Get Ready for More Public Cannabis Companies and 12 Stories from New Cannabis Ventures

This is a copy of the May 20th edition of our weekly Newsletter, which we have been publishing since October, 2015.


2018 is shaping up to be the year that trading publicly finally became widely appealing to U.S. cannabis companies. The changing of the political winds out of Washington, D.C. (Trump-Gardner) has resulted in a major revision to how companies and investors are thinking about risk. For those who have followed the space for a while, you are likely aware of some recent improvement in the quality of the companies as a new path opened in late 2016, with companies like CannaRoyalty, iAnthus Capital, Liberty Health Sciences and MPX Bioceuticals listing on the CSE and dual listing on the OTC. These companies have been able to raise substantial capital with the support of the Canadian investment bankers. Earlier this year, MedMen announced its intent to follow this model, and it expects to be trading publicly by the end of Q2 with a market cap that is projected to be in excess of $1.65 billion based on its last round of pre-public financing at that level. Multi-state operator Acreage Holdings, formerly High Street Capital, has also announced its intent to trade publicly.

A couple of companies used the timing of last week’s Canaccord conference to reveal their plans to go public. GTI, out of Chicago, a multi-state operator, announced its reverse-merger partner. We have heard from several sources that the projected market cap will be in excess of $700 million. Another deal came out of left field: TILT Holdings. This transaction will merge software company Baker Technologies, Oregon-based ancillary company Briteside Holdings and Boston-based Sea Hunter with aspiring Canadian licensed producer Sante Veritas, which recently began trading on the CSE. The conglomeration shared a forecast of $70 million in sales in 2018 and $200 million in 2019, huge numbers that caught the attention of Canadian regulators that forced a retraction.

Even CNBC is beginning to notice what’s going on. On Thursday’s episode of Fast Money, commentator Tim Seymour discussed the “massive premium valuation” in Canada and suggested that it “makes sense to buy cheap U.S. assets”, projecting that “more liquidity is coming to cannabis” and that there should be a “bid under the U.S. assets.” This was one of the most serious observations about the U.S. cannabis industry on CNBC or any major news network to date .

We agree with Seymour, and we expect to see many more private cannabis companies go public alone or merge with existing players. While the evolution we expect to see in federal policy will take some time to work itself through the political process, the downside of asset confiscation and/or imprisonment is looking more remote as each day passes.

Simplifying the cannabis category the way Apple and Google simplified technology

Canndescent has established itself as a category thought leader and as the leader in luxury cannabis marketing. Raising it’s $5.5M seed round in 2016, the company closed 2017 as the #1-selling brand of cannabis flower in California according to BDS Analytics. Canndescent operates two cultivation facilities in Desert Hot Springs, CA and has its third facility and an extraction lab under construction. In 2018, the company plans to septuple its production from 2500 pounds to over 18,000 pounds per annum.

With both volume and price, Canndescent aims to “premiumize” the cannabis category the way Starbucks shifted coffee up market in the 1980s. At present, the company is bringing its total invested capital to $30M. To learn, visit the company’s page and click the green Get More Info button in order to stay up to date with their progress.

New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:

To get real-time updates download our free mobile app for Android or Appledevices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers.

View the Public Cannabis Company Revenue Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than $2.5m per quarter.

Consider subscribing to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013 for more in-depth information and market intelligence about the publicly traded cannabis sector, including insights into Canadian, American, German and Australian opportunities.

Alan & Joel

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

Get Our Sunday Newsletter