Upcoming Mining Events – Q1 2023

Home to over 300 mining listings (and counting), the CSE team understands and appreciates the importance of cultivating strong relationships in the mining industry. It’s why we’ve proudly made a name for ourselves in the sector by attending, sponsoring, and speaking at a range of mining and exploration events within Canada and globally over the years. 

As the mining sector continues to flex its muscle, renewed interest in gold and battery metals is generating lots of discussion and deal flow, especially at mining events and conferences. 

Check out which mining events we’ll be heading to in the first quarter of 2023.

Vancouver Resource Investment Conference (VRIC) 2023

Produced by Cambridge House International, VRIC, now in its 28th year, is a renowned junior mining and exploration industry event that is anticipated to host thousands of attendees. Featuring mining companies, investors, and mining industry thought leaders, attendees will enjoy insightful discussions, a tradeshow and exhibition, networking opportunities, and more.

Members of the CSE team will be at booth #822, and CSE-listed issuers exhibiting at this year’s event include:

  • Western Uranium (CSE:WUC) 
  • Snowline Gold (CSE:SGD) 
  • Sitka Gold (CSE:SIG) 
  • Sassy Gold (CSE:SASY) 
  • Quebec Nickel (CSE:QNI) 
  • Inflection Resources (CSE:AUCU) 
  • Headwater Gold (CSE:HWG) 
  • Green River Gold (CSE:CCR) 
  • Getchell Gold (CSE:GTCH) 
  • Bunker Hill Mining (CSE:BNKR)

Be sure to stop by and say hi to our team!

Date: January 29–30, 2023

Location: Vancouver Convention Centre (West Building), Vancouver, BC

For more information and to register for this event, please click here.

PreDAC 2023

Leading up to the renowned PDAC Conference, the CSE will once again be hosting our much-anticipated mining industry networking event, PreDAC, with dates in both Toronto and Vancouver. 

Attendees will hear quick pitches from industry-leading speakers on mining and exploration and also have the opportunity to network with mining professionals from across Canada and around the world.

PreDAC Vancouver

This year, PreDAC Vancouver will have an incredible line-up of speakers, including Bruce Campbell, Founder and Portfolio Manager of StoneCastle Investment Management; Gwen Preston, the Resource Maven; and Chen He, an investment advisor at Leede Jones Gable. 

Date: February 23, 2023, from 2:00 PM–5:00 PM PST

Location: Vancouver Club (Grand Ballroom), Vancouver, BC

PreDAC Toronto

We’re proud to be hosting this year’s PreDAC Toronto with Investor.Events. Stay tuned for our line-up of this year’s speakers. 

Date: March 1, 2023, from 4:00 PM–7:00 PM EST

Location: The Albany Club, Toronto, ON

Keep an eye on the CSE’s event page for information on how to register for PreDAC Vancouver and PreDac Toronto. 

PDAC 2023

Organized by the Prospectors & Developers Association of Canada, PDAC has been the world’s premier mineral exploration and mining convention for over 90 years. As always, the conference will be packed with fascinating exhibits, networking, events, and programming with leaders in the mineral exploration and mining sectors.

The CSE will once again have a booth on the exhibition floor at the Investors Exchange to offer visitors a rich offering of mining-focused content produced by the CSE. 

Date: March 5–8, 2023

Location: Metro Toronto Convention Centre, Toronto, ON

For more information and to register for this event, please click here.

PDAC Investor Luncheon 2023

Now a mainstay of the PDAC experience, the CSE’s PDAC Investor Luncheon is a highly sought-after event that brings together a dynamic mix of investors, CSE-listed companies, and thought leaders from the finance and mining and exploration communities. 

Following opening remarks, we will invite several CSE-listed companies to present their company’s stories in a rapid-fire pitch format. Then, we’ll have an hour-long networking session for attendees to meet in-person. 

Date: March 7, 2023, from 11:30 AM–2:00 PM EST

Location: InterContinental Toronto Centre (Ontario Room), Toronto, ON

Keep an eye on the CSE’s event page for information on how to register for the PDAC Investor Luncheon 2023.

Jay Martin on Making Investment Personal (Again) | The CSE Podcast Ep3-S3

Jay Martin, President and CEO of Cambridge House International makes his long-overdue return to the Exchange for Entrepreneurs podcast!

In this episode we follow-up 30 months after our last conversation with Jay when the impact of the global pandemic was starting to irreversibly alter the path of his business at Cambridge House International – a business anchored by several well-known investment conferences. Since that time Jay has moved most of Cambridge’s activities into the online-content world with the exception of the Vancouver Resource Investment Conference (VRIC), which takes its rightful place again in Vancouver from January 29-30, 2023.

In this discussion Jay reveals the reasons for bringing back the show and why its still critically important to bring investors and entrepreneurs together under one roof. He also highlights how his experience with one former Prime Minister re-affirmed his belief in bringing the conference back as an in-person event.

Mr. Martin also discusses his viewpoints on investors newsletters and how he sources his own motivation for writing a weekly digest for his followers. For those looking for advice on who to follow or what newsletters to consider then look no further than Jay’s principles shared on this week’s program.

Learn more about Cambridge House International at https://cambridgehouse.com/

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Cam Chell on How Innovation Paths Have Changed | The CSE Podcast Ep1-S3

Welcome back to a new season of the Exchange for Entrepreneurs Podcast!

This year promises to be another compelling year of discussion with entrepreneurs, investors and influencers standing firmly in the intersection between entrepreneurship and the public markets.

Season 3’s inaugural interview is with returning guest Cameron Chell. Cam is the Co-Founder and CEO Co-Founder of Draganfly Innovations Inc. (CSE:DPRO), a global UAV (unmanned aerial vehicle) leader in hardware, software, logistics & services.

Cam reflects on his experiences since his last appearance on the show during the onset of the pandemic in 2020. Since that time his company has ventured into Ukraine to deliver life-saving technology to the warring nation. Cam explains why he was willing to take the risk to take his business into a warzone and why there wasn’t any other choice as an entrepreneur.

Mr. Chell is also Co-Founder and Chairman MetaWorks Platforms (CSE:MWRK) – an award winning blockchain and Web3 development platform that empowers Fortune 5000 brands to create and monetize their own metaverse. We spend time reflecting on the post-FTX reality for companies in the crypto/blockchain space and why the fall of FTX might have been inevitable yet necessary.

Host: James Black
Guest: Cameron Chell

Learn more about Draganfly at https://draganfly.com/

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Jeffrey Guillot from Millennial Strategies on Cannabis Advocacy | The CSE Podcast Ep31-S2

Episode 31 of The Exchange for Entrepreneurs Podcast is live! The CSE’s Barrington Miller chats with Millennial Strategies Partner Jeffrey Guillot about the company’s lobbying work, cannabis legalization in the US, and New York State’s positioning within the industry. The conversation also addresses CAURD licenses, the illicit versus legal markets, and cannabis oversupply.

Here’s an overview of what Barrington and Jeffrey discuss in this edition of The Exchange for Entrepreneurs Podcast:

00:00 – Introduction
00:24 – What is Millennial Strategies all about?
01:42 – What does a lobbyist do?
03:06 – Cannabis in New York State
08:01 – New York State’s potential
11:15 – What will happen to the legacy market?
15:36 – Is Federal legalization possible?
21:45 – What can be done about oversupply?
25:20 – Where can we learn more about Millennial Strategies?

Learn more about Millennial Strategies at https://millennialstrat.com/

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InnoCan Pharma: Combining Cannabinoids and Cutting-Edge Science to Deliver Drugs on Target

Smart drug delivery systems that deliver medications to specific sites in the human body are on the leading edge of science.

This type of biomedical engineering focuses on maximizing drug efficiency and minimizing possible side effects, while reducing the overall amount of medication used and frequency of treatment.

Cannabinoids play a crucial role in regulating the immune system and have been shown to suppress inflammation through multiple anti-inflammatory pathways. Their high safety profile makes them an appealing alternative to many traditional drugs, according to Iris Bincovich, Chief Executive Officer of InnoCan Pharma (CSE:INNO). 

InnoCan is working to harness the unique qualities of cannabinoids and combine them with the latest in drug delivery systems. The goal is to deliver cannabinoids such as CBD so that more of it becomes available for the body to benefit from than with current platforms.

Bincovich recently spoke with Canadian Securities Exchange Magazine about working with university researchers on the combination of cannabinoids and innovative delivery systems, as well as the direction in which the company’s technologies are heading.

InnoCan recently reported the results of preclinical trials on dogs, using injections for both pain relief from osteoarthritis and for the treatment of epilepsy. What did you learn from these trials?

We learned that we can bring a substantially better bioavailability of CBD to the bloodstream.

The low oral bioavailability of CBD in people, at 6.5% to 20% of administered dosage, is a result of first pass metabolism in the liver and considered to be variable and dependent on fasting and fed conditions.

Together with The Hebrew University of Jerusalem, we’re developing injectable liposomal CBD formulations (LPT) that have already shown higher bioavailability of CBD and prolonged release to the bloodstream.

In a recent study, we’ve learned that the LPT showed close to 100% bioavailability of CBD and prolonged release for at least four weeks after one LPT subcutaneous injection.

In this preclinical trial, a dog with drug-resistant epilepsy was treated with InnoCan Pharma’s LPT injections. The results demonstrated that the frequency and intensity of the dog’s epileptic seizures decreased significantly. Since the last LPT injection, the dog has not had a seizure for over 10 weeks.

In another preclinical trial, six dogs suffering from osteoarthritis and treated with oral analgesics, but still experiencing pain, were administered a single LPT subcutaneous injection in addition to their routine analgesics. CBD concentrations were observed for six weeks following the liposomal CBD injection in the dogs’ plasma. Owners reported that the dogs’ pain and wellbeing scores improved for several weeks after the injection. The results show that the LPT technology has the potential to provide additional analgesia in dogs suffering from pain.

You’re starting by treating dogs for these conditions, and eventually moving on to the human side?

We’re gathering data for this purpose. We chose a big animal model for developing a drug and a treatment model. And yes, the veterinary industry is a potential market whereas the regulatory barriers are marked for the human pharma side.

In both pathways, veterinary and human, we see a lot of potential for the LPT technology to improve patients’ quality of life.

CBD-loaded exosomes (CLX) may hold the potential to regenerate cells. Could this work for conditions associated with the central nervous system?

Exosomes are small particles created when stem cells are multiplied. Lately, they are considered a very promising delivery platform for different molecules. The exosomes can be used as a delivery vehicle that can deliver cannabinoids to diverse target sites in the body.

Various cannabinoids were shown to protect neuronal cell death following their exposure to various oxidative stress damages.

We’re collaborating with Ramot at Tel Aviv University to develop a revolutionary cannabinoid-loaded exosome technology that may hold the potential to provide a highly synergistic therapeutic effect. This effect utilizes the regenerative and anti-inflammatory properties of exosomes and cannabinoids to target various conditions associated with the central nervous system.

What’s next for InnoCan?

The LPT platform development is now in the stage of collecting more safety and efficacy information, with a view toward human clinical trials.

From Q4 2022 going into 2023, we will commence targeting pharma veterinary companies, especially in the companion animal arena for pain management and epilepsy drugs, to initiate negotiation of licensing agreements.

In the three years since we went public, we’ve done an early exercise of warrants. Nearly 90% of our investors chose to exercise the warrants for total proceeds of C$9.2 million. We’re collaborating with leading scientific institutes, focusing on the development of the LPT and CLX drug delivery systems, to achieve our goals of presenting the market with more efficient and accurate delivery systems of cannabinoids to the body.

This story was featured in Canadian Securities Exchange Magazine.

Learn more about InnoCan Pharma at innocanpharma.com.

CSE Going Global: Highlights from Recent Travels to Israel and Australia

At the Canadian Securities Exchange, we pride ourselves on being the exchange of choice for entrepreneurs from a range of industries around the world. The growing international demand for deep expertise in public venture capital, especially in areas like mining, cannabis and technology, are part of the reason why members from our team recently travelled to meet with entrepreneurs in Israel and Australia.

Israel: Connecting with Entrepreneurs

The CSE’s most recent trip to Israel in November is the continuation of more than five years of visits. Mark Francis, the CSE’s Senior Advisor of Listings Development for Western Canada, sought to strengthen key relationships and further the CSE’s interests in the region. 

With an economy that encourages and nurtures entrepreneurship, especially at the growth stage, Israel offers a vibrant start-up environment. That said, according to sentiment on the ground, investment funding tends to skew towards bigger companies, which means growth-stage firms may need to look further afield for venture capital. 

Fortunately, Canada – and the CSE in particular – are appealing to Israeli entrepreneurs because of our streamlined small-cap regulatory environment, strong company disclosure framework, large volumes of small-caps driving expertise, and integration with the US capital markets. Additionally, Mark noted that many Israeli entrepreneurs were quite open to sharing ownership with experts and investors who have a broad cross-section of skill sets in order to accelerate getting deals done.  

Australia: A Mining Powerhouse

With mutual interests and expertise in mining, a history of Canadian companies listing in Australia and vice versa, Canada represents an important pool of investment capital for early-stage Australian mining companies.

The seemingly natural fit between these two global mining powerhouses is what motivated CSE’s Director of Listings Development for Western Canada Anna Serin to connect with entrepreneurs and various capital markets stakeholders at several mining-focused investment conferences in Australia this past November. 

From Perth to Sydney to Melbourne to Noosa, Anna had the opportunity to meet with issuers, investors, and miners on their home court. Whether it was at the International Mining and Resources Conference (IMARC), the Noosa Mining Investor Conference, as well as at other local meetups, it was clear that there are opportunities for the CSE and Australian-domiciled companies to consider pursuing in the future. 

What stood out to Anna during her time in Australia was the energy level around mining. In particular, the level of enthusiasm among attendees of mining events as well as the ease with which one could network, made these events as enjoyable as they were valuable. 

Of course, one big topic of discussion and focus was lithium. Undoubtedly, this theme, as well as the conversation on how to raise capital in the current environment will continue to be topical in the upcoming slate of mining conferences here in Canada.

Continuing to Push Globally

Despite journeying to very different markets, the entrepreneurial spirit among early-stage companies is remarkably similar around the world. The combination of a tenacity to grow as well as the desire for accessible public venture capital mean that entrepreneurs across the globe are increasingly looking to the Canadian Securities Exchange as a destination to write the next chapter in their respective growth stories. And, we are undoubtedly happy to welcome them. 

As 2022 winds down, the CSE team will be taking a well-deserved break from travelling. We look forward to hitting the road — and skies — again in 2023 and are especially excited to see our friends, old and new at events throughout the next year.

Marimed: More US Growth in the Works for This Consistently Profitable Cannabis Company

Consumer demand for legal cannabis continues to grow in the US despite stalled legalization efforts at the federal level. Analytics company New Frontier Data, for example, projects US cannabis sales will hit US$57 billion annually by 2030, with that number possibly reaching $72 billion if 18 additional states permit adult recreational use.

MariMed (CSE:MRMD) has developed into a premier seed-to-consumer multi-state operator with expertise in cultivation, production and dispensary operations. The company has a track record of sustainable revenue growth along with one of the strongest EBITDA margins in the industry, projecting $135 million to $140 million in revenue for 2022, as well as $35 million to $40 million in adjusted EBITDA.

The Canadian Securities Exchange Magazine recently spoke with MariMed President Jon Levine, who discussed the company’s growth prospects, how it plans to increase shareholder value and the ways in which US federal legalization efforts influence MariMed’s business.

What distinguishes MariMed from other US multi-state operators?

MariMed is a company that prides itself on its history and a leadership team with a strong track record of winning licences. We built this company over several years – first as advisors helping businesses win their applications and building out their facilities, and now as acquirers working to consolidate those businesses under the MariMed footprint.

Today, we have a lot of team members and facilities with deep industry knowledge, including several members of our executive leadership team. Our CEO Bob Fireman, COO Tim Shaw and I have been working together in this industry for more than a decade.

Why did you choose the states in which you operate, and do you have plans to expand to other states?

In the beginning, MariMed submitted applications in multiple states that were available for licensing and focused on getting those states up and running. Now that MariMed has consolidated the businesses in Illinois, Massachusetts and Maryland, we are focused on expanding to the maximum allowable by law in each of those states.

In Massachusetts, for example, we plan to add two more adult-use dispensaries to our fully vertical, seed-to-sale operation there. In Illinois, we recently added a cultivation-and-processing licence that, once operational, will make us fully vertical in that high-growth state, and we also acquired a licence to build a fifth adult-use dispensary. Illinois allows operators to own and operate a maximum of 10 dispensaries, so we are also focused on adding an additional five to maximize our retail operations in that state.

Additionally, we’re looking for other markets we can expand into that have limited licences and are within the larger regions we presently operate in. We can go in and do the same build out where we go fully vertical as quickly as possible.

What are MariMed’s plans to enhance shareholder value?  

We have an exciting future ahead of us. As I mentioned, we’re building out Illinois, Massachusetts and Maryland with additional locations. We’ve also recently won licences in Ohio and Connecticut. 

We’re also going to continue to expand into additional states through either acquisitions or through the licensing process. Then we’ll build them to be as fully vertical as quickly as possible.

We’re also going to expand our branded products, including Betty’s Eddies, Kalm Fusion, Bubby’s Baked and Vibations: High + Energy, which have all been very successful in each of the states in which they are presently distributed. We’re going to make them bigger and stronger, as well as expand them into additional states over the next several years.

How do you intend to finance your growth plans?

We’re presently cash-flow positive and generating additional cash every month. So, we’ve been using cash flow from operations to expand at a slower rate. But with the current down market making equity issuance not the best option for shareholders, there are opportunities to borrow non-dilutive money at attractive rates given our financial strength and clean balance sheet.

What impact, if any, has the government’s inability to introduce federal cannabis legalization had on your business?

It’s a disappointment for MariMed because we would like to see some form of the SAFE Banking Act passed. That’s less important for our company, as our strong management team has learned how to operate within these tough confines of borrowing and banking abilities for over a decade. The SAFE Banking Act is really about helping smaller cannabis entrepreneurs that are more challenged in gaining fair and equitable access to capital.

We would love to see the SAFE Banking Act passed, and with the right amount of social equity reform included in it. But even with the continued delays at the federal level, MariMed can still operate efficiently and successfully. We’re going full steam ahead in building additional opportunities for our investors.

Finally, what do your shareholders have to look forward to in the next 12 months? 

Our investors should expect continued success and growth. Over the next 12 months, we will open additional retail and cultivation facilities, generating more revenue, and increasing the number of consumers that can access our great brands. We’ve been very successful over the last few years, and we’re going to continue that trend.

Our shareholders should expect MariMed to have a strong balance sheet with the ability to expand our cash flow and to borrow money at reasonable rates to accelerate the expansion of our business to get to the next level. We may be considered a small MSO, but we are going to become much bigger. 

In this market, we have a wonderful opportunity to continue to grow. I think our shareholders will benefit from patience and expect that we will continue to grow over the next several years.

This story was featured in Canadian Securities Exchange Magazine.

Learn more about MariMed at marimedinc.com

Year-End 2022 Interview with Canadian Securities Exchange CEO Richard Carleton

With 2022 drawing to a close, the global financial community is looking back on yet another year of unprecedented activity across markets. Governments relaxed pandemic restrictions and wound down historic financial support for individuals and companies, just as interest rates surged in response to inflation concerns that proved to be highly warranted. Shifts in the geopolitical and security landscapes added to the uncertainty.

As always, volatility means difficult times for some and opportunity for others. The mining industry was in the spotlight to be sure, as prices for some metals weakened modestly, while others rose or remained strong. Cannabis rode expectations for regulatory change in the US to both the upside and downside.

The Canadian Securities Exchange took this environment in stride, leveraging competitive advantages that have underpinned its success by making it a popular listing destination for entrepreneurial companies from around the world. The year 2023 looks set to be transformational for the CSE, with several major developments on the horizon that are important for investors, issuers and the financial professionals who serve them to know about.

Canadian Securities Exchange CEO Richard Carleton sat down recently to discuss key accomplishments during 2022 and their meaning for the CSE, as well as to explore some of the changes on deck for 2023.

We have a number of important topics to cover, including some substantial developments set to take place at the CSE early in the new year. But before getting to these, it’s important to set the table with some thoughts on financial markets in 2022. Markets seemed more challenging to figure out than usual. What is the view at the CSE?

Well, I guess there are a few themes. The first is that mining is really driving the bus in terms of capital raised and generating the vast majority of our new listings. And different from some past mining cycles we have seen at the Canadian Securities Exchange, there is investor interest across a range of metals.

Rather than the traditional emphasis on precious metals exploration, we have seen a focus on battery metals: nickel, copper, zinc, cobalt, as well as lithium, graphite and rare earths.

Many of these companies are exploring sites where historic drilling took place. World prices for those metals could not support or commercialization of these deposits some years ago. I think it’s fair to say that given the increases in commodity prices, particularly when we consider them in Canadian dollars, the likelihood of producing mines being developed on these properties is higher than perhaps we have seen in earlier mining cycles.

On the other hand, we are seeing lower levels of trading activity on the exchange. Far fewer people working from home at this point, and I think the increase in interest rates has put a lot of investors in defensive mode, particularly retail investors. The decline in major indices, especially those tracking large technology companies, has also made people somewhat more conservative in terms of risk profile in my view.

The amount of money raised by companies on the exchange is also smaller than we have seen for the last few years. This can be explained by the fact that early-stage mining exploration companies are coming to market with relatively modest market capitalizations; they don’t need a lot of money to fund the initial phases of drilling they are looking to carry out. This contrasts with the large, integrated US cannabis companies coming to market a few years ago where single companies were raising several hundred million dollars in one go.

Overall, financing activity is robust, but it is not accounting for anywhere near the total sums of money that we saw in the latter part of 2020 and early part of 2021.

The CSE continues to pursue issuers from jurisdictions outside of Canada: Australia, Israel and the US are prime examples. Why these markets in particular and what are the plans for 2023?

I believe that one of the best things that Canada does as an economy is to provide public venture capital to early-stage companies. When we are looking at applying the services and skills we offer, we view, in particular, Israel, Australia and the United States as three dynamic places that support start-up companies. But in Israel and the United States, there isn’t a marketplace like the CSE that services early-stage companies with the focus that we bring to the table.

In the case of Australia, we have real interest from the mining community, especially with mining very much back on the minds of investors in North America. We can help Australian companies, that have maybe raised their preliminary capital in Australia, to access more of the global markets through a listing on the Canadian Securities Exchange. This makes them more accessible to investors in Canada, the United States and Europe. What we are looking for are dynamic economies generating lots of start-up companies, but where the companies are perhaps underserved by local markets in their effort to raise public capital.

The CSE has been working on a blockchain-based system for the clearing and settlement of tokenized securities. Where does the project stand and have recent developments outside the Exchange influenced your strategy?

We’ve made good progress on the technology. In fact, this summer we tested the full cycle of a trade with one of the dealers. That would be the trade, through clearing and settlement to all of the back-office processes that need to be completed in order to finalize a transaction. From that perspective, we have continued to make good progress.

It is fair to say that the crypto winter, or whatever you might call it, has influenced how we are thinking about this effort as we move forward. We have a lot of very credible people who are looking to tokenize securities to take advantage of some of the strengths of the technology, and we are continuing to work with regulators on a framework for that.

I think regulators will be conservative in their approach to tokenized securities in view of the situation with FTX and the knock-on impact on a number of participants in the crypto space. None of these, to be honest, are all that relevant to the traditional securities world, which is what we occupy. But, as I say, I believe it will make the regulators more conservative in terms of their approach with regard to thinking about some of the things that we are looking to achieve.

There are a number of job postings on the CSE website, mostly in customer support and regulation. What specific needs will the exchange be addressing with these hires?

A lot of the growth is taking place in our Vancouver office, and it is very much tied to the changes we are looking to implement in our listings policies. We have been working with the regulators and believe we are very close to coming to terms with the British Columbia Securities Commission and the Ontario Securities Commission on the approval of these policies.

The commissions are asking us to take on a larger role in overseeing a number of aspects regarding issuers listed on the exchange. For example, we will be launching a senior tier, which perhaps 80 to 100 companies will qualify for.

The way the regulations work, and exchange policies, is that these companies will be subject to closer scrutiny than the more junior companies. That is more labour intensive from the exchange’s perspective, and we have been staffing up to meet the obligations we are undertaking as a result of these policy changes.

The CSE team participated in several cannabis industry events in 2022, and you were recently named “Capital Markets Advocate of the Year” by the American Trade Association for Cannabis and Hemp. What is the exchange’s motivation to devote so many resources to the cannabis industry?  And what have you learnt about the cannabis industry that the market doesn’t know but needs to?

I think roughly 85% of the market capitalization on the exchange is in the cannabis space. They are our largest companies, our most mature companies, and they account for the vast majority of the revenues generated by companies on the CSE. So, it is a very important community for us to work with and to recognize and support.

There are also a significant number of private companies in the United States in the cannabis sector who don’t like the asset values being given in the public markets right now, especially in light of the decline in share price for many of the companies after Senator McConnell indicated that he was not going to support the SAFE Banking Act, which is liberalization of the rules around access to banking services for the cannabis industry. He suggested he would not be backing that during this session of Congress, and perhaps beyond.

In any event, there is a significant additional number of companies in the United States that we believe will be candidates for listing at some point, so we are trying to keep those relationships warm, even though valuations are not as attractive at the moment as they once were.

I will focus on some of the challenges the US cannabis industry faces in the capital markets. It is unique in the sense that, particularly for the US companies, about 97% of the shares are held by retail accounts. For a number of reasons, there is very little institutional participation in these names. For some it is because they are not listed on a national securities exchange in the United States, because their custodian refuses to keep shares of US cannabis companies in custody, because of volatility, or because they are operating in a state where cannabis is illegal. Many institutions have determined that it is not an investment they are prepared to make.

What that means is that there just isn’t the kind of long-term institutional holding of these shares, which I think has made them considerably more volatile, both up and down, than some of the other companies in their consumer-packaged goods peer group.

When people look at these big price swings, it is important to understand that this is not a Procter & Gamble or something along those lines, where you have a significant percentage of the stock held by institutions, fund managers or ETFs. This is all pretty much retail activity, and retail investors may not have the patience, investment horizon or approach that you would see from an institution. That’s fine, but people need to understand that the profile of these companies may be a little different when it comes to secondary market trading activity as a result.

Mining is another sector that is historically important to the CSE. In 2022, over 70 new mining companies have listed on the exchange. What makes the CSE such a good home for resource companies?

There are two things that I would highlight. The first one is that our team has a really good reputation with leaders in the entrepreneurial community, as well as the investment bankers and the accountants and the lawyers who service that community. We have surveyed these groups over the course of the year to get a better understanding of how they see us and our competitors. We see not only a high level of satisfaction, but a lot of repeat business from these professionals who have had a positive experience as they bring a company to market on the Canadian Securities Exchange.

That experience includes everything from the analysts reviewing files to our accountants. As one example, Francis Manns is an experienced consulting geologist who was extremely influential in the development of 43-101 reports for mining. He is now a resource at the CSE available to our issuers as they look to improve the quality of their public disclosure through technical documentation. He is a highly regarded individual and someone whom people in the industry look forward to working with.

The other piece is that our pricing is very amenable and responsive to the needs of the mining community. It is less expensive to list on the Canadian Securities Exchange than on other markets via IPOs and RTOs. We have long had a policy of providing cost certainty for companies. We are not looking to charge fees as a company raises money, for instance. We are not in the situation where we are nickel-and-diming our companies. They know at the start of the year what their budget is for maintaining a listing on the Canadian Securities Exchange and we stick to that. This is something the companies appreciate because they apply more of the money raised to advancing their projects, as opposed to putting it in the back pocket of the exchange where they happen to be listed.

I think the combination of those two things gives us a powerful leg up when it comes to attracting new business from the mining industry.

In October, the exchange launched the CSE2 trading venue. What exactly is CSE2 and what led you to launch a new venue in what appears to be a fairly crowded landscape?

This is a difficult question to answer quickly because it involves a grasp of evolving Canadian equity market structure. But I’ll give it a try.

An increasing number of brokers are providing zero-commission trading for their clients. People wonder how they get paid if they are not charging clients anything for the trading services they provide.

One of the ways is to monetize order flow from their clients. So, how do they do that?

Markets in Canada typically incent the provision of liquidity by providing a rebate to the party that posts an order that eventually trades. And they charge a higher fee to the party who accesses that liquidity by causing the trade to happen. It is known as “maker-taker” because one party makes the liquidity and the other party takes it. The maker gets a rebate and the taker is charged a fee.

All markets now have a second book which has an inverted price method in which the party who takes the liquidity receives the rebate and the party who posts the order is charged a fee. That way, the discount broker, let’s say, receives a rebate when they post a non-marketable order, and they receive a rebate in the inverted market when they trade against an order that is already there. That way they get rebates on their active orders and they get rebates on their passive orders.

Now, remember how important retail is to the Canadian Securities Exchange, and a lot of that order flow is coming from discount brokers that have reduced or eliminated trading charges over the last few years.

It is thus critical for us, if we are to maintain our price discovery role in the marketplace, to ensure that we continue to gather as many of the passive and active orders for companies listed on the CSE as we possibly we can. Yes, it is a crowded marketplace, but we are the listing exchange and we need to maintain that price discovery for determining the market value of securities at any given time. The alternative is to potentially lose that to marketplaces that are not having to absorb the expenses and regulatory responsibility to actually list the company. That is where we are coming from with CSE2.

One of the biggest developments slated for 2023 is the introduction of a CSE senior tier. How will this differentiate the exchange and what other activities are you planning to support this evolution?

There are really a few things, but I guess the first misconception I want to clear up is that this involves us somehow declaring war on other exchanges in Canada and making a pitch to a company like Royal Bank to delist from the Toronto Stock Exchange and come over to the CSE. It really isn’t that at all.

We have a number of companies on the CSE that would meet the admission criteria on senior exchanges in Canada. And we don’t want to be in a position where those companies are able to follow lesser standards of corporate governance, or longer periods to provide quarterly reporting to the marketplace as well as their annual audit results by virtue of the fact that they are listed on the CSE.

We are trying to put those companies on a level playing field with their peers that are listed on the other senior markets in Canada. We also, obviously, want to retain these companies. I sometimes speak about the Nasdaq back in the 1970s and the 1980s as one of our inspirations. They did such a good job working with Microsoft and Cisco and Oracle way back when they didn’t qualify for the New York Stock Exchange because they lacked tangible assets in the form of factories and steel mills and those sorts of things. All they had was intellectual property and engineers working to improve it.

When the New York Stock Exchange tried to attract Bill Gates and the rest of the senior leadership of the young tech companies in the United States, they told them they were not going to move because they’d had such a positive experience working with Nasdaq as public companies.

That’s the kind of approach we would like to take. We have worked with many companies that have succeeded and are growing. We want those companies to stay and continue to prosper on our marketplace and not go somewhere else simply because they qualify.

The other part is that we are interested in the opportunity to list ETFs and structured products. Looking at some of the other markets in Canada, they have robust structured product and ETF offerings that attract a lot of new listing activity. That is something that has not been available to us in years past, and we hope to open that capability and compete on a level playing field with other exchanges in Canada for that business. We think there are a number of products, such as a true cannabis ETF, that really do have a natural home on the Canadian Securities Exchange.

Let’s close on a look back and a look ahead. Talk to us about what it took to build the CSE to its current status, and what amongst your team’s accomplishments makes you the proudest. What should the financial community expect from the CSE over the next two or three years?

I’m going to work backward and start with the question about what to expect. The answer is not all that exciting, but I’d say to anticipate more of the same. That means the CSE grows quickly and we continue to be responsive to the needs of the corporate finance community in Canada, and particularly to entrepreneurs. That way, whatever industry sectors are receiving support from the investor community in Canada, we will be here to support them and provide them with fair, transparent and accessible trading markets for their securities. And then overlay that with the opportunity to compete for more structured products and ETFs.

What did it take for us to get here?  It is very much the team we built and the reputation it has earned through hard work and engagement with people across Canada, the United States and beyond. They achieve a very high level of customer satisfaction and repeat business – all of the indicators suggest that we will continue to be very competitive with our peers in bringing new companies to market, and really what it rests on is the people we have had around us for years. Our bench is deep and experienced. And we continue to add to it with people who are excited to join a group that did such a good job of building an exchange that is now a material part of the Canadian financial landscape.

There are not many other examples in the world of an alternative exchange like ours being successful and having the impact that it has had. I think that while all of us can take some pride in that, what we definitely can’t do now is to take it easy. It is still a very competitive landscape in Canada and beyond.

Jen Rainnie on Beach Lifestyle Footwear Brand Malvados | The CSE Podcast Ep30-S2

Episode 30 of The Exchange for Entrepreneurs Podcast is live! The CSE’s Barrington Miller chats with Malvados Founder & CEO Jen Rainnie about her journey from being a former Canadian windsurfing champion to a fashion entrepreneur, her advice for women in business, and Malvados’s beach-inspired footwear and authentic brand identity. The conversation also addresses the steps Malvados is taking toward environmental, social and governance (ESG).

Here’s an overview of what Barrington and Jen discuss in this edition of The Exchange for Entrepreneurs Podcast:

00:00 – Introduction
03:27 – What is Barrington wearing?
04:19 – What is the landscape like being a female entrepreneur?
05:46 – What exactly is surf culture today?
06:51 – Who is your customer?
09:55 – What advice would you give to yourself knowing what you know now?
12:23 – What market has surprised you the most?
16:12 – What are your long term goals?

About Jen Rainnie

 Upon her arrival home to Canada, Jen began a long and successful career in the action sportswear industry. Noticing a need for a more luxurious, yet comfortable sandal, an idea was sparked. Always one to seize an opportunity, Jen set out to create her own fashion-forward footwear label, one that would prove sandals aren’t just for the beach—they’re also for every festival, wind-in-your-hair, road-tripping moment in between. And so the story goes, MALVADOS was born.

Learn more about Malvados at https://malvados.com/

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Cresco Labs: Top-Tier House of Brands Acquires a Major Retail Network and Sets its Sights on Becoming Number One

Cresco Labs (CSE:CL) Chief Executive Officer Charlie Bachtell believes that when it comes to cannabis, brands matter just as much as in any other industry. Branding Cresco’s retail stores Sunnyside, rather than simply using the parent company name, is but one example of this concept at work.

There are 51 Sunnyside stores across seven states, all brightly coloured and selling products in packaging that would be right at home on the shelves of Whole Foods or CVS.

Different Cresco Labs products have their own unique branding too, depending on their target audience. There’s the namesake Cresco, the flagship “excellent everyday cannabis,” packaged in sleek, matte-coloured containers.

Then there’s Mindy’s, a line of restaurant quality edibles made in collaboration with a James Beard award-winning chef. The packaging has a deep red colour and black cursive font – it looks indulgent. It’s a Cresco Labs product just the same, but it has a totally different identity.

Bachtell emphasizes the importance of a house of brands strategy rather than what he calls a “branded house” where everything is named for the company itself. Consumers are loyal to brands they trust, and you cultivate that trust by speaking to your target audience.

“One thing we realized very early is that the cannabis consumer is very wide and varied,” Bachtell says. “You’ve got your 21-year-old male college student, but you’ve also got your 63-year-old grandmother. They’re effectively walking to the same store to buy the same product, but they want it to look and feel very differently from each other.”

The dedication to brand differentiation is paying off. Cresco Labs had the top branded product portfolio in the second quarter, according to cannabis sector analytics firm BDSA, including the top portfolio of branded flower, the top portfolio of branded concentrates, the second-highest portfolio of branded vapes and a top five portfolio of branded edibles.

The company grew even stronger in March when it announced a definitive agreement to acquire what Bachtell refers to as “the largest engine of value creation in the industry,” New York-based Columbia Care. Once complete, the acquisition will bring 131 facilities (99 dispensaries and 32 cultivation and manufacturing locations) into the Cresco Labs family in one fell swoop. The transaction is expected to close around year-end.

Creating scale in the US cannabis industry is a challenge, in no small part because regulations vary from state to state. Most cannabis companies, Cresco Labs included, generate 75% of their revenue from their three biggest states, according to Bachtell.

But with Columbia Care under the umbrella, Bachtell expects to have eight states contributing at least US$100 million to the top line in 2023. That’s significant diversification.

“We are matching the most productive per-store retail operating model with one of the largest combined retail store platforms in the industry,” Bachtell explained on the company’s earnings call to review the second quarter. “We are creating an unmatched diversification and balance of revenue by geography and by channel.”

Speaking of geography, Cresco Labs is number one in market share in Illinois, Pennsylvania and Massachusetts. The goal is to be in the top three in every state where the company operates.

Bachtell is based in Illinois, where before he co-founded Cresco, he was general counsel for a mortgage company. He started that job in 2007, just in time for the housing market to be engulfed by the Great Recession.

The mortgage industry went from relatively unregulated to highly regulated overnight, Bachtell says, and those in the business had to figure out how to navigate rapidly shifting sands.

When a colleague suggested they get into the cannabis business in 2013, Illinois was just about to pass a law legalizing medical cannabis. Bachtell was skeptical it would be a good fit for him, but then he saw the legislation.

As it turned out, mortgage banking and cannabis sales have something in common.

“I read the bill, and it was as well-drafted and thorough as legislation that was geared toward that banking industry through the last five years of crazy regulatory and legislative initiatives,” he says. “I felt like I had read this book before.”

What Bachtell realized then is that cannabis would never be less regulated than it was at the time. Especially if federal legalization eventually became law, cannabis would develop into a consumer product whether the industry knew it then or not.

The cannabis industry, according to Cresco, can be broken down into four verticals: cultivation and manufacturing, building consumer brands, distributing those brands onto as many shelves as possible, and retail locations. The goal is to excel at all four, but Cresco is prioritizing the middle two. That’s the way the wind is blowing, according to Bachtell.

For example, if cannabis products do end up on the shelves of your local pharmacy, that makes brands more important than brick and mortar retail stores.

Illinois also became the first state to require that products be packaged in childproof containers. That cemented the importance of packaging in what Cresco Labs considers its mission to this day: normalizing, professionalizing and revolutionizing cannabis.

“If Illinois was going to require you to put it in a container, then that becomes your Coca-Cola can, your Budweiser bottle, your Marlboro cigarette pack, your Tylenol box,” Bachtell explains. “However you want to think about cannabis, it just became a consumer product good.”

Bachtell is the first to admit that the cannabis business is complicated. With all manner of different state regulations and federal legalization not yet realized, it’s not an easy industry to navigate. But it’s where Bachtell feels he belongs.

“I knew what the industry needed at that time, which was somebody to come in that had been through this kind of chaos before and knew how to normalize and professionalize an industry that people were concerned about.”

Investors are concerned too, he says, and fatigued by the lack of federal progress. Cannabis companies can’t trade on the New York Stock Exchange or Nasdaq while cannabis is federally illegal, and there is no shortage of OTC-traded companies jockeying for position.

But Bachtell believes Cresco Labs can become the most important company in cannabis. With a vibrant house of brands and an acquisition that more than doubles the company’s retail footprint, the mortgage lawyer turned cannabis CEO looks to have collected all the pieces to the puzzle.


This story was featured in Canadian Securities Exchange Magazine.

Learn more about Cresco Labs at www.crescolabs.com.