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Dear Pot Lawyer,

Are Canadians really taking over Oregon weed? I’m concerned!

Not exactly, but Canadian money is definitely here and more is on the way. How it’s happening is sort of strange, but consistent with the trend of Canada lapping the US as far as cannabis industries go. But you asked about Oregon. I’ll explain.

The Canadian invasion began two years ago, when Oregon became the first state to open its weed industry to nonresident ownership and investment. One of the first Canadian companies to take advantage of this was Golden Leaf Holdings, AKA Golden. It grabbed a few Oregon licenses and started using public money to buy up local brands like Chalice Farms. Now Golden is a vertical player moving into states like Nevada. As far as US cannabis companies go, Golden is fairly big.

So how is a cannabis company publicly traded? The short answer is: It’s easier in Canada. Like the US, Canada has various securities exchanges where people buy and sell stocks. The most popular for weed businesses is the Canadian Securities Exchange (CSE), which is newish and smallish and now lists about 60 pot companies. Some of these are probably pump-and-dump schemes, but others may turn out to be okay. If you want to straight-up gamble, I’d recommend buying some Canadian pot penny stocks. (Looks like Golden is trading at close to C$0.30/share.)

US exchanges generally won’t list plant-touching pot companies, so Oregon entrepreneurs who want to access public money are rolling into, or partnering with, Canadian outfits. And that’s where things get interesting. There are two ways that Canadian pot companies form. The first is through the CSE listing process, which is somewhat tedious and cumbersome. The second is by acquisition or continuance of a listed, hibernating company. Sometimes we call that company a “shell.” And this happens quite a bit.

The Canadian exchanges are peppered with mining company shells. (When I say mining, I mean companies formed to extract resources from the earth’s crust, not cryptocurrency.) In the past decade, many of these companies became worthless due to mining industry downturns. But their officers and shareholders kept them around as shells, because the companies had licenses and permits, and because there is value in having a company cleared on an exchange, and because hey, you never know.

Now these mining companies are becoming cannabis companies. The shells have been resuscitated to raise money and buy stylish Oregon pot businesses. Some of the targets are doing pretty well—I’ve closed five or six sales in the past year, on either side of the equation. I expect more to trickle in.

So are these Canadian outfits actually taking over the Oregon industry? I don’t think so. Many of them have already made their plays, and others are moving on to the shiny prize of California. But these resuscitated mining firms and CSE outfits have injected some desperately needed cash into select Oregon brands. It’s no takeover, but it’s keeping things interesting.