Part of that has to do with the size of the deals — they’re still relatively small and don’t always capture the attention of the larger American banks. But even the bigger deals tend to be managed by Canadian firms, thanks to the lack of regulatory risk those firms face.
While it’s not illegal for U.S. firms to participate in these deals, the fact that pot is legal on a federal level in Canada makes it easier for Canadian banks to participate, according to Harrison Phillips, vice president at Viridian Capital Advisors.
“The rules as they stand play in the favor of Canadian operators and institutions, investment banks included,” said Phillips of Viridian, a financial advisory firm that focuses on the cannabis market. “So rather than operators and investors trying to price the risk of federal illegality, they’ve moved to the capital markets that are more favorable to the space.”
A list of M&A advisers in the cannabis sector provided by Dealogic shows that the top eight firms are all Canada-based. The ninth is Greenhill, an American investment bank. On the IPO side, there are a few more American investment banks, including Cowen, which is tied with BMO Capital Markets for first place,thanks solely to its work for medical marijuana producer, Tilray, which went public in July.