Department of Justice announced this week that the Drug Enforcement Administration will publish a rule to transfer cannabis from Schedule I to the less restrictive Schedule III category of drugs under the U.S. Controlled Substances Act. This news sent cannabis stocks surging.
Smart Approaches to Marijuana, a Washington-based organization opposed to cannabis legalization, has voiced opposition to that move and promised to fight the rescheduling effort in court.
Marijuana is a “psychoactive drug known to come with serious health and mental-health consequences,” according to SAM President Kevin Sabet.
