More marijuana stocks are headed north, as Acreage Holdings and LivWell, which has rights to Willie Nelson’s marijuana brand, became the latest U.S. cannabis companies to seek listings in Canada.
Acreage said Monday that it landed $119 million in new funding and plans to go public in Canada this fall.
The gargantuan funding round and planned listing north of the border come roughly three months after former House Speaker John Boehner and former Massachusetts Gov. Bill Weld joined the company’s board of advisors. Boehner and Weld, in a statement at that time, called for a “serious consideration of a shift in federal marijuana policy” and said they believed the Acreage Holdings team “will transform the debate, policy and landscape around this issue.”
Acreage Holdings has operations in 13 states. Its headquarters are in New York City. The company said it would use proceeds from the investment to fund preparation for the listing and acquire licenses, brands and other properties.
The company says it intends to list on the Canadian Securities Exchange this fall. The exchange has become a more popular destination for U.S. marijuana companies looking to draw shareholders. The Toronto Stock Exchange, Canada’s biggest, bars U.S. marijuana companies from listing on it.
“The liquidity on the CSE is incredibly attractive to Acreage, and we know that retail investors in the U.S. have become comfortable with that exchange,” Kevin Murphy, CEO of Acreage Holdings, said in a statement. “We expect to see a tremendous response to our offering this fall.”
Big Willie Style
Also Monday, LivWell announced several deals that, when taken together, look to make it a formidable new entry among marijuana stocks.
Among them, LivWell said it’s taking over management of Calgary-based 51st Parallel and buying a 12% stake in GCH, which owns Willie Nelson’s cannabis brands, according to Bloomberg. The GCH stake gives LivWell Canadian distribution rights to Willie Nelson’s Willie’s Reserve marijuana brand.
Additionally, LivWell plans a reverse takeover of investment company Target Capital, which would allow the U.S.-based company to list in Canada.
Marijuana Stocks, Born From Reverse Takeovers
Acreage President George Allen said in an interview that the company plans to go public on the CSE via a reverse takeover deal. The company, he said, was in late-stage, exclusive negotiations to finalize that deal.
MedMen, a large U.S. marijuana producer and retailer, also went public on the Canadian Securities Exchange in May via a reverse takeover.
Under a reverse takeover, a private company gains control of most of another company’s existing shares and uses that control to springboard itself onto the public exchange. Private companies generally target dormant firms or shell companies with minimal operations on the exchange for reverse takeovers.
But as more Bitcoin, blockchain and marijuana companies use that process to go public in Canada, the supply of shell companies without legal or financial baggage has become more scarce. Allen said it was “very challenging” to find a suitable shell company.
Acreage’s announcement follows last week’s initial public offering of Tilray (TLRY), a Canadian pot producer, on the Nasdaq. The debut marks the first time a marijuana company used a major U.S. exchange for an IPO.
Earlier this year, other marijuana companies in Canada found ways to tap U.S. exchanges to attract ever-more-receptive investors. Canopy Growth (CGC) trades on the NYSE. Cronos Group (CRON) trades on the Nasdaq.
Tilray shares reversed sharply lower, closing down 1.1% at 29.45 on the stock market today, after rising 10% earlier. The stock priced at 17 last week. Canopy surged 5.5%, and Cronos dipped 1.2%.
Marijuana Stocks Get Boost
The marijuana industry in recent months has secured some big endorsements from the worlds of business and government.
Corona parent Constellation Brands (STZ) invested in Canopy Growth last year. U.K. tobacco company Imperial Brands (IMBBY) has also invested in the marijuana industry. The CEO of Scotts Miracle-Gro (SMG), which has a hydroponics business, has called for legislation that makes marijuana policy and industry “a states’ rights issue once and for all.”
Meanwhile, President Trump last month said he would “probably” end up supporting a bill that would keep the federal government from interfering with states’ efforts to legalize marijuana.
Boehner, Weld Support
Allen, in the interview, said the support from Boehner and Weld helps the company decrypt the movements of Washington. Having the former House speaker and governor aboard also affords them greater understanding of what policies have a chance of being successful and how to respond when or if marijuana policy changes.
“Their ability to interpret what’s going on in Washington is orders of magnitude more nuanced than anything you can pick up from reading a newspaper,” Allen said.
The statement in April from Boehner and Weld also noted the growing public support for greater marijuana access, the nation’s opioid crisis, and veterans’ use of marijuana to treat chronic pain and PTSD.
“While the Tenth Amendment has allowed much to occur at the state level,” the statement said, “there are still many negative implications of the Federal policy to schedule cannabis as a Class 1 drug: most notably the lack of research, the ambiguity around financial services and the refusal of the VA to offer it as an alternative to the harmful opioids that are ravaging our communities.”
Boehner, in a tweet made in conjunction with the announcement, said his “thinking on cannabis has evolved.” He said he was “convinced de-scheduling the drug is needed” to facilitate research, help veterans and combat opioid abuse.
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