Canopy Growth NYSE Listing
Most of our readers know that Canopy Growth Corp (OTCMKTS:TWMJF, TSE:WEED) is the market leader of Canadian marijuana stocks. However, a Canopy Growth NYSE listing could take the company to another level—a level that offers enormous gains for investors.
The company came close to applying for that listing earlier this year, but negotiations with Constellation Brands, Inc. (NYSE:STZ.B) got in the way.
Now that the road is clear, however, Canopy Growth is seeking a spot on the NYSE with a “CGC” stock symbol. It hopes to enter the U.S. stock market by the end of May. (Source: “Canopy Growth Announces Application to List on the NYSE,” Canopy Growth Corp, May 14, 2018.)
Adding its name to that hallowed investing ground could do wonders for Canopy Growth stock. Right now, it only trades on the Toronto Stock Exchange (TSE), a venue that, to U.S. retail investors, might as well exist on the moon.
Opening up the pool of investors to those who live south of the 49th parallel could bring in fresh money, higher bids, and a great deal more liquidity.
Of course, Canopy Growth isn’t the first Canadian marijuana stock to move down south. Cronos Group Inc (NASDAQ:CRON) made the jump in late February 2018.
Chart courtesy of StockCharts.com
In a way, that CRON listing showed that it was safe for marijuana companies to access U.S. investors. Until then, CEOs were unsure whether they’d run afoul of U.S. federal law, which clearly states that marijuana is a Schedule I drug under the Controlled Substances Act.
You see, only certain U.S. states have embraced the shift toward greater marijuana legalization. Nine have fully embraced adult recreational marijuana; 13 others have decriminalized it. More are sure to come, of course, but that doesn’t change the fact that stocks are regulated at the federal level.
So, the whole thing was murky.
The CRON listing cleared up the fog, however, by showing that a Canadian marijuana company need only comply with narcotics laws in countries they are active in. Since neither Canopy nor Cronos have production facilities in the U.S., that puts them in the clear.
A Few More Details
Despite the similarities between Canopy Growth and Cronos, one difference stands out, namely the choice of stock exchange. Cronos chose the Nasdaq, Canopy the NYSE.
When asked why, Canopy Growth CEO Bruce Linton said, “Ultimately one of them is on Wall Street and has a bit more history and cache, and the neighbors on it are pretty substantive companies.” (Source: “Canopy Applies to Become First Pot Producer Listed on the NYSE,” Bloomberg, May 14, 2018.)
He’s right. The NYSE has a storied background, not to mention a wide investor base, making it the perfect landing ground for foreign companies seeking entry into U.S. financial markets.
Even giants like Alibaba Group Holding Ltd (NYSE:BABA) sought a listing on the NYSE when the company first came to America. It would have been natural for a technology company to gravitate toward the Nasdaq, but prestige might have been in short order.
Acquiring status among the investment community is always important, but, to a marijuana company, it’s everything.
“One of the primary drivers of this listing is, as we are expanding globally, having U.S. institutional investors helps,” said Linton. “I think the investment community has to drop the pot jokes and talk about the investment grade opportunity.” (Source: Ibid.)
This is precisely what anyone holding Canopy Growth stock wants to hear. Legitimize the business. Make it normal for big, institutional funds to come knocking. That way, the CGC stock symbol can become a normal sight in huge portfolios.
Canopy Growth stock more than quadrupled in the last year. It was at risk of overheating.
It has a market cap of more than $5.0 billion, and not nearly enough earnings to justify that valuation. That’s why I warned investors that it might be a good idea to “trade the rumor, sell the news” with this stock.
But I said all that before the Canopy Growth NYSE listing announcement.
I now believe that, given the stock’s imminent exposure to U.S. investors, there’s still room for it to climb.