In a sure sign of changing times, the first cannabis-industry business has been listed on the Nasdaq stock exchange — raising questions about how long federal prohibition can hang on in the face of a burgeoning economic sector.
On Feb. 26, a Toronto-based medical marijuana investment group won approval from the U.S. Securities and Exchange Commission (SEC) to become the first cannabis company listed on Nasdaq, New York City’s second biggest stock market.
The Cronos Group spent six months doing preparatory work for its application to the SEC, which was finally filed earlier this year. After the news broke on Monday, Cronos’s shares jumped up 11 percent to $9.83 dollars.
“It’s very significant for the company and the whole industry,” Mike Gorenstein, Cronos founder and chief executive officer, said in an interview with Bloomberg. “It’s a huge moment — just shows the stigma is continuing to erode on cannabis.”
The company has international ambitions. It’s already exporting to Germany (which has a tightly controlled medical marijuana program), is building a growing facility in partnership with a kibbutz in Israel (a country which has a growing medical marijuana program), and has received a license through a joint venture in Australia (which also has a rigid and limited medical marijuana program), according to CNN Money. Eventually, the company hopes to have a presence within the United States too, Gorenstein said — but only when it is legal at the federal level, he emphasized with perhaps unwarranted optimism.
CNN points out that whether Cronos is indeed the first canna-business to be listed on Nasdaq is to some extent a matter of definition. British firm GW Pharmaceutical is listed, and markets a cannabidiol (CBD) treatment for epilepsy, as well as other cannabis-based products. There’s also Innovative Industrial Properties, a real estate developer and lessor to cannabis cultivators.
But Cronos appears to be the first that directly markets herbaceous cannabis. This does seem like something of a watershed, though there is also a sense of inevitability to it.
The Arcview Group, an Oakland, California-based market research firm, has forecast that the legal cannabis market will grow to $40 billion in size by 2021. In November, Forbes ran a story predicting that the international market for cannabis will reach $31.4 billion within the next four years, citing a study by the Chicago-based Brightfield Group.
In 2016, Microsoft broke what media reports called the “corporate taboo” on cannabis, announcing a new partnership to market software tracking medical marijuana from “seed to sale.” And in 2015, the Philadelphia Inquirer got hold of a leaked 45-page internal equity report from high-finance giant Merrill Lynch, examining the future prospects for North America’s cannabis sector. The report said Merrill Lynch is “bullish on the cannabis testing market.”
It’s a strange contradiction that the SEC of the Trump administration has taken this ground-breaking step of approving Cronos. U.S. Attorney General Jeff Sessions is certainly the administration’s “drug war” hardliner. In January, he moved to revoke the Obama-era cannabis-friendly policies that had granted many investors the confidence to move into the industry.
In other ways, the SEC under the leadership of Chairman Jay Clayton seems perfectly in tune with the Trump zeitgeist. As Politico notes, he’d long called for lighter penalties on corporations found to be skirting regulations. And indeed, since he took over in January 2017, penalties collected by the SEC have dropped precipitously.
This raises the question of whether the Trump administration’s free-market principles will extend to cannabis, or if the sentiments of his cultural-conservative base will prevail.
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