I had the privilege of moderating a panel on publicly-traded cannabis stocks at the recent New West Summit in San Francisco. The goal of the discussion was to help the audience gain insight into the challenges cannabis companies that want to trade publicly face and to learn about some of the best practices of leading publicly-traded cannabis companies.
Each of the panelists brought a unique perspective. Derek Peterson, CEO of Terra Tech (OTC: TRTC), which has a cultivation and dispensary presence in both California and Nevada (under the Blum and IVXX brands) and also operates a produce business in New Jersey (Edible Garden), took his company public in 2012 through reverse-merger. Nick Kovacevich, the CEO of Kush Bottles (OTC: KSHB), formed his packaging company, which operates in Colorado, California and the Pacific Northwest, in 2010 but went public in 2016 through a different process, the Form 10. Both of these companies are generating substantial revenue. Leslie Bocskor, who runs Electrum Partners, has brought his capital markets background to the cannabis industry for the benefit of both public and private companies for the past four years. He currently serves on the Board of Directors of publicly-traded GrowBlox Sciences (OTC: GBLX) and has counseled many publicly-traded companies.
The panelists shared their views on the reasons to go public, which include better access to capital and currency to do acquisitions, the pros and cons of the various ways of going public (the traditional IPO is not an option for these companies, which trade “over the counter”), different ways to raise capital as a publicly-traded company and how federal illegality impacts cannabis businesses. Interestingly, neither TRTC or KSHB expect to uplist to a higher exchange in the near future despite having achieved many of the objective criteria, with both companies taking steps to prepare themselves internally for the higher reporting requirements but believing that the exchanges, like NASDAQ, aren’t ready yet.
For now, both companies believe that the challenges they face are actually barriers to entry for potential competitors, and they seek to continue their rapid growth while larger companies stay clear due to federal illegality and stigma issues. Bocskor believes that the access to capital for publicly-traded cannabis companies will improve significantly after the November elections. Despite going head-to-head with Richard Branson’s keynote address, this panel drew a large crowd.