Marijuana Business Magazine September 2018

Q&A Trekking North to Raise Capital Five Questions with Richard Carleton, CEO of the Canadian Securities Exchange R ichard Carleton’s involvement in medical can- nabis dates to spring 2014. That’s when medicinal cannabis companies in Canada, buoyed by new federal regulations, first turned to the public markets for capital to grow their businesses. They found the incumbent exchanges – including the Toronto Stock Exchange – ambivalent about the sector, however. As CEO of the upstart Canadian Securities Exchange (CSE), Carleton sensed a major opportunity. “By the summer of 2014, we had become the center of the industry to raise capital,” he said. Some of today’s biggest cannabis companies used the CSE as a springboard to become international players. Aurora Cannabis was an early issuer and was valued at $3.2 billion (CA$4.3 billion) as of mid-July. U.S. cannabis companies have taken note – especially those in need of capital to fund aggressive growth plans. Of the 75 medical cannabis companies listed on the CSE as of late June, 26 were from south of the border. “Look at the valuations that Canadian investors are providing to issuers operating both in and outside Canada,” Carleton said. “The fact that you can pro- vide liquidity for early stage investors, (going public in Canada) seems to be a very compelling proposition” for privately held U.S. companies. By Matt Lamers Carleton spoke with Marijuana Business Magazine about Canada’s public markets and what American companies need to know about them. Q How can a public listing be used to raise capital? A The Canadian public markets – which include the dealer community, auditors, law firms and so on – have raised billions of dollars for the medical cannabis industry from its inception four years ago in Canada. We have a demonstrated record of raising money, and we know from the pace of transactions recently that there continues to be an appetite in Canada for companies in the cannabis space and in particular for companies with operations in the United States. Q What do American medical cannabis companies get out of listing on the CSE as opposed to the Toronto Stock Exchange? A TMX Group (parent company of the Toronto Stock Exchange, or TSX) has indicated they will not list compa- nies with exposure to the cannabis industry in the United States, so it is simply not an avenue for them to consider. Richard Carleton 16 • Marijuana Business Magazine • September 2018