US cannabis firms could gain from Canadian Securities Exchange plan

The Canadian Securities Exchange’s (CSE) new senior tier could offer U.S. cannabis companies lower capital costs and a broader investor base.

Thirty-nine of the 108 companies that will graduate to the new tier starting in May are cannabis businesses, according to the Globe and Mail.

“The ultimate object of the exercise here is to ensure that senior companies receive a lower cost of capital,” CSE chief executive Richard Carleton told the Globe and Mail.

“Just as it is a lower cost of capital for companies listed on the Toronto Stock Exchange than it is for companies listed on the TSX Venture, we will be tracking very carefully whether companies on our senior tier are in fact rewarded with a lower cost of capital versus companies that are on the regular CSE market.”

Senior tier members will be included on the Investment Regulatory Organization of Canada’s (IIROC) list of securities eligible for reduced margins, which will help the CSE to compete with the Toronto Stock Exchange (TSX), TSX-V and NEO Exchange.

Carleton said the plan has been in the works for three years, but the timing of the announcement is sure to attract the attention of U.S. multistate cannabis operators, which are grappling with high costs of capital.

TerrAscend Corp., which currently lists on the CSE (TER), recently announced its plans to restructure its company to uplist to the TSX.

New York-based Curaleaf, which also lists on the CSE (CURA), has also had discussions with the TSX.

To qualify for the CSE’s senior tier, the exchange will audit financial statements of each issuer starting in May, according to a news release.

Issuers must meet one of four standards:

• Shareholder equity of at least $5 million and a market value of the public float of at least $10 million.
• Net income of at least $400,000 in the last fiscal year or in two of the three most recent fiscal years; shareholder equity of at least $2.5 million; and a market value of the public float of at least $5 million.
• A market value of all securities of at least $50 million, shareholder equity of at least $2.5 million and a market value of the public float of at least $10 million.
• Total assets and total revenues of at least $50 million each in the most recent fiscal year or in two of the three most recent fiscal years and a market value of the public float of at least $5 million.

“These Amendments create a level playing field with other exchanges, enabling us to meet the current needs and expectations of our issuers and investors,” Carleton said in a statement.

Source: https://mjbizdaily.com/us-cannabis-firms-could-gain-from-canadian-securities-exchange-plan/