The Bank of Montreal’s (TSX:BMO) participation in a major financing deal for licensed marijuana producer Canopy Growth marks a big policy shift for Canada’s biggest banks, which may be warming up to the cannabis sector.
Canopy (TSX:WEED), Canada’s biggest licensed cannabis producer, announced yesterday that BMO Capital Markets and GMP Securities were leading its $175-million bought deal offering of roughly five million shares.
Until now, Canadian banks have been reluctant to service the country’s burgeoning marijuana industry, leaving smaller banks and financial institutions to cash in on pot companies’ financing and commercial banking needs.
However, the legislative landscape in Canada is changing rapidly as the federal and provincial governments gear up for legalization of cannabis for recreational use by this summer, and pot stocks have seen significant gains over the past year in anticipation.
But BMO’s participation in the Canopy deal comes as lawmakers crack down south of the border — where many of Canada’s big banks have ties — on marijuana, which remains illegal in the U.S. under federal law.
Attorney-General Jeff Sessions earlier this month rescinded an Obama-era memo that suggested that federal lawmakers would not intervene in states where the drug is legal, allowing legalization to flourish.
The Canadian Press