How U.S. Investors Can Buy Canadian Cannabis Stocks
Jason Mueller
February 12th, 2018
Policy
Updated on April 30, 2018 by Ryan Allway
Canada has become an important investment destination for U.S. investors following the legalization of medical and adult-use cannabis nationwide. As the only G20 country with nationwide legalization in place, investors have the unique opportunity to invest in licensed producers, which have become important suppliers to both domestic consumers and international markets that have legalized medical marijuana.
Unfortunately, many of these companies trade on Canadian exchanges that are difficult for U.S.-based investors to access through traditional brokerage accounts, such as the Toronto Stock Exchange (TSX), Toronto Venture Exchange (TSX-V), and the Canadian Securities Exchange (CSE). While they may trade over-the-counter (OTC) in the United States, the Canadian shares may offer the best liquidity for investors.
In this article, we will look at how U.S.-based investors can invest directly on Canadian stock exchanges and some important considerations when doing so.
U.S. Brokers that Trade Canadian Stocks
Many U.S. brokers do not permit trading in international stocks, but fortunately, Canadian stocks have become an exception to the rule in some cases. For example, TDAmeritrade enables you to place phone orders for stocks on Canadian stock exchanges, but the pricing is often significantly higher than online trades. The good news is that there are some brokerage accounts that do permit online trading in international markets.
InteractiveBrokers is the most popular U.S. brokerage for international traders. With both fixed and tiered pricing, retail and professional investors can use the platform to minimize fees and maximize their returns. The minimum balance for individual accounts is $10,000, but those 25 and younger need just $3,000 and IRAs qualify with just $5,000.
PennTrade is an easy-to-use broker, but they charge an expensive $29.95 commission. The upshot is that this commission is offset by no extra charges for market orders, limit orders, large volume, small volume, or stocks trading under $1.00 – and every tenth trade is free. The minimum requirement to open an account is also just $500.
Questrade charges between $4.95 and $9.95 per trade with no minimum balance, but there are a lot of other fees that may be included. There is also a $5.00 flat per-day commission for days where you trade a U.S. dollar security in your account, which means that it’s best when used exclusively for holding Canadian stocks.
Important Considerations
There are many important considerations for U.S. investors when placing trades on international stock exchanges, like the TSX, TSX-V, and CSE.
The first thing to remember is that prices are expressed in Canadian dollars, which fluctuate in value relative to the U.S. dollar. Some brokers provide an easy way to convert Canadian dollars into U.S. dollars, but it’s important to double check to avoid any surprises. On one hand, investing in Canadian dollars provides a higher level of diversification, but on the other hand, a relative increase in the U.S. dollar could have negative consequences.
It’s also important to consider all of your options. In some cases, American Depositary Receipts (ADRs) or over-the-counter versions of the stock may be preferable in terms of liquidity. You may also prefer the OTC version of the securities for other reasons, such as not having to worry about the Canadian dollar’s movements, lower trading fees, or just less complexity to worry about when managing your portfolio.
Finally, you may be responsible for paying foreign taxes on international capital gains and dividends. The good news is that Canada has a deal with the United States to avoid double taxation, but you may be required to make extra filings during tax time. You should consult your financial or tax advisor to learn more about how investing directly on Canadian stock exchanges may impact your tax situation.
Due Diligence Tips
Many Canadian stocks do not file with the U.S. Securities & Exchange Commission (SEC), which makes analyzing them more difficult for investors accustomed to 10-Q quarterly reports, 10-K annual reports, and other regulatory filings. While some dual-listed companies do file with the OTC Markets, separately, they are not obligated to do so unless they trade on the OTCQB or OTCQX, and even then, they may only be required to file Canadian filings.
Investors looking to conduct due diligence on these companies should look at Canada’s SEDAR, which is the equivalent to the U.S. SEC. Using that system, they can look up common filings, including quarterly reports, annual reports, and management discussion and analysis (MD&A).
Investors can also access the latest financial data from third-party websites that provide access to this data automatically, such as YCharts or Morningstar.
The Bottom Line
U.S. investors looking for exposure to Canadian stock exchanges have several options, but they should carefully consider their decision before jumping in. In general, Interactive Brokers offers the most attractive account for these investors, but you may also want to consider others that are based in Canada and accept U.S. clients.
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About Jason Mueller
Search CannabisFN
Press Coverage
Psychedelics Index
Top Videos
In addition to his role as Founder and CEO at MAZAKALI, Sumit is a consultant to The Arcview Group and the Managing Partner of Emerald Ventures. A frequent speaker at investment seminars, Sumit acts as a mentor to Arcview and Canopy companies and serves on the Canopy Investment committee as well as the NCIA Finance […]
Rob is the co-founding President of Pelorus Equity Group and has more than 18 years of experience in the real estate finance industry. Since the formation of Pelorus in 2010, he has raised more than $175,000,000 in secured real estate transactions. Rob’s primary role at Pelorus Equity Group is the development of strategic alliances with […]
The Yield Growth Corp. is a diverse team of business executives dedicated to rapid, sustainable financial growth for businesses with viable models for success.
CanIDeal is the first fully-legal, B2B digital marketplace for the entire cannabis industry. The company’s mission is to provide an easy-to-use and safe ecommerce solution for entrepreneurs in the market for THC, CBD and ancillary products.
Network Partners
About CFN Media Group
CFN Enterprises Inc. (OTCQB: CNFN) owns and operates CFN Media Group, the premier agency and financial media network reaching executives, entrepreneurs and consumers worldwide. Through its proprietary content creation, video library, and distribution via www.CannabisFN.com, CFN has built an extensive database of cannabis interest, assisting many of the world’s largest cannabis firms and CBD brands to build awareness and thrive. For more information, please visit www.cfnenterprisesinc.com.
Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. CFN Media Group, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. CFN Media Group, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. CFN Media Group, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.
Copyright © Accelerize Inc. · All Rights Reserved · Privacy Policy · Legal Disclaimer
