October 17 is almost here, and we’re witnessing a flurry of cannabis activity. While the late-summer rally has largely cooled off, activity in the industry has if anything increased. It seems that we’re hearing about new supply contracts, M&A deals and partnerships almost daily.
The latest big news?
Aurora Cannabis Inc (TSX:ACB) wants to take its stock to the U.S.
And it looks like it’s aiming to do it no later than October.
Aurora’s timing here couldn’t be better. In October, much of the world’s eyes will be on Canada as investors, politicians and regulators look to see how our legalization experiment will play out.
Investors in particular will be looking to see how legalization impacts cannabis companies–and the expectations are generally positive.
Many U.S. investors are looking to get a slice of Canadian cannabis profits, and what better way to accommodate them than by listing shares on a U.S. exchange?
If investor sentiment regarding legalization remains positive, an October listing could benefit Aurora’s investors. Here’s how.
It could give Aurora more access to capital
One benefit of listing on multiple stock exchanges is increased access to capital. By listing in both the U.S. and Canada, Aurora facilitates purchases in both Canadian and U.S. dollars.
This may increase the number of Americans buying Aurora shares, as people tend to prefer investing in their own currency.
This in turn would mean more buyers if Aurora chooses to sell equity. In that case, the new shares issued would be bought up more quickly and possibly at higher prices than if Aurora was issuing shares just for Canadian dollar buyers.
The end result? More capital flowing into Aurora.
It could increase Aurora’s prestige
A major reason that companies choose to cross-list is to increase their prestige. A listing on the New York Stock Exchange (NYSE) indicates that a stock is in the big leagues, and with that comes increased respect.
While this is a factor that’s difficult to quantity, it has been cited by top CEOs and market analysts repeatedly.
Remember that Aurora is hungry for acquisitions. It has acquired more companies in the past year than any of Canada’s other big cannabis producers. Having a U.S. listing could increase the company’s prestige in the U.S., which might make U.S. companies more open to the idea of being acquired by Aurora.
It could also put the company on the radar for a larger company looking to make its own acquisition.
It could make Aurora’s products more visible
One reason that Canadian companies list on U.S. exchanges is to make their products more visible. This may sound counter intuitive (who buys something because they saw it was listed on the NYSE?), but remember that stock market news can influence peoples’ purchasing decisions.
U.S. financial media are more likely to report on U.S.-listed stocks, if for no other reason than that many financial news sites have a geographic focus. So by listing on the NYSE, a company may gain more coverage in the U.S. press.
If this happens to Aurora, the company could gain new customers in states like Colorado that have legalized cannabis, which may eventually translate into gains for Aurora’s investors.