Article by Jack Kaskey, The Globe and Mail
When Hadley Ford created a company for investing in the fast-growing business of legal marijuana, the former Goldman Sachs Group Inc. investment banker left New York and headed north of the border.
While more than half of U.S. states allow marijuana for medical or recreational use, the drug is still outlawed by the federal government, starving pot entrepreneurs of institutional capital. Major stock exchanges won’t accept listings for businesses that Washington deems illegal, and banks and other lenders have stayed mostly on the sidelines.
So Mr. Ford created a public company that raises money in Canada, where medical marijuana is allowed, Prime Minister Justin Trudeau supports full legalization and bankers, lawyers and accountants operate without fear of prosecution. The move gave Mr. Ford entree into a vibrant public market for cannabis and a way to fund investments in the U.S.
“We have a $50-billion playing field all to ourselves, and the prices are ridiculously cheap,” Mr. Ford said in an interview. ‘‘You could not have created a better business model for a reformed Goldman Sachs banker to wade into.”
Mr. Ford, 57, is among a growing list of entrepreneurs who are capitalizing on the difference between the two nations when it comes to marijuana. Two other U.S.-focused pot companies have followed him to the Canadian Securities Exchange, which caters mostly to small-cap mining, technology and biotech firms. CannaRoyalty Corp. began trading in December, and Canadian Bioceutical Corp. started in January.
“The industry has gone from a Ziploc bag with a hoodie on the corner to now where you’ve got publicly listed companies in Canada acquiring assets in the United States using European money,” said Canadian Bioceutical Chief Executive Officer Scott Boyes. London-based investors bought the majority of the company’s recent $27-million private placement of shares, he said.