Why The World’s Largest Cannabis Company Won’t Uplist Despite Federal Reform, According To CEO

The U.S. cannabis industry is entering a new phase of reform. However, according to Boris Jordan, CEO of Curaleaf Holdings, Inc. (TSX: CURA) (OTCQX: CURLF), the largest cannabis company in the world by sales, a real breakthrough will come not from stock exchange listings alone, but from attracting major institutional investors.

Speaking at The IgniteIt Cannabis Capital Conference this past June, Jordan emphasized that federal cannabis rescheduling has fundamentally changed the industry’s outlook.

“I think the reform process is now underway,” Jordan said during a fireside chat with moderator Jack Mascone of Seaport Global Securities. “This is the first chapter in a very long process, but it’s a very positive one because it completely changes the dynamic for the industry.”

A Different Path To Uplisting

Jordan applauded Trulieve’s decision to uplist to the New York Stock Exchange, even though he has plans on applying a different approach when it comes to Curaleaf.

He said Curaleaf will not separate the company’s international medical business to qualify sooner, but rather keep its operations together in anticipation of institutional investors being fully able to participate.

“The issue is what I call safe harbor language for investors to actually be able to invest,” Jordan said. “The biggest problem is we don’t have the investors.”

Jordan further argued the cannabis equity market is still dominated by the same group of investors moving from one stock to another, making it difficult to attract new shareholders.

Curaleaf is holding off on uplisting until there is more progress on the regulatory front, including rescheduling, IRS guidance and legal challenges, he explained.

“We want to anchor our deal with some very large investors… the BlackRocks, the Fidelitys… and then uplist and show the market that we’ve got real strong institutional backing,” Jordan said.

Institutional Capital Is Key

What the cannabis industry needs in this moment is not exchange access or custodial services but institutional ownership.

Jordan noted that while Curaleaf’s $500 million debt refinancing attracted significant institutional demand, equity investors remain on the sidelines due to compliance departments still restricting investment in U.S. cannabis companies.

“The problem is a plumbing problem rather than a fundamentals problem,” he said.

Cannabis stocks will remain volatile and vulnerable to sharp price swings if there isn’t backing from long-term institutional shareholders.

“The institutional backing has to anchor the capital structure of these companies,” Jordan continued.

Jordan said Curaleaf’s European business is one of the company’s greatest competitive advantages. Curaleaf International supplies EU-GMP-certified medical cannabis across several markets including the UK, Germany, Italy, Spain, and Poland. “It was obviously the crown jewel of Curaleaf,” he said.

Europe’s population of more than 700 million people and double-digit growth rates represent one of the industry’s largest long-term opportunities, Jordan added.

Consolidation Is Here Alongside Rescheduling

In the U.S., the next logical stage for the cannabis industry is consolidation.

“There are too many companies out there… everybody is competing against each other on price,” Jordan said.

Mergers among larger operators could generate $150 million to $200 million in synergies while creating businesses large enough to attract global institutional investors.

“We need to create companies that are $10 billion, $15 billion in valuation in order to attract the capital,” he continued.

Jordan expects the regulatory landscape to improve significantly over the next several months with cannabis rescheduling in mind.

“We need to get this reform process finished,” he said. “Then you’ll get comfort from compliance departments… that’s when you’re going to see the capital come in.”

Until then, Curaleaf intends to remain patient.

“We’re going to wait until we can get these guys to anchor our deal, and then we want to go and uplist,” Jordan said. “I think this is a question of six months, and I think the situation will change dramatically for the sector.”