The “final” edition of the CSE Quarterly is now live. It has been a great run, with inspiring stories of ingenuity, intrepidness, and excellence of companies listed on the Canadian Securities Exchange in every issue.
Thank you to the entrepreneurs for helping to make the CSE Quarterly such a success over the past several years.
Though this will be the final issue of the CSE Quarterly, there is another exciting project on the horizon that will carry the entrepreneurial torch forward.
With 2017 now officially in the record books, CEO of the Canadian Securities Exchange, Richard Carleton sat down with Peter Murray of Kiyoi Communications, to discuss the best year on record at the CSE. Included in the discussion were important developments that took place at the exchange, the evolution of the cannabis investment landscape as well as opportunities in blockchain, fintech and more that the CSE will be looking to next in 2018.
PM: It has been a truly phenomenal year for the CSE in terms of growth in trading volume/value, capital raised and many other measures. This has particularly been true in the fourth quarter, with the most active issues routinely trading well over 20 million shares per day. As the exchange’s CEO, what would you point to as the highlights of 2017? What is driving the success?
Richard Carleton, CEO of the Canadian Securities Exchange
RC: There are multiple factors working in our favour at the moment, but clearly our decision more than three years ago to welcome the original applicants for the MMPR (Marihuana for Medical Purposes Regulations) licenses in the Canadian cannabis space is one that has proven to be quite sound as far as growth and development of the exchange is concerned.These companies have caught the attention of the retail investing public in particular, although the broader investment community is beginning to support and invest in them as they mature and grow.
We have seen a tremendous increase in trading volume in the cannabis space, and it has had a knock-on effect on technology, mining and other sectors on our exchange.
Overall, it has served to dispel a number of the incorrect, but in some cases widely held, beliefs about companies listed on the Canadian Securities Exchange in terms of liquidity and challenges to completing secondary financings. Given the trading turnover and secondary financings completed by issuers in multiple industry sectors on the CSE this year, I think we have laid those concerns to rest for good.
At the end of the day, our success in 2017 was simply a case of presenting companies to the marketplace that the investment community was interested in, and the community responded accordingly. Back to top
Market participants: Proprietary traders and retail investors
PM: Looking at just trading volume for a moment, are program traders, algorithmic trading and high-frequency traders accounting for a considerable percentage of the activity? Some people in the markets don’t like their presence, whereas others appreciate the liquidity they bring. What is their status on the CSE?
RC: We have a pretty good idea where the trading volume is coming from, and we have seen increased participation from proprietary traders, which I would define as people who tend to pursue relatively short-term strategies such as market-making or cross market arbitrage. By and large, that activity is not driven by computers but by actual human traders pursuing these strategies in the market.
But far and away the largest percentage of participants are in fact investors and individual traders. It is human beings hitting the enter button, and doing that, generally speaking, through the facilities of one of the discount brokers in Canada. Back to top
On tap for 2018: Cannabis, blockchain and more
PM: How do you follow up on a successful year like 2017? What is the 2018 game plan?
RC: We certainly think the cannabis space has a way to run, and we see that in our pipeline of applicants seeking to list on the CSE. We expect to see additional companies looking for growth capital to serve a particular segment of that market, whether it be recreational cannabis in the United States, cultivation internationally, or some aspect of the therapeutic market.
And, of course, with legalization anticipated at some point in Canada during 2018, it will be interesting to see how the industry develops specifically here at home.
We are also seeing a tremendous number of companies with some component of blockchain technology in their business development mandate, many of them looking to address some inefficiency, cost or risk for people on the payment side. There are quite a few interesting applications of blockchain technology to reduce the cost and risk of the payments process both for the customer and for companies.
We have a number of blockchain companies on the exchange already, there are more coming, and based on the funds raised and the interest in existing issuers, I think we will see a continuation of the high level of trading activity witnessed in the latter part of 2017. Back to top
Growth in new listings
PM: The CSE welcomed over 50 new issuers in 2017. What is the pipeline looking like as we begin 2018, and where are the issuers coming from in terms of sectors?
RC: The interesting thing is that even as the pace of listings reached record levels in the fourth quarter, each month we received more applications than companies listed. In other words, even though we were listing more companies than we ever had before, the pipeline was growing.
As a general observation, the companies listing now tend to be larger, more mature and better capitalized than at any other time in the history of the Canadian Securities Exchange.
I mentioned the cannabis and financial technology sectors, with a particular focus on blockchain, but a number of the more traditional sectors are also seeing investor attention. There is certainly interest in the mining space. We have seen a number of transactions funded for later-stage mining projects, often with a clear path to initiating production. Those companies do tend to be larger and are looking to raise substantial amounts of capital to complete their business programs.
It really is a situation where, with the possible exception of the oil and gas space, we are firing on all cylinders. Back to top
Enabling innovation
PM: Cannabis is a relatively new business sector for public markets and the CSE deserves credit for providing a platform enabling a substantial number of these companies to obtain the funding needed to carry their businesses forward. We now see a similar dynamic with companies in the blockchain space. Does the CSE have a unique proposition for these companies and is the exchange itself looking at opportunities with this technology?
RC: Let me begin with the first part of the question. The CSE’s proposition is really the same for all companies looking to access the public markets. We seek to facilitate the lowest cost of public capital for these companies, principally by providing a very streamlined listings process, and then once the company is listed to provide cost certainty in the form of fixed fees, regardless of how active the company is in secondary financings, changing its business, making acquisitions and other activities.
Our promise is that those companies will be able to conclude those transactions with more disclosure to the marketplace, but with less interference and second-guessing of their business plans from the exchange as their principle regulator.
Fundamental to the DNA of the CSE is that we believe the marketplace is best suited to price the risk and benefits of management’s business decisions, and not somebody at the exchange. To ensure this is the case, we must make sure the companies are providing the best possible disclosure to the marketplace so those decisions can be made.
I think it is interesting to see how fintech, and blockchain in particular, has come to the public markets. In past years I have talked about the challenges the public markets in Canada have had in attracting technology companies. These types of companies have often elected to raise their capital from private equity and venture capital firms as opposed to seeking a public market listing.
The fintech and blockchain space seems to have taken on a different dynamic, as these companies are in fact coming into the public markets, and to be fair it is probably a result of the capabilities demonstrated by the public markets in funding the cannabis space. Entrepreneurs in the fintech and blockchain space look at the public markets and acknowledge that we were able to back the creation of an entirely new industry with significant amounts of capital at competitive costs vis-a-vis private alternatives.
As far as the CSE goes, we are very much interested in looking at the potential to apply new technologies to reduce cost and risk. We have a number of experts looking at smart contracts and in effect tokenizing a security with a view to a potential listing on the exchange. We are going to have more to say about that in the very near future and are looking carefully at the potential to adopt a number of those technologies.
I will say that our systems developers have deep experience in the space and as a result we do have some excellent partnerships already developed that will give us a real leg up if we choose to become early adopters. Back to top
Enhanced disclosure: A better model for investors and companies
PM: One of your competitors suggested recently that the CSE’s suitability standards for officers and directors might be too lenient. What would you say to this opinion? And what about disclosure of issuers listed on the CSE in general?
RC: To be blunt, I was confused by that statement. I have no idea what that person was referring to. The rules in place for suitability for officers and directors are essentially identical across all exchanges operating in Canada, whether it be the NEO Exchange, the CSE, the Venture Exchange or the Toronto Stock Exchange. The spokesperson from the Toronto Stock Exchange would have no idea what our policies and procedures are in administering the rules. We can, and do with some regularity, exercise our discretion to prevent individuals being involved with particular companies. I think that was not an informed opinion being voiced by the spokesperson from the TMX Group.
The CSE believes that in return for the exchange not being as involved in a company’s decisions as perhaps other exchanges are in Canada, the company must agree to adhere to higher disclosure standards.
In addition to the work we do on a company’s initial listing statement, as well as their legal obligations to provide continuous disclosure, companies are required to file monthly reports that are effectively an update to the Management’s and Discussion and Analysis from the listing statement or prospectus. Companies find that it is a helpful part of their investor relations activities, and not a burdensome extra piece of exchange regulation.
That disclosure record builds for the companies and it is easy for people to see which companies are executing against the plan they set out, and which companies are not making the progress they set for themselves in their business plan. Back to top
Regulatory outlook for cannabis-related businesses
PM: There was a degree of controversy this year about Canadian stock exchanges listing companies that operate cannabis-related businesses in the United States. Can you comment on the CSE’s policies and how your regulatory model held up in the face of this debate? Do you foresee policy at the CSE changing at all in 2018?
RC: The answer to the latter question is that I do not see our policies changing. We may learn things as time goes on from the legal position in the United States, but this to us was a relatively straightforward call.
The basic principle is that all companies listing on the Canadian Securities Exchange, and for that matter any exchange in Canada, must provide a positive representation that they are operating in accordance with applicable law in the jurisdictions in which they conduct business.
To that end, and particularly with companies in the cannabis space in the United States, we can and do require the company to provide a legal opinion and analysis demonstrating how it is that they are operating in accordance with the licensing regime in place in the particular state or states in which they do business.
From an investor’s perspective, clearly there are risks in investing in these companies given the uncertainties in the legal framework in the United States. That is why companies who have come to us with US exposure, either in the listing statement or in a prospectus cleared with one of the provincial regulators, must spend a lot of time explaining the legal position of the company, and what the position of the company would be assuming various changes took place. Investors need to know what the impact on the company would be if the rules changed in the US.
This was formalized by the Canadian Securities Administrators in a guidance notice a couple of months back and it’s an approach, because it’s based on disclosure, that is entirely in line with the one we’ve taken to these companies coming into the public markets.
So, again, we see that there is considerable investor interest in these opportunities, there is considerable interest from entrepreneurs based in the United States to raise growth capital from the Canadian public markets, and we expect to see more of these companies, not fewer, coming to us in the months ahead. Back to top
Strength behind the bench at the CSE
PM: The CSE’s largest shareholder is Urbana Corporation, which holds just under half of your common equity. This is different to the other major Canadian exchange groups, which often have a wider base of shareholders. Is there a benefit to having a concentrated ownership structure and, presumably, the relative independence it provides for?
RC: I don’t know if I can speak to the benefits of having a relatively concentrated shareholding. What I can speak to is the benefit of having Urbana Corporation as our principal shareholder, and that of course is that Urbana made its name some years ago for its successful investments in the exchange space, not just in Canada but around the world.
The team there, led by Tom Caldwell, who is also our chairman, is regarded as one of the most knowledgeable there is when it comes to the business of exchanges. Tom has access to many different types of people in the industry. Whether it be senior management at other exchanges or analysts and investment bankers, they all know Tom and if we need to meet these people, the opportunity is there because of our chairman and Urbana Corporation.
I believe we are very fortunate to have an engaged, supportive and extremely knowledgeable main shareholder. We really couldn’t have wished for anything more. Back to top
Hitting its stride as a full-service stock exchange
PM: In some respects, the CSE is fighting a two-front war with other exchanges, both in attracting exciting young companies and in retaining your maturing issuers. Do you think it makes sense for companies to leave the CSE if they qualify for a “senior” exchange? Conversely, does the CSE still maintain its advantages as an exchange suited for early-stage companies? Can you realistically cater to both?
RC: Branding is obviously extremely important in the exchange world, and probably more than I understood when I became CEO. There is very little difference in what we do versus the so-called senior exchanges. The access that we provide, the systems that we deploy, the rules governing the companies and so on – there is an awful lot of commonality among us.
However, some institutional investors and retail investors believe, for some reason, that these senior markets will provide higher multiples, better liquidity, more access to investors both in Canada and internationally, and a better experience for the issuer.
I think that is a very difficult proposition to support, especially on a cost-benefit basis, when somebody looks at the increased costs of being, for example, on the Toronto Stock Exchange versus the Canadian Securities Exchange. It would be difficult to justify on an objective basis in a lot of cases.
The one area that really is one of the last mountains for us to climb as an organization is the institutional investment community in Canada. Some institutions have hard-coded into their mandate the requirement that a public equity in the portfolio must be listed on one of the TMX Group exchanges, or specifically on the TSX. They don’t mention the Canadian Securities Exchange and they don’t mention the NEO Exchange.
When we hear from a company that an interested investor has said they would invest in them but for the fact they were listed on the CSE, those are barriers that we need to continue to work to knock down. That is not just perception but a genuine issue that exists.
Our challenge as an organization is to try to reduce the number of institutions with those restrictions in their investment mandates. Our goal is to provide an identical or better experience than the other exchanges, where companies are going to pay considerably more for the privilege of being listed.
One other concern is that if a company believes it is on its way to joining one of the major indices on the Toronto Stock Exchange, there is a rule that to be in the long-established national indices, those stocks have to be listed on the Toronto Stock Exchange. It is sort of like back in the day on the S&P 500 when you had to be listed on the New York Stock Exchange. And as a result, companies such as Microsoft and Apple and Cisco and Intel didn’t qualify for the S&P 500 for a number of years because they were on Nasdaq. Eventually it got to the point where S&P had to do the right thing and permit companies from exchanges other than the NYSE into the index.
Our goal is to have companies stay on the CSE and get big enough and relevant enough to the broader market that people lean on the S&P and TSX to allow them into the indices. I think we may have our first billion-dollar company relatively soon, and with that achievement we might then have investors lobbying Standard and Poor’s to change the rules.
Vancouver is no stranger to bold ideas. Home to the internationally renowned TED conference since 2014, another conference focused on the pursuit of big ideas has now also come to Vancouver.
The inaugural Extraordinary Future Conference (XF), launched this past September, was a joint initiative by the Canadian Securities Exchange and Cambridge House International to shine the spotlight on the robust technology scene in Western Canada and to highlight revolutionary technologies that will help to shape many facets of society in the years to come. Whether it was the latest developments in personalized medicine, the seismic shift in financial technology being caused by blockchain, or the advancements in virtual and augmented reality, there was no shortage of fascinating and engaging content for attendees to take in at this year’s show.
Held at the beautiful Vancouver Convention Centre, the first edition of the Extraordinary Future conference brought together over one thousand attendees, including investors, technology entrepreneurs, capital markets professionals as well as other stakeholders working in and supporting the innovation economy. Additionally, there were 33 guest speakers as well as 26 companies representing a variety of technology-driven sectors.
As a technology investment conference, an important objective of this event was to showcase both public and private companies and the entrepreneurs working on cutting-edge technologies. It was also especially encouraging to see the number of organizations and entrepreneurs present at the show that were located in the Lower Mainland or in Western Canada.
Highlights of the Talks
Many of the industries featured at this year’s show were either growing in popularity or beginning to hit their stride, and as such, the enthusiasm around these technologies was palpable.
That said, most of the technologies being discussed at this year’s show are still not mainstream. As such, it was incredibly valuable to have assembled thought leaders and entrepreneurs who are actively working in these areas to explain the state of their respective industries, and to highlight for attendees, where there might be opportunities for investors to engage.
Below are highlights from topics covered during panel discussions that took place at this year’s show.
Personalized Medicine
The conversation around the role of technology and how it is shaping healthcare was a fascinating one. Moderated by Dean Sutton, CEO of Victory Square Health, panelists Dr. Brendan Byrne (TELUS Health), Dr. Tom Elliott (Personalized Biomarkers), Rashid Ahmed (BioMark Diagnostics) and Norma K. Biln (Augerex) provided a variety of perspectives on how technology can deliver a more personalized and customized approach to healthcare delivery. In particular, several panelists highlighted the role that detection technology will play in recognizing health issues as well as how technology can help intervene at a much earlier stage in a disease to facilitate better outcomes.
Investing in Blockchain
One of the hottest topics of discussion at the Extraordinary Future conference this year was blockchain. As part of a broader discussion on the evolution of financial technology, blockchain has the power to radically shift the landscape of the financial ecosystem. Moderated by Blake Corbet, the Head of Technology and Healthcare Investment Banking at PI Financial, there was a capacity crowd on hand to hear from panelists Guy Halford-Thompson (BTL Group), Harry Pokrandt (Hive Blockchain Technologies), Marc van der Chijs (First Block Capital) and Alex Tapscott (NextBlock Global). It was clear from the perspectives shared by the panelists that the move to the ‘internet of value’ is still in its early days, but that momentum is strong and changes are occurring at a rapid pace.
Vancouver as a Leader in VR/AR
When it comes to the rapidly evolving world of visual content development, Vancouver stands out as an international leader. The combination of talent in the visual effects industry and entrepreneurial culture have created an exciting environment for leading edge VR/AR technology and content to be developed. The panel discussion on the future of VR/AR was moderated by Dan Burgar, President of the VR/AR Association in Vancouver and Director of Business Development at Archiact and included panelists Nancy Basi (Vancouver Economic Commission), Anne-Marie Enns (Archiact), Kevin Oke (LlamaZoo) and Ryan Peterson (Finger Food Studios). A key takeaway of this discussion was that the growth of the VR/AR technology is already taking place in the enterprise market and wider consumer adoption is on the horizon. This insight was also a takeaway from the AR/VR session hosted by Equity.Guru’s own Chris Parry who profiled several choice companies including INVRS3D Cinematic Reality, uForis VR, Ampd GameTechnologies and Ydreams Global Interactive.
Unlocking Capital to Fuel Innovation
One of the biggest challenges to overcome in becoming a leader in the innovation economy is making capital accessible to entrepreneurs. James Black, VP of Listings Development at the Canadian Securities Exchange, moderated the panel discussion on the intersection of technology and finance, which spoke to the different strategies available to early-stage technology companies that require capital to scale their growth. On the panel were Aimee Gagnon (Dojo Card), Bill McGraw (Wavefront), Jamie Brown (Canaccord Genuity) and Tom Rossiter (RESAAS) each of whom lent their own perspectives on how technology entrepreneurs can navigate the growing number of options help finance their growth.
Looking Forward to Extraordinary Future 2018
For its part, the CSE recognizes the important role that public markets can play in driving capital formation which in turn can help early-stage companies scale up and compete globally. The scope of Extraordinary Future, however, extended beyond just the public capital markets sphere, a recognition that innovation ecosystem is diverse and needs support in a number of different aspects to fully succeed.
As James Black, VP of Listings Development at the CSE stated: “The excitement and enthusiasm shown by everyone at our first Extraordinary Future conference was incredible. For all involved, it is a clear indicator that Canada can play a major role in popularizing the next wave of technological innovation. As the Exchange for Entrepreneurs, the CSE is proud to support connecting the many stakeholders required to grow Canada’s emerging wave of technology companies. I have no doubt that we can build XF into one of the premium gathering places in North American for capital and emerging technology companies as well as thoughtful discussion on the intersection of tech and finance.”
As this year’s show clearly demonstrated, bringing together a dynamic mix of industry analysts, investors, technology entrepreneurs, and a diverse selection of public and private companies working to advance the innovation economy, is fertile ground for exciting conversation, connections and catalysts.
In the leadup to next year’s conference, it will be interesting to see how many of the bold predictions and forecasts made at this year’s show unfold. One thing is for certain, however, and that is for organizations such as the CSE, the future of Canada’s innovation economy continues to look extraordinary.
This past summer, the Canadian Securities Exchange, in partnership with Stockpools, Lift Cannabis Expo, and Abattis Bioceuticals Corp. (CSE:ATT), successfully ran the first-ever CSE Stockpools Cannabis Investment Challenge.
This 11-week fantasy stock trading competition attracted over 1,000 participants from across North America and beyond who were each vying for the chance to win weekly cash prizes as well as the chance to win the grand prize, valued at $3,000.
The challenge helped investors understand more about the pool of companies in the competition; specifically, all of the companies that investors could choose from are CSE-listed companies involved in the cannabis sector. In total, there were 45 companies that investors could choose from in order to put together their fantasy portfolio.
In addition to some colourful usernames, weekly winners of the competition (listed below) posted some impressive gains, with the range of returns spanning from 0.28% in week 6 to 15.12% in week 4. The grand prize winner, John Terry from Rhode Island (USA), won the final three-week stretch with a gain of 13.21%.
As part of the competition, select CSE-listed companies also shared their unique insights and experiences on the shifting landscape facing public cannabis companies. Included below is a list of companies that shared their perspectives on the cannabis markets:
Rob Abanante, CEO of Abattis Bioceuticals Corp. (CSE:ATT), a lead sponsor of the challenge, shared his thoughts on challenge’s performance and had a few kind words to say about working with the CSE and Stockpools:
“We at Abattis Bioceuticals Inc. would like to first thank all of the participants in the CSE Cannabis Investment Challenge, as well as Lift Cannabis Expo, the Canadian Securities Exchange, and of course the other featured companies; I hope you all enjoyed participating as much as we did. After this success, we are looking forward to working with Stockpools and the CSE again on future contests. There is so much to learn about this diverse and volatile industry that is changing rapidly. We wish to continue educating new investors through Stockpools’ unique platform and invite them to our website for more information. Thanks again everyone!”
This competition not only helped to highlight the cannabis sector, it also provided investors with a risk-free opportunity to learn more about investing online as well as about the diversity of companies in the cannabis space and the Canadian Securities Exchange. “Our partnership brought together a select group of CSE-listed companies in the Cannabis space,” explains Anil Mall, CEO of Stockpools, “and gave our global audience a unique opportunity to hone their trading skills on Stockpools’ risk-free educational platform.”
The focus of the CSE Stockpools Investment Challenge was to provide an educational opportunity as well as engage retail investors in the cannabis space, an objective the CSE is confident was met. “The initiative ended as a huge success in August with more participants than expected across the globe,” said Anna Serin, Director of Listings Development and challenge organizer. “The Canadian Securities exchange continues to work to engage the investment community in the small cap space, always striving to build more engaged and liquid markets for the benefit of its issuers.”
Thank you to our sponsors and to everyone who participated in the CSE Stockpools Investment Challenge. Congratulations to the following weekly winners:
Week 1 – michelrbrunet (1.58%) – Quebec, Canada
Week 2 – Krab – (4.26%) – Delta, BC
Week 3 – dancep (6.02%) – Ontario, Canada
Week 4 – arod (15.12%) – Ontario, Canada
Week 5 – Beausoleil (5.64%) – Quebec, Canada
Week 6 – Excelsior (0.28%) – Tennessee, US
Week 7 – chriscam(9.01%) – Has not sent in claim form yet
Week 8 – Tiekam (11.71%) – Kitchner, ON
Week 9-11 (Grand Finale) – Jt420money (13.21%) – Rhode Island, USA
The pace of change in technology is extraordinarily fast and, it seems, only getting faster. Ideas and technology that seemed to belong to the realm of science fiction are now very much on the cusp of becoming commercial realities. It is against this exciting backdrop that the latest edition of the CSE Quarterly is launching.
The growing constituency of tech issuers on the CSE, including those profiled in this edition of the CSE Quarterly, provide great examples of innovators leveraging technology to solve real-world problems and have global impact.
Featured in this special technology and innovation edition of the CSE Quarterly are:
It’s one thing to talk about ‘the next big thing’ but it’s another to actually meet the entrepreneurs and thought leaders making it happen.
This month, investors and technology enthusiasts will have the opportunity to attend the first-ever Extraordinary Future conference in Vancouver. Attendees will be able to meet and engage directly with companies working on a number of cutting edge technologies, including blockchain and cryptocurrency, artificial intelligence, virtual and augmented reality and more.
Produced by Cambridge House International and sponsored by the Canadian Securities Exchange, the Extraordinary Future conference aims to connect the vibrant entrepreneurial community of the West Coast with investors who are both curious and keen to stay on top of the latest developments in these fast-moving spaces.
Extraordinary Future: Highlights
One of the biggest attractions for this year’s conference is the opportunity to hear from the innovators defining the commercial landscape for some of the most talked-about ideas making headlines today.
Among the highlights of the show for the Canadian Securities Exchange will be the Technology & Finance panel discussion (taking place at 4:50pm). The CSE’s VP of Listings Development, James Black, will be moderating a group discussion between technology entrepreneurs and investment professionals including Jamie Brown – Vice Chairman, Managing Director Investment Banking at Canaccord Genuity; Tom Rossiter – CEO at RESAAS Services (CSE:RSS); Bill McGraw – Executive in Residence at Wavefront and Aimee Gagnon – VP Marketing & Co-Founder at Dojo Card.
With a mixture of panel discussions as well as company presentations, attendees will have the chance to discover what the entrepreneurs working in this space see as challenges and opportunities on the path to growth.
Another unique and highly-prized feature of the Extraordinary Future conference is the ability to meet directly with company management and executives. Going beyond being able to meet on the show floor, this conference enables individuals to schedule personal meetings with companies to ask in-depth questions of the company. In fact, via the conference registration software, companies and investors can coordinate meeting with one another.
According to Jay Martin, president of Cambridge House International, there is a palpable appetite in Vancouver for a technology show of this nature. One of the most compelling reasons is because growth stage companies are looking to raise capital. The launch of the Extraordinary Future conference offers entrepreneurs convenient access to a critical mass of well-establish brokerage firms and experienced deal-makers who can consult on options available to raising capital – including on how to do so by being public.
Building bridges for innovation
As the Exchange for Entrepreneurs, the CSE recognizes that accessing public capital is one strategy that has proven effective for companies looking to scale their growth. In addition to representatives from the CSE being present, there will also be a number of CSE-listed firms in attendance demonstrating that with the right exchange, the cost of raising capital can actually be competitive with other methods while providing the advantages associated with being public.
For growth stage companies working in such frontier opportunities, the path to going public requires working with partners with an expertise and appreciation for innovation. The CSE is no stranger to bold ideas, a fact borne out by their own revolutionary approach to the Canadian publicly listed marketplace.
In a recent interview, director of the Canadian Securities Exchange and renowned investor Thomas Caldwell stated:
“We felt access to public capital markets for up and coming Canadian entrepreneurs must be made simpler and less onerous. That does not mean less safeguards. The CSE’s collective mission is embodied in our byline “The Exchange for Entrepreneurs”. Our concern is exemplified in the fact that only a single digit number of new companies became public (IPOs) in Canada in 2016. Most were CSE listings.”
By focusing on what would enable entrepreneurs to succeed, including streamlining the listing process, the CSE is arguably the most entrepreneur friendly exchange in Canada. Their leadership and subsequent success in the commercial cannabis sector, is clear evidence of that.
James Black, VP of listings development at the CSE, also shared his thoughts on the upcoming conference stating: “the CSE is thrilled to be a founding sponsor of the Extraordinary Future Conference. We are excited at the prospect of growing this event into Vancouver’s premier technology investment show by focusing on the topics and themes that are going to dictate the future of our markets for years to come. Vancouver is building a reputation as a world-class tech centre.”
To that end, in addition to being a title sponsor of the event, the Canadian Securities Exchange is offering an exclusive discount code for the Extraordinary Future conference of 25% off the ticket price. Attendees can use code CSE25 during the ticket registration (available here) to receive the discount.
Looking forward to the future
Without question, technology will reshape the world in which we live. To realize its promise, however, ideas need to make the leap into products and services. For that to happen, there needs to be a well-functioning innovation ecosystem, one that brings together companies working on ‘the next big thing’ with those who wish to invest capital and resources to make it happen.
As the Exchange for Entrepreneurs, the CSE is actively working alongside great partners, investors and entrepreneurs at this conference to help ensure the future looks extraordinary.
For more information on the Extraordinary Future Conference, visit the conference website here. To follow the conference activities on Twitter, use the hashtag #XF2017.
CEO of the CSE, Richard Carleton, providing an update at the CSE’s annual pre-Stampede breakfast in Calgary (July 2017)
Earlier this month, CEO of the Canadian Securities Exchange, Richard Carleton, sat down with Peter Murray of Kiyoi Communications, to discuss the performance of the CSE in the first half of 2017 as well as to get the CSE’s perspective on a number of issues related to Canadian public markets, the evolving cannabis sector and innovation at the CSE.
Scroll down to read the full transcript of this interview. For ease of navigation, a list of hyperlinked topics is included.
PM: Media outlets have published several articles recently on the demise of the microcap issuer, pointing to reductions in IPO activity, capital raised and issuer numbers. The CSE is doing quite well servicing this segment of the market these companies. What are your opinions on the state of the microcap sector?
RC: There are different ways to assess the health of the sector, some of which are pretty encouraging. One of the concerns expressed in an article published by the Globe and Mail recently was that the number of companies listed on Canadian exchanges has declined quite considerably. What they did not refer to was that there are some 320 companies listed on the Canadian Securities Exchange, and this was not the case eight or nine years ago.
In other words, some of those missing companies are not missing at all – they are listed on the Canadian Securities Exchange.
That said, we’ve obviously gone through a prolonged slump in the mining and oil and gas exploration sectors. This has an impact on the overall health of the Canadian markets because Canada has been very good historically in terms of creating large numbers of these types of public companies.
The bottom line is that public capital is always there, but raising that capital is never going to be easy. Quite frankly, it is not supposed to be easy. But with price weakness in some of the commodities that underpin the value of Canadian resource companies, applying the model of raising public funds for pre-revenue companies has been a bit of a struggle.
Fortunately, the tremendous growth in the legal cannabis space since the spring of 2014 has served as a counterbalance. We are increasingly seeing old fashioned IPO-type deals where companies are raising tens of millions of dollars, and even into nine figures, in ways that remind one of the good old days, with Canadian investment dealers conducting a wide distribution on behalf of the issuer.
So, what we really have is a kind of dichotomy where the traditional Canadian small-cap space continues to suffer a high degree of stress. But the sunrise industry that is the legal cannabis space in Canada and the United States has attracted a lot of attention from investors and the investment dealer community.
PM: The CSE has welcomed several issuers based in the United States over the past few years. What is the attraction for US companies in listing on the CSE, and in general what do they tell you about their listing and post-listing experiences?
RC: The reason they come to Canada is that they can raise money here. In the United States, deals in the $20 million to $40 million range are the realm of the venture capital and private equity investment communities. Some companies don’t want to go down that route because there can be significant drawbacks when you accept money from these types of investors.
Specifically, entrepreneurs find that venture capital funds and private equity funds exert a tremendous level of control over investee companies, as you would expect when they are investing the amounts of money we are talking about. An important advantage to raising funds publicly is that you often retain more control over the future direction of the enterprise.
Another issue is that the exit scenarios for private funds may be at odds with those of a company’s founders. Funds may be more interested in an early trade sale, rather than continuing to finance the company to the point where it is one of the big and truly successful entities in its space.
The result is that we see companies looking to raise the smaller amounts available in Canada through the public markets. And the cost of that capital tends to come in lower than if they were raising money privately in the United States.
PM: A number of companies have successfully grown their operations on the CSE but then left for other exchanges as they reached a point they felt warranted such a move. Can you share your views on why this happens?
RC: There are two issues in play in my opinion. The first is something the team at the Canadian Securities Exchange is working to address, and that is a bias held by some members of the institutional investment community.
When companies are looking to raise large amounts of money – and again I am talking high tens of millions, or over $100 million – many institutional investors are more comfortable with the incumbent exchanges because they have worked with them before and they understand their standards and procedures. It really is up to the CSE to better communicate our value proposition and our reliability as a partner to these institutions, because we have a lot to offer. This is definitely something we are working diligently on.
The other issue is that if a company believes it will have sufficient market capitalization and trading turnover to qualify as an index component on the Toronto Stock Exchange, public company managers may see that as a powerful inducement to move. Once you join the index it means the company is likely to be followed by several analysts and its shares will be included in a variety of portfolios held by investors both domestically and internationally.
Those two factors combined can create, under certain circumstances, an incentive for companies to move to another exchange.
I do believe, though, that some of this thinking is rooted in the past.
PM:It has been a good first half for the CSE and the financial community is increasingly supportive of what the exchange and its issuers are working toward. Can you briefly review the half for us and share some of the approaches that seem to be succeeding for issuers right now?
RC: We have a number of projects underway at the exchange and one I would highlight is the update to our listing standards.
We updated the initial listing standards last year and are now in the process of introducing continued listing standards. Our intent is to ensure that companies listed on the exchange are active businesses, which means that the ones hanging on purely for shell value are not going to qualify for continued listing unless they can show that there is an imminent opportunity for a transaction.
We are receiving a lot of support from both the investor and issuer communities for this effort. Last year, we delisted almost as many companies as we listed, which was almost 10% of the listed company register. We want to assure investors that the companies that remain listed are active.
In the first six months of the year, CSE issuers raised a record amount of capital ($320 million). I think observers would expect that it is flowing mostly into the legal cannabis space, but actually this sector accounted only for about half of the total. We have seen a variety of companies in the financial technology space, clean technology and mining add significantly to their treasuries.
Again, although capital is scarce and companies are having to work hard to obtain it, they are certainly doing so at record levels on the Canadian Securities Exchange to this point in the year.
PM:The CSA (Canadian Securities Administrators) recently released for comment a list of proposals designed to reduce the regulatory burden on small-cap issuers. Can you discuss the CSE’s positions on some of the key recommendations?
RC: Most of the recommendations are aimed at small- to mid-cap companies listed on the Toronto Stock Exchange. So-called venture issuers, which covers companies on the CSE, are already afforded relief from some of the reporting requirements imposed on public companies. Essentially, the CSA was looking to extend similar relief to some of the companies listed on the Toronto Stock Exchange.
The key measure in the discussion paper was a proposed reduction in the financial reporting cycle from quarterly to semi-annually. Basically, only the audited annual financial statements and a half-year summary would be required from public companies.
The CSE does not support this proposal, and neither do the vast majority of companies, financial advisors and accounting firms we have spoken with.
Quarterly reporting is not burdensome, and in fact the decrease in transparency resulting from a move to semi-annual reporting would increase the cost of capital for small companies. So, while the idea is well-intentioned, we think it would bring about the opposite of its intended goal.
What we would like to see is significant change in how the exempt markets in Canada are managed and regulated. For example, we would like to see regulation similar in nature to Regulation A+ in the United States, which gives individual investors an opportunity to invest in exempt market companies up to individual deal limits and annual limits.
What this means is that smaller retail investors would be able to participate in opportunities that at this point are only available to accredited investors and institutions.
We think this is important to engaging the next generation of investors because the average accredited investor is getting on in years. We are concerned that younger investors are not getting the opportunity to invest in the kinds of growth stories they should.
PM:I know you are working on a consortium of sorts to address data fee costs for investors. What are the specific issues at play here and what do you hope to achieve?
RC: I have some good news to share on this topic.
First, though, the background is that any professional investor looking to get a full picture of what is going on in Canadian equity markets must sign contracts and pay fees to each of the individual exchanges if they want access to real-time data. Not surprisingly, the fees add up pretty quickly. Canadian data can thus be considerably more expensive than in other markets around the world. It is another resistance point we just don’t need.
The Ontario Securities Commission was successful in late June in its long-term effort to gain jurisdiction over marketplace data. It looks as if the commission will seek to exercise that jurisdiction to address the pain points that professional data users currently suffer. It remains to be seen what specific approaches to the problems the regulators are going to take.
This is a positive development from our point of view because there is a large transparency deficit at present.
The CSE and some of the alternative exchanges do not reach the same scale of user population that the TMX exchanges do from a data-subscription perspective. And that means a significant transparency deficit exists in the marketplace.
It looks as if we will be asked to take a leading role in helping to define what the data delivery model, fees and terms look like in coming years for marketplace operators in Canada.
PM:The CSE team has been very active in the first half of the year hosting CSE-branded events and participating in investment conferences. Can you share with us the goals and some of the achievements on the marketing side?
RC: Our team has been extraordinarily busy this year, literally traveling all over the Northern Hemisphere – Europe, Asia, and across North America.
We always pursue two goals: to explain to the international and domestic investing public what the value proposition of the Canadian Securities Exchange is, and to meet with issuers, investors and advisors so that we continue to build the list of companies we present through our facilities.
The favourable reception we receive at virtually every stop is extremely gratifying.
I am amazed when I sit back on a given day and try to figure out where the various members of the CSE team are, because we have literally crossed the northern half of the globe several times over the course of the first half of 2017.
PM:Cannabis companies have experienced some ups and downs since entering the public markets a few years ago but the sector in general seems to be getting itself on a steadier track now. While most of the early movers focused on opportunities in Canada, many of what one might term the “second wave” of issuers seem set on operating in the US. What is next for the cannabis sector in your opinion?
RC: I actually think of the US companies as the third wave. The first wave was the licensed medical marijuana producers in Canada. Next, we saw entities in ancillary industries – extractors and alternative delivery systems are good examples. The third wave is clearly companies that have business interests in the United States and are ramping up to address the coming legalization for adult use in very large jurisdictions.
We speak to people in this industry on a regular basis and the numbers are mind-boggling.
California’s population is roughly that of Canada, and they are on a similar timeline as Canada to legalization. Cultivators there are looking to raise billions of dollars to build the operations necessary to supply the state’s legal market.
Given that one of the objectives of government policy in every jurisdiction is to displace the black market, it is critically important to the success of those policy directions to enable the legal market to meet the demand from the adult-use side.
It is fair to say that we have not seen anything yet in terms of how big this is going to become. There will be a steady stream of companies in this space with solid business plans looking to build out and meet the dawn of a significant new industry in North America.
PM:Are there any market sectors right now that remind you of what cannabis felt like in 2014?
RC: In the sense that the legal cannabis market is one of the most significant new business opportunities to hit public capital in a long time, I can’t really say I sense anything up and coming of the same magnitude.
As I mentioned before, we see a lot of different stories getting funded, but I think we are going to continue to see the legal cannabis space driving a substantial percentage of our growth as we make our way through the rest of 2017.
PM: The infrastructure supporting securities trading and information exchange is predominantly digital these days. How has the CSE navigated the rapidly evolving digital landscape?
RC: There are a variety of things I would like to see happen faster than they are today.
One of them relates to information released by issuers, where I would like a more aggressive implementation in Canada of a protocol called XBRL (eXtensible Business Reporting Language). This basically refers to digitally tagging news and company filings with the regulator. The practical impact is that an analyst can download a company’s financial history directly into spreadsheets. At the present time, an analyst wanting to initiate coverage on a CSE company has to manually key its financial history into a spreadsheet.
To put it mildly, that is a massive time commitment, with significant potential for error involved.
I would really like to see the Canadian exchanges and regulators get together on a taxonomy of XBRL for reporting financial information for public companies in Canada. It has already been mandated for use in the United States.
We have also implemented a new trading system and a variety of new technologies around that system. Although it was a significant investment for us, the benefits have been immediate, including lower operating and data centre costs.
We don’t describe ourselves as a technology company but we do certainly avail ourselves of those tools in a significant way and they up our game from a customer service perspective while helping us to manage costs.
[Updated: 8/07/17] In partnership with Stockpools, Lift Cannabis Expo, and Abattis Bioceuticals Corp. (CSE:ATT), the Canadian Securities Exchange is pleased to announce Canada’s first Cannabis Investment Challenge: a fantasy online stock trading competition focusing solely on the Canadian cannabis sector.
This exciting competition enables participants to create a fantasy portfolio based on select companies listed on the CSE that are actively involved in the cannabis industry.
Contestants will compete for weekly cash prizes based on the best performing portfolios each week and will also be able to play for the grand prize trip to Las Vegas for a marquis marijuana convention. There are up to $4,000 in cash prizes up for grabs as well as the grand prize trip, valued at $3,000.
To learn more about the Cannabis Investment Challenge, and to register for the upcoming week (Week 7), click here.
Weekly Featured Company Insights
As part of the Cannabis Investment Challenge, each of the seven featured companies were asked for their perspectives on the rapidly evolving cannabis industry in Canada.
Companies who have shared their insights include (in no particular order):
Follow along as we highlight one of the seven investment challenge’s featured companies each week and gain insight into how they see the opportunities and challenges ahead for the cannabis market.
Disclaimer: The opinions expressed below are those of the author themselves and do not necessarily reflect or represent the views of the Canadian Securities Exchange.
Week 7: Brad Moore CEO: Global Cannabis Applications Corp. (CSE: APP)
Around the world, more and more governments are either moving toward legalizing medical marijuana or decriminalizing it altogether. In fact, the global cannabis market is expected to grow at a CAGR of 37.8 percent between 2016 and 2020.
With legislation pending in more than 40 nations, analysts are forecasting legal medical cannabis will become a multi-billion- dollar -per -year industry. GCAC is poised to profit from the growing global trend in medical cannabis regulation and can begin generating revenue faster than the licensed producers trying to break into the space. Global Cannabis Applications Corporation’s (GCAC) technology solutions under the Citizen Green brand are “dedicated to the digital world of all things medicinal cannabis.”
Many potential medical cannabis users in newly regulated markets such as Germany, Australia and Canada may have limited to no experience with cannabis.
Citizen Green mobile apps, CannaLife and Prescriptti , provide a bridge to knowledge and the support of an online community for medical cannabis users. These two solutions create a massive user-driven data solution, a unique opportunity for cannabis R&D.
GCAC’s ‘Pain To Strain’ model combines advanced algorithms, artificial intelligence (AI) and real time anecdotal user feedback to provide a highly valued user data set for licensed producers, practitioners, pharmacists and regulatory agencies. This information is instrumental for creating safe, effective products and programs for medical cannabis users.
As such unlike the plethora of overvalued licensed producers, the revenue model for a cannabis centric technology company is not tied down by a lengthy licensing process nor the heavy costs associated with acquiring land and building facilities. As the global consumer base of medical cannabis products grows so does the value of Global Cannabis Applications Corporation.
Week 6: Larry Bortles – Chairman of the Board, Canada House Wellness Group Inc. (CSE:CHV)
The landscape of the cannabis industry is rapidly changing and expanding, as this trend continues we see an industry consisting of a wide array of businesses that have different purposes and objectives.
Canada House places value on its overall objective that we believe should be applied across the industry, which is to not just focus on market-driven or monetary objectives but also a social responsibility regarding the reinstatement of cannabis as an alternative option to health ailments. Cannabis hasn’t been provided the opportunity to play the role it should in treatment that it did historically before experiencing disparagement and Canada House is helping in its reinstatement of being an acceptable form of treatment. We see this as a common trend within the industry. If we do this successfully we are on track to be successful in the industry ourselves and vanquish the incorrect reputation cannabis has received.
The subsidiaries of Canada House are formed for the best opportunity at success with our integrated services that have been established through a client-centered approach. Together, Marijuana for Trauma, Knalysis Technologies and Abba Medix provide a vertically-integrated platform to help our clients achieve health outcomes that were not previously attainable, an alternative from pharmaceutical cocktails. A client-centered multi-faceted approach based around the role that cannabis plays is a combination that we think the cannabis industry should embody as changes and expansion occur.
Week 5: Linda Sampson, CEO and Director, Marapharm Ventures Inc. (CSE:MDM)
Marapharm Ventures Inc. is a publicly traded company, primarily investing in the medical and recreational cannabis space, with operations based in British Columbia, Canada.
Through its wholly owned operating subsidiary Marapharm Inc., the Company has applied to Health Canada to become a licensed producer under the Access to Cannabis for Medical Purposes Regulations (ACMPR). Marapharm’s initial facility, a proposed 22,000 sq ft state-of-the-art cultivation facility, will be constructed on an 11 acre leased site in Kelowna, British Columbia.
The Company’s growth strategy will be to build facilities or acquire licenses in the United States, determined by identifying opportunities in the market. The company has currently focused its attention on opportunities in Nevada, Washington and California. Land has been purchased and construction has begun, In the Apex Business Park in the City of North Las Vegas, Nevada. The company’s intention is to build cultivation and processing facilities in this location, which will utilize two medical and recreational cultivation licenses and one medical processing license. In Washington State, the Company has an opportunity to lease a facility to an I-502, tier 3 license holder. The licensee holds a production license for 30,000 sq ft and a processing license with unlimited potential. In California, we have commenced the purchase of two industrial properties and own a delivery service for medical cannabis.
Marapharm has also purchased and is developing an all-natural hemp oil based cosmetic line called, Maragold, which will be ready for market within a few months. The products created by Maragold will be marketed online directly to end-users and will be sold individually or by subscription.
Week 4: Benjamin Ward, CEO of Maricann Group Inc (CSE:MARI)
As the CEO of Maricann Group Inc., I have been setting the stage for our entrance into the European medical marijuana market for many years. In 2014, we identified Germany as a potential gateway into Europe and secured a facility in Dresden.
Early this year, when German parliamentarians voted unanimously to legalize cannabis based medicines and opened up an estimated 800,000 patient market, we obtained $42,500,000 in non-dilutive, debt-free financing to begin the Dresden facility expansion.
Currently, there are only a handful of Canadian producers who export marijuana, but with the country running out of legal marijuana to supply both medical and – soon – recreational users, exporting is becoming increasingly hazardous to the domestic market.
It has also became apparent that eventually countries will seek to trap the industry’s economic opportunities while alleviating downside risk for regulators in product safety and close their borders to imports. When this happens, only companies with boots on the ground will have a place in the market.
For these reasons, we have chosen not to export our products from Canada and instead produce in Europe to exclusively supply European patients.
Maricann is entering Europe equipped with a German operational team, including the former head of production and manufacturing for Bayer. The company has also carefully selected an Advisory Board of well-respected German-based medical professionals in research, healthcare and business.
We are slated to produce 40,000 kilograms of cannabis per year inside the new 150,000 square foot GMP-compliant, clean-room cultivation facility. With the potential for 820,000 square feet, we can increase production and scale capabilities in Europe’s largest market for medical cannabis.
It is our aggressive global expansion efforts paired with our market leading technological extraction and product formulation differentiation that has positioned Maricann to be leaders in the European and Canadian medical market.
Week 3: Rosy Mondin, CEO of Quadron Cannatech Corp. (CSE:QCC)
Anil Mall from Stockpools asks: Where do you see things going with legalization and how does this impact Quadron?
Licensing:
In Canada, there already exists a diverse and well-established private sector for both medical and illicit recreational (i.e. ‘non-medical’ or ‘adult-use’) cannabis; in fact, Canada is considered by many as a world leader in cannabis production.
Through my work as Executive Director of the Cannabis Trade Alliance of Canada (CTAC), we’ve been advocating government to implement a licensing structure which grants more licenses to increase the quantity and variety of the available supply chain. We believe a legalized cannabis licensing structure should be open to industry participants of various sizes, from craft to larger forms of industry, and regulations should implement a more responsive licensing system providing greater flexibility for businesses. Therefore, we would like to see a move towards a system of separate licensing categories like we’ve seen in Washington, Oregon, Colorado, Nevada and California. Having various types of licensing ‘classes’ falls into line with the consultations and recommendations we made to the Task Force on Legalization last year.
Extracts: Extracts are the fastest growing category of cannabis products. Canada’s medical cannabis industry has been focused on dried cannabis product, however demand in extracts/oils/concentrate is growing exponentially, and oil sales in Canada are already significantly outpacing dried “bud”. According to Health Canada data, as of March 2017, oil sales comprised ~50% of total sales by Licensed Producers, and does not consider sales of oils and extracted products sold through dispensaries and the black market.
Health Canada data: bud vs oil sales
Cannabis oils, in addition to allowing for a greater variety of product, is safer than smoking, is more stable than dried material, and can be produced using standardized preparations (particularly important for consistency in dosing).
In addition to this Health Canada Licensed Producer data, if we look at the sales data coming from Washington state, concentrate sales skyrocketed to $140 million last year. Additionally, if we look at the data that came out of the Mackie Research Focus Report earlier this year, assuming full legalization, by 2018 the Canadian demand for oils to increase by 198,000% by 2020). There’s no shortage of data and statistics. Impressive figures are also coming from growth of ancillary markets, and consulting services: In the USA, investment in the ancillary market (i.e., businesses that do not touch the cannabis plant) grew 161% in 2016 compared to 2015.
Catering to these trends is exactly where Quadron’s offerings are targeted.
The Science of Cannabis: As cannabis use expands and more products enter the marketplace, third-party testing labs will be needed to ensure purity, potency, and consistency of products before they reach the consumer. It’s a crucial step in the supply chain process, a critical consideration for public health and underlies the whole framework for legalization which is predicated on “safe product”. Anticipating these needs, our subsidiary Soma Labs Scientific, aims to establish scalable labs, using research, development and science to establish industry standards for the creation of standardized extracts, using our state-of-the-art extraction and formulation equipment, products and services.
Extraction and Formulation Equipment: There is so much demand for extracted product that there are waiting lists to purchase commercial-scale machinery. Quadron is currently the only company trading on the CSE in the cannabis ancillary equipment manufacturing and supply space, giving us a great first mover advantage.
For more information on Quadron Cannatech Corp. please email [email protected]
Week 2: Robert Abenante, President & CEO, Abbatis Bioceuticals Corp. (CSE:ATT)
Who is Abattis?
As the cannabis industry gears up for legalization in Canada, Abattis Bioceuticals Corp. is establishing itself as the leader in providing services to licensed producers, medical and legal recreational users and large scale farmers of marijuana and hemp biomass. “We see this industry commoditizing at an incredible rate and our intent is to be the picks and shovels cornerstone to this high growth sector.” stated Robert Abenante, President & CEO of Abattis Bioceuticals. “Our mandate is to be fully integrated along the supply chain through our subsidiaries. This means we should be able to cultivate, test, extract, formulate and push value added products into the market in the quickest and most cost effective way” added Mr. Abenante.
Through its Health Canada Licensed Dealer, Northern Vine Labs the Company provides federally mandated testing of legal cannabis and derivatives as well as formulations for products using legal cannabis, derivatives and industrial hemp/cannabidiol.
The Company also has an exclusive distribution agreement with Suzhou Raybot Material Tech Corp. (“Raybot”) which allows it to sell and service proprietary extraction machines in North America and Europe. This ability gives Abattis a major competitive edge within the industry as no large scale cost effective extraction methods currently exist. Raybot’s machines provide industrial scale and cost-effective cannabinoid extraction with the potential to significantly disrupt the rapidly growing cannabis derivatives market by providing several competitive cost advantages in the extraction of CBD, THC and other derivatives from marijuana and industrial hemp.
Abattis also has a sales and marketing subsidiary, Vergence Naturals Ltd., focused on the sales and marketing of nutraceutical products. In addition to selling third party natural health products, Vergence will be the main distribution arm for the products formulated by Northern Vine with or without CBD. Vergence has established sales channels in Asia, Europe, Canada and United States.
Northern Vine, an Abattis subsidiary, is one of the few Licensed Dealers in Canada, of which only seven are cannabis specific and of which only two are publicly traded. In March 2017, High Times announced that the next billion dollar industry would be cannabis testing. With random product testing introduced by Heath Canada in April 2017 and mandatory pesticide testing for Licensed Producers mandated by Health Canada in May 2017, the Company has the best advantage of its peers to be a frontrunner for servicing the cannabis industry.
Combined with the ability to formulate products and to extract biomass, Abattis is well positioned to be a leader in the burgeoning medical and soon to be legal recreational cannabis market.
This welcome letter contains forward-looking statements. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe” and similar expressions are intended to identify forward-looking statements. Forward- looking statements in this press release include statements regarding the selling and servicing of proprietary extraction machines in North America and Europe; the potential of the technology to significantly disrupt the rapidly growing cannabis derivatives market; the competitive cost advantages; the potential size of the cannabis testing market; the Company’s advantage to its peers to service and to be a leader in the medical and legal cannabis industry. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties, including that the Company will not be able to open its new lab or execute its proposed business plan in the time required or at all due to regulatory, financial or other issues. Additional risk factors are included in the Company’s Management’s Discussion and Analysis, available under the Company’s profile on www.sedar.com. The forward-looking statements are made as at the date hereof and the Company disclaims any intent or obligation to publicly update any forward-looking statements, where as a result of new information, future events or results, or otherwise, except as required by applicable securities laws.
Week 1 – Brayden Sutton, CEO of Friday Night Inc. (CSE:TGIF)
The cannabis industry in Canada, broadly speaking, is very fatigued and taking a much-needed breather, as reflected in the share prices across the board. Some would say that they ran too hard and too much after Trudeau’s promises.
Right now, as a result, Canadian LP’s are priced with legalization “baked-in.” This is important to point out, in case Mr. Trudeau does face hurdles, potentially causing a delay in the passing of the legislation next year.
As prospective new patients wait for ‘legalization’ they will notice the disparity between the market caps of collective Canadian cultivators vs. lethargic patients and sales numbers. The fatigue caused by this disparity forces investors to take a closer look at the ancillary components of this sector, such as extraction and processing technologies, branding, software and IT infrastructure, security – you name it. Something else to keep in mind is that the United States could hold even greater potential than Canada in this sector.
29 American states now have some form of a medical cannabis program, with many of them also including an ‘adult-use’ or recreational program. Places like Colorado have provided us now with almost 5 years of data since they went legal, and the numbers are staggering.
The data is very compelling for other states to come on board.
So as the wave goes through the US, it’s all eyes on the next, high-per-capita-use-demographic states, such as Florida, Arizona, and in particular Nevada, with recreational sales beginning there on July 1st of this year. With an estimated 48 million visitors a year to the “strip” in Las Vegas, it’s a highly anticipated market.
Another up and coming market is Germany, as they too roll out a federal medical program, much like the one we have here in Canada: the ACMPR. So, it’s tulip-mania over there, much like Canada experienced in 2013 and 2016 leading to the prices we have here today.
There is tons of opportunity all around, but timing is everything. Never bank on something until it’s done, and make sure you know the current usage landscape to ensure it matches the enterprise values.
On May 23rd, the CSE hosted a special webinar event featuring Tom Adams, managing director and principal analyst of the investment research and consulting division at BDS Analytics as well as editor-in-chief of Arcview Market Research.
The webinar dissects the cannabis industry, and with BDS Analytics’ impressive data collection of more than 250,000,000 processed and analyzed legal cannabis transactions, provides valuable insights into a rapidly growing industry.
In his presentation, Tom showcases the market’s current data, trends and opportunities and what it all means for investors. Tune in to see his detailed market forecasts and the possible direction BDS sees the cannabis industry heading in.
There’s no denying that since 2014 the cannabis industry has increasingly grown a following with investors and, of late, mainstream media and conservative business service providers.
In this special edition of the CSE Quarterly, six CSE-listed companies operating in the rapidly evolving cannabis space are profiled. These firms, and the entrepreneurs behind them, showcase the diversity of opportunities and challenges facing an industry that is still in its earliest stages.
Featured in this special edition of the CSE Quarterly are:
