Creso Pharma (ASX:CPH) share price jumps 16% on merger termination & NASDAQ plans

This cannabis company has terminated its unpopular merger plans…

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The Creso Pharma Ltd (ASX: CPH) share price has been among the best performers on Tuesday.

At the time of writing, the cannabis and psychedelics company’s shares are up 16% to 14 cents.

Why is the Creso Pharma share price rocketing higher?

Investors have been bidding the Creso Pharma share price higher today after it announced the termination of its proposed merger with Red Light Holland. Instead, the company will seek to list on the NASDAQ index.

According to the release, the decision to mutually terminate the merger plans follows Creso Pharma’s ongoing review of market conditions, COVID limitations, and consultation with shareholders and institutional investors.

The latter is likely to have been the biggest factor in the merger breakdown. The response to the merger was very negative and the Creso Pharma share price had been on a downward trajectory since its announcement.

Why list on the NASDAQ?

Management believes that listing on the NASDAQ will unlock growth. It notes that it is expecting a number of favourable regulatory shifts to materialise in North America, which will provide a favourable operating environment for Creso Pharma to expand into the US market.

This following the introduction of the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, the Marijuana Regulation and Taxation Act (MRTA), and the Cannabis Administration and Opportunity Act. These are all aimed at legalising, taxing, and regulating recreational cannabis.

By having the Creso Pharma share price listed on the NASDAQ, it feels it will be positioned to capitalise on a number of opportunities.

Creso Pharma’s Non-Executive Chairman, Adam Blumenthal, explained: “We are now shifting our resources and focus to the proposed NASDAQ dual listing. The Company anticipates that this development will allow for easier comparisons to our North American listed peers and allow Creso Pharma to be valued accordingly. Following potentially favourable legislative shifts, a NASDAQ listing will also provide us with access to the world’s largest recreational cannabis market and a growing psychedelic medicines sector.

But don’t worry, there will still be a Creso Pharma share price on the Australian share market.

Mr Blumenthal said: “Pleasingly, a dual listing opportunity will also allow Creso Pharma to retain its ASX listing, which we believe is in the best interests of our longstanding and faithful shareholders. The Company remains well capitalised, with considerable financial flexibility to pursue these initiatives.”

The Creso Pharma share price is down over 20% in 2021.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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