Should U.S. investors take an interest in Canadian marijuana stocks, such as Cronos Group Inc. (TSXV:MJN), it could inflate valuations even further in a sector that some think is already insanely priced
SmallCapPower | February 27, 2018: Cronos Group Inc. (TSXV:MJN), based in Toronto, becomes the first marijuana company to list on a major United States stock exchange, the Nasdaq, on February 27, 2018, under the trading ticker ‘CRON’. Cronos Group will retain its listing on the TSX Venture Exchange (TSXV) under the symbol ‘MJN’.
For Our Complete Coverage Of Canadian Marijuana Stocks Click Here
Cronos Group CEO Mike Gorenstein said, “This up listing to NASDAQ is a major corporate milestone and reflects the significant progress we have made in strengthening our corporate governance and expanding our global footprint. We believe this will increase long-term shareholder value by improving awareness, liquidity, and appeal to institutional investors.”
The listing is a significant milestone for the cannabis company and the marijuana sector as well, which has faced resistance from the Donald Trump-led U.S. administration. Earlier in January 2018, an Obama administration policy, regarding enforcement of federal marijuana laws in the states that legalized the drug, was rescinded by the U.S. Justice Department. In the U.S., federal law prohibits the use of cannabis in spite of certain states such as California moving to give legal sanction to the usage.
The Nasdaq listing allows U.S. investors, who were reluctant to invest in cannabis stocks outside the country because of legal concerns, to invest legally in such shares. It took about six months for Cronos Group to prepare its application for the listing.
Cronos Group owns and operates brands in the area of marijuana cultivation as well as distribution. The Company owns 100% of both Peace Naturals and Original BC, which are licensed to grow and sell medical cannabis. Also, Cronos Group has a minority stake of 21.5% in a third cannabis producer, Whistler Medical Marijuana Company. Cronos Group has two production facilities in Ontario and British Columbia and has operations internationally in Israel and Australia. Furthermore, it has access to over 12,000 pharmacies in Germany.
This move by Cronos Group could prompt other Canadian cannabis companies to apply for U.S. listings as well. Should U.S. investors take an interest in Canadian marijuana stocks, it could inflate valuations even further in a sector that some think is already insanely priced.
After the news of its listing was announced on February 26, 2018, Cronos Group’s stock rose 10.8% to close at $9.86 on the TSX Venture Exchange. The Company’s share price has increased ~200% over the past year, in tandem with its Canadian counterparts on the back of expected legalization of recreational marijuana in Canada by this summer.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
To read our full disclosure, please click on the button below:
