On May 31, Charlotte’s Web began trading on the Toronto Stock Exchange, having delisted from the Canadian Securities Exchange. The CBD company’s graduation to the more senior exchange was enabled by the passage of the U.S. Farm Bill last December, which removed hemp-derived CBD from the U.S. Controlled Substances Act. Now that hemp-derived CBD is no longer federally illegal in the United States, the TSX can start listing U.S. hemp and CBD-focused companies, even though it continues to prevent U.S. cannabis companies from listing, due to rules prohibiting listed companies from participating in federally illegal activities. Cannabis Pro spoke with Loui Anastasopoulos, the TSX’s president, capital formation, about U.S. hemp companies listing on the TSX and other opportunities he sees coming to market. The interview has been edited for clarity.
Cannabis Pro: How has the passage of the Farm Bill changed things for the TSX?
Loui Anastasopoulos: We’d been hoping for the passage of the U.S. Farm Bill, that subsequently would allow us to do business with these CBD and hemp companies. The passage of the bill has made it now appropriate for us to list those companies on our marketplace. Charlotte’s Web is just the first of more to come. We’ve been anticipating this change for quite some time, so we’ve had ongoing conversations with many companies going back a number of years.
CP: How many CBD or hemp companies are you expecting to list in the coming months?
LA: We typically don’t comment on specific numbers, but what I can say is we have a healthy pipeline of companies that we are engaged with. In terms of when they go public or when they switch or when they list, that’s determined by a number of different factors outside of our control. I also think it’s important to note that the opportunity extends beyond just the U.S. Obviously the U.S. is an important marketplace and there are a lot of great companies that we see there. But this industry has expanded beyond the U.S., and we’re seeing opportunities out of Europe, out of Israel; we had a couple of listings out of Israel last week. We’re seeing opportunities out of Latin America and Africa. Really it’s become a global story, so we’re focused on opportunities all over the world.
CP: Are these mostly new listings? Or are companies moving over from other exchanges, like Charlotte’s Web?
LA: I’d say both. There are some companies listed on other marketplaces that we’ve had ongoing discussions with, but there are a number of companies that have yet to go public.
CP: The U.S. Congress is currently considering a cannabis banking reform bill that could open up U.S. exchanges to U.S. cannabis companies. Are you concerned that Canadian exchanges could be sidelined if this happens?
LA: It’s important to note that among companies listed on a marketplace, whether it’s the TSX or another one, they build a shareholder base here, they build relationships with different institutions and pools of capital. If the U.S. does open up and become available to some of these companies, it doesn’t necessarily mean that they’ll give up one listing for another. What we often see is companies do a dual listing, and that’s something we actually work with companies on a fair bit. We do view inter-listings as something that actually facilitates liquidity and is good for companies. So that’s what we anticipate and what we think will happen. We do believe we’ll continue to be leaders in the space. And I think we’ve demonstrated immense value in our two markets: deep pools of capital, exposure to a broader capital markets audience, and access to international investors.
CP: How is the cannabis investor base changing?
LA: Obviously this started off being very retail, and continues to have a large amount of retail. But over the last 12 to 14 months, we are seeing more and more institutions participating in this sector. If you use Charlotte’s Web as an example, that was one of the reasons they did move to the TSX, to give them expanded access to international institutional investors and pools of capital.
CP: What needs to change for the TSX to allow U.S. cannabis firms to list?
LA: It goes back to core legality at the federal level. We’re watching closely. If there is a change at the federal level and marijuana is not longer a Schedule I drug, then that will change the way we look at the opportunity. But for the moment, that’s not the case, so we continue to drive forward with our current position.
CP: Would the passage of the STATES Act or cannabis banking reform change the TSX’s view?
LA: We’re currently reviewing those developments around the banking act and the STATES Act. I’m not in a position to go any deeper at this point.
Mark Rendell