In this Tuesday

Canada captures U.S. cannabis investment

Trudeau win could send influx of foreign investment into Canadian cannabis space

By Alexandra Posadzki, The Canadian Press

TORONTO – Friendlier laws on medical marijuana use in Canada are already drawing American investment north or the border, and the trend is likely to further ignite if the federal Liberals make good on their promise to allow recreational use of the drug.

Poseidon Asset Management, a San Francisco-based hedge fund focused squarely on the cannabis space, says it is considering boosting its Canadian holdings following Justin Trudeau’s election win.

“We have one core holding up there currently but we would love to expand that,” says Morgan Paxhia, the hedge fund’s founding partner and chief investor.

South of the border, Poseidon invests only in businesses that are “one step away from touching the leaf,” such as producers of cooling systems used in marijuana production facilities or vaporizer technology.

That’s because despite the fact that a number of states – including Oregon, Colorado and Washington – have legalized the recreational use of marijuana, U.S. federal laws that prohibit the drug leave cannabis producers operating in a legal grey zone.

“We wouldn’t want to put our (investors) at risk with that exposure in the United States,” says Paxhia. “That’s why Canada is of interest to us, because we can then participate in that growth.”

Experts say American institutional investors looking for cannabis plays are heading north, where medical access to the drug is legal countrywide, to avoid running afoul of U.S. federal laws or sinking their money into companies that could be shut down by U.S. federal authorities.

“That’s a theme we’ve been seeing for a long time – foreign investors investing in Canadian companies, to the point that most of the capital raised now for Canadian companies comes from overseas,” says Khurram Malik, a Jacob Securities analyst who tracks the medical cannabis space.

Trudeau’s election win could accelerate that trend further says Alan Brochstein, the founder of 420 Investor and communications and marketing firm New Cannabis Ventures.

“Canada really has a chance to be a global leader here,” says Brochstein.

Some companies that operate in the U.S. have even started listing their shares on Canadian markets in the hopes of capturing more investment dollars.

“That’s part of the rationale of listing in Toronto, because we can attract U.S. investment in Toronto,” says Don Robinson, CEO of Golden Leaf Holdings, a cannabis extracts producer currently operating in Oregon.

Golden Leaf, which has plans to expand across North America, listed its shares on the alternative Canadian Securities Exchange on Oct. 14. under the symbol GLH.

Nutritional High International Inc., a company that sells marijuana edibles to recreational users in the U.S., has been trading on the Canadian Securities Exchange since March, even though edible cannabis products are not currently legal north of the border.

“You’re going to see a lot of U.S. marijuana companies listing on the Canadian exchanges up here,” says Malik, noting that Canada has a high number of legitimate cannabis companies trading on its stock markets relative to other countries.

“If you go to the OTC pink sheets in the U.S. there’s probably over 100 names, but a lot of those are pretty sketchy,” says Malik. “So (cannabis companies) are looking for a market where their legitimate peers are trading and that happens to be Canada.”

However, Braden Perry, a lawyer who specializes in government compliance, says even investing in Canadian cannabis firms could spell trouble for American funds.

“If you have U.S. money invested in a product that is illegal in the United States, repatriating that money could be considered a money laundering violation,” said Perry, a partner in Kansas City-based law firm Kennyhertz Perry, LLC.

However, Perry adds that the issue is a complicated one.

“I don’t want to be accusing people of breaking the law when I don’t know exactly what they’re doing.”

Follow @alexposadzki on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Helping others, especially those struggling with mental health issues, keeps MOD Pizza owner Jim Hayden cooking. (RIck Stiebel/News Staff)
A 1900s writing box found in Greater Victoria contained ink, photos and a letter addressed to Clara McCaubry dated October 14, 1898. (Photo courtesy Suzanne Hervieux)
Mysterious 1900s writing box finds a home among Saanich Archives

Wooden chest owned by early Saanich resident Clara Isabelle McCaubry

(Black Press Media file photo)
Spooky online class cooks up funds for Greater Victoria Imagination Library

United Way Greater Victoria offers how-to for witch cookies, tasty coffin as fundraiser

Murray Rankin has announced he will seek the nomination for the Oak Bay Gordon Head riding in the 2021 provincial election (which could happen in the fall of 2020). The former Minister of Parliament for the Victoria riding from 2012 to 2019.
(MurrayRankin.com)
New Oak Bay-Gordon Head MLA Murray Rankin says he will use his federal connections

Rankin said being part of NDP majority government gives him a strong voice

NDP Leader John Horgan celebrates his election win in the British Columbia provincial election in downtown Vancouver, B.C., Saturday, Oct. 24, 2020. THE CANADIAN PRESS/Jonathan Hayward
Horgan celebrates projected majority NDP government, but no deadline for $1,000 deposit

Premier-elect says majority government will allow him to tackle issues across all of B.C.

FILE – Prime Minister Justin Trudeau greets Premier John Horgan during a press conference at the BC Transit corporate office following an announcement about new investments to improve transit for citizens in the province while in Victoria on Thursday, July 18, 2019. THE CANADIAN PRESS/Chad Hipolito
Trudeau congratulates Horgan on NDP’s election victory in British Columbia

Final count won’t be available for three weeks due to the record number of 525,000 ballots cast by mail

Comedic actor Seth Rogen, right, and business partner Evan Goldberg pose in this undated handout photo. When actor Seth Rogen was growing up and smoking cannabis in Vancouver, he recalls there was a constant cloud of shame around the substance that still lingers. Rogen is determined to change that. (Maarten de Boer ohoto)
Seth Rogen talks about fighting cannabis stigma, why pot should be as accepted as beer

‘I smoke weed all day and every day and have for 20 years’

NDP Leader John Horgan elbow bumps NDP candidate Coquitlam-Burke Mountain candidate Fin Donnelly following a seniors round table in Coquitlam, B.C., Tuesday, October 20, 2020. THE CANADIAN PRESS/Jonathan Hayward
Horgan, NDP head for majority in B.C. election results

Record number of mail-in ballots may shift results

The Canadian border is pictured at the Peace Arch Canada/USA border crossing in Surrey, B.C. Friday, March 20, 2020. More than 4.6 million people have arrived in Canada since the border closed last March and fewer than one-quarter of them were ordered to quarantine while the rest were deemed “essential” and exempted from quarantining. THE CANADIAN PRESS/Jonathan Hayward
Majority of international travellers since March deemed ‘essential’, avoid quarantine

As of Oct. 20, 3.5 million travellers had been deemed essential, and another 1.1 million were considered non-essential

Canada’s Chief Public Health Officer Theresa Tam responds to a question during a news conference Friday October 23, 2020 in Ottawa. Canada’s top physician says she fears the number of COVID-19 hospitalizations and deaths may increase in the coming weeks as the second wave continues to drive the death toll toward 10,000. THE CANADIAN PRESS/Adrian Wyld
Canada’s top doctor warns severe illness likely to rise, trailing spike in COVID-19 cases

Average daily deaths from virus reached 23 over the past seven days, up from six deaths six weeks ago

100 Mile Conservation officer Joel Kline gingerly holds an injured but very much alive bald eagle after extracting him from a motorist’s minivan. (Photo submitted)
B.C. driver thought he retrieved a dead bald eagle – until it came to life in his backseat

The driver believed the bird to be dead and not unconscious as it turned out to be

White Rock RCMP Staff Sgt. Kale Pauls has released a report on mental health and policing in the city. (File photos)
White Rock’s top cop wants to bill local health authority for lengthy mental-health calls

‘Suggestion’ included in nine-page review calling for ‘robust’ support for healthcare-led response

A Le Chateau retail store is shown in Montreal on Wednesday July 13, 2016. Le Chateau Inc. says it is seeking court protection from creditors under the Companies’ Creditors Arrangement Act to allow it to liquidate its assets and wind down its operations.THE CANADIAN PRESS/Ryan Remiorz
Clothing retailer Le Chateau plans to close its doors, files for CCAA protection

Le Chateau said it intends to remain fully operational as it liquidates its 123 stores

Most Read