This noise coming from the New York Stock Exchange lately responds to the explosion of the cannabis market in the US mainly but in the world eventualy.
Wall Street brokers enthusiastically welcomed the arrival this week on the official Nasdaq market of the first company specializing solely in cannabis, the Canadian Cronos.
First observation here: the title of Cronos jumped 20% since its listing on the stock market!
The company’s stock, which grows and distributes therapeutic and recreational cannabis on four continents, could already be traded on the Toronto Stock Exchange as well as over-the-counter in New York in the form of American Depositary Receipts (ADRs), certificates allowing a foreign company to trade in the United States without having to comply with the country’s massive regulatory requirements.
However, since Tuesday, the company has been allowed to list its shares on the official Nasdaq platform, the electronic stock exchange overlooking Times Square in New York, in the same way as Apple or Amazon. This implies that it now meets all the requirements of the American financial markets policeman, the SEC.
Cronos CEO Mike Gorenstein described this development as “a major step forward for the company.” In a statement issued last Monday, he noted:
“We believe this will increase long-term shareholder value by improving visibility, liquidity, and attractiveness to institutional investors.
Cronos gave up nearly 2% the day he arrived on the Nasdaq but jumped 20.34% Wednesday.
An explosion of the cannabis market
This fanfare on the New York Stock Exchange responds to the explosion of the cannabis market in the world. In December 2013, Uruguay became the first country in the world to legalize the production, distribution, and consumption of cannabis.
In the United States, although soft drugs are still banned at the federal level, several states have authorized their marketing.
Several countries have also legalized cannabis for therapeutic use. In Canada, recreational use will become legal on July 1, 2018.
North American investors capitalizing on the commercial potential of cannabis can also invest in other specialized over-the-counter companies such as Aphria, Canopy Growth Corp or Aurora Cannabis, whose shares are also traded on the Toronto Stock Exchange.
It is also possible for them to bet on companies with a foot in the soft drug sector, such as the American alcoholic beverage distributor Constellation Brands, which recently acquired an equity stake in Canopy Growth.