[Editor’s Note: Download a comprehensive report on taking a company public, by either an IPO or RTO, in Canada. This is a ‘how-to’ guide for larger companies.]
In the absence of sensible federal cannabis reform, a growing number of US-based companies are looking to do business in Canada, where adult-use cannabis is fully legal. Aside from the simple issue of legality, cannabis companies operating in Canada are also able to list themselves on publicly traded stock-exchanges, such as the Canadian Securities Exchange (CSE), whereas most US-based companies cannot.
For those cannabis companies hoping to do business north of the border, the question becomes: how does one take their company public in Canada and when is the right time to do it? A new report released by MGO-ELLO Alliance attempts to answer this question.
MGO-ELLO Alliance is a professional collaboration between MGO LLP, a company dedicated to CPA and financial advisory services, and ELLO LLC, which focuses on cannabis financial services. MGO-ELLO Alliance aims to help shepherd emerging companies through the increasingly complex cannabis industry.
“As the cannabis industry continues to experience massive growth, inevitable financial and operational challenges will develop and the MGO-ELLO alliance is uniquely positioned to provide the highest quality consulting and professional services needed,” said ELLO CEO, Evan Eneman, in a statement announcing the partnership.
In the report, MGO-ELLO Alliance weighs the pros and cons of going public. For example, one of the advantages of going public is that it is easier to raise capital and attract top talent. The tradeoff, however, is that publicly traded companies, especially those in the cannabis space, are under increased scrutiny and are subject to strict regulatory oversight.
The report also covers the differences between going public through an initial public offering (IPO) and a reverse takeover (RTO). Generally seen as the traditional way of going public, IPOs involve filing a preliminary prospectus form with securities regulators and allow companies to raise as much money as possible.
RTOs, which is where a company goes public by buying a publicly traded company, represents a growing trend among cannabis companies in the United States. The reason why is that RTOs are quicker, cheaper, and subject to less oversight than traditional IPOs. The tradeoff, however, is that the purchasing company will have to issue a percentage of its shares to legacy shareholders of the purchased company. There also may be hidden liabilities that the purchasing company may have to deal with.
For US-based companies hoping to do business in Canada, the MGO-ELLO Alliance report provides a detailed walkthrough of how to go public through both an IPO and RTO, as well what the regulatory expectations are for publicly traded companies.
To view the full report, click the following link or visit the report section on Green Market Report.
Original Post: Green Market Report: New Report Provides Detailed Walkthrough on How to Go Public in Canada
Ed. Note: Big tobacco just spent big to enter the cannabis business. This certainly marks the era of marijuana going mainstream. We really do hope that the small, sustainable growers and craft businesses keep the lion’s share of the market. Ultimately, it’s up to us consumers.
Today, Cronos Group Inc. (NASDAQ: CRON) announced that it had received a CAD $2.4 billion investment from Altria Group Inc. (NYSE: MO), the owner of Marlboro cigarette marker Phillip Morris USA.
The investment comes a little more than a year after Corona beer distributor Constellation Brands announced that it would invest billions of dollars in Canopy Growth Corporation (NYSE: CGC). For some, the investments from both Constellation and Altria represent the maturation of the cannabis industry and a sign that cannabis has truly gone mainstream.
For others, however, the investments mark the beginning of the end for the independent cannabis industry as Big Tobacco and Alcohol, which have fought against cannabis legalization for decades, start to take over the market.
The private placement investment will give Altria a 45% stake in Cronos Group. Altria will receive 146.2 million Shares of Cronos at closing at a price of CAD $16.25 per Share, representing a 41.5% premium to the 10-day VWAP of the Shares on the TSX on November 30, 2018. In addition, Altria will receive purchase share warrants, valued at CAD $1.4 billion, which if exercised would give the company an additional 10% in Cronos.
“Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting new growth opportunity for Altria,” said Howard Willard, Chairman and CEO of Altria. “We believe that Cronos Group’s excellent management team has built capabilities necessary to compete globally, and we look forward to helping Cronos Group realize its significant growth potential.”
Under the agreement, Altria will have the right to name four directors to Cronos Group’s board of directors, which includes one independent director, and the board will be expanded from five directors to seven. Altria will make Cronos its exclusive partner for all world-wide cannabis-related investments, with some limited exceptions.
News of the deal has caused to Cronos’ stock price to jump by nearly 25% in pre-market trading. Altria’s stock price rose by nearly 2% in pre-market trading. As of publication, Cronos is trading at or around USD $13.00 per share, and Altria is trading at or around USD $55.43.
Pending regulatory approval, the deal is expected to close within the first half of 2019. Earlier this morning, Cronos held a conference call discussing today’s announcement, and a recording of the call has been made available at https://thecronosgroup.com/investor-relations.
The post Big Tobacco Spends C$2.4 Billion To Invest In Cannabis appeared first on Green Market Report.
Original Post: Green Market Report: Big Tobacco Spends C$2.4 Billion To Invest In Cannabis
Leafwire, a Denver-based cannabis technology platform, announced today the beta launch of its online marketplace. The goal of its marketplace will be to connect investors and entrepreneurs in the cannabis space and to help enable a better exchange of information and opportunities within the industry.
Although cannabis business owners secured more than $1.5 billion last year in investment, many in the industry still have difficulty to find the right investment partners; which is only worsened by the disconnect between state and federal cannabis laws.
“Legalization of cannabis opens up a huge opportunity, not only for cultivators and distributors but for the ancillary market that supports those companies,” said Leafwire CEO Peter Vogel. “Yet the investment community has been slower to support this industry than other emerging markets because of the lingering Federal regulations and existing stigma. That said, I have spoken to 100’s of investors who are looking for the right opportunities to explore in this market. Leafwire will help to connect those investors with the prospect that best meets their needs.”
The platform’s first offering will allow entrepreneurs to find investors that are interested in investing in the cannabis industry and vice versa. Both investors and entrepreneurs will be able to create profiles that detail their investment preferences, experience, and current needs.
Entrepreneurs will be able to search for investors based on several filters; including the stage of investment, location, and preferred type of cannabis business. Likewise, investors will be able to search for cannabis businesses based on their size and fundraising stage, company location, and company type.
Company profiles will also allow entrepreneurs to list their company’s products and services, making it easier for investors to find the right partner.
In addition to connecting entrepreneurs and investors, Leafwire will also act as a hub for cannabis news, regulations, allow private messaging, and provide updates from members of the individual’s user network.
To celebrate its beta launch, Leafwire will hold an inaugural Pitch-a-Thon on July 19, 2018, in Denver, Colorado. The contest will include pitches from six up and coming cannabis companies seeking funding and will feature a cash prize for the winner. Judges for the event will consist of senior executives from Kush Bottles, Phyto Partners, New Frontier Data, Wana Brands, and Denver Relief. The company also plans on holding additional pitch events later this year in Miami and Southern California.
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Original Post: Green Market Report: Leafwire Announces Beta Launch of Its Online Marketplace
The prospect of legalized cannabis in North America just got a little bit brighter. On June 7, 2018, the Senate voted to approve Bill C-45, a measure legalizing recreational cannabis in Canada. The measure will now go to the House of Commons for a final vote.
If approved, the potential financial effect could be tremendous. A recent report released by Stifel Financial estimated “a total medical market opportunity of $1.3 billion CAD and a recreational opportunity of $8 billion CAD (retail sales).” Additionally, the report found that the wholesale market opportunity for licensed producers could reach as high as $5 billion CAD.
With the majority of the House controlled by Prime Minister Justin Trudeau’s Liberal Party, which successfully campaigned on cannabis legalization in 2015, the odds of Bill C-45 passing are quite high. However several amendments to the measure made by the Senate, such as allowing provinces to ban personal cultivation, could slow down the legislative process.
Speaking with The Toronto Star, Health Minister Ginette Petitpas Taylor said that once passed, it would take upwards of two to three months to implement the new law.
In the United States, President Donald Trump stated that he would most likely support a bipartisan bill, introduced by Massachusetts Sen. Elizabeth Warren and Colorado Sen. Cory Gardner, that would essentially end the federal war on cannabis.
“I support Sen. Gardner. I know exactly what he’s doing; we’re looking at it. But I probably will end up supporting that, yes,” Trump told reporters, as quoted by NPR.
Under the proposed legislation, the Controlled Substances Act would be amended to allow states to write their own cannabis laws without fear of federal interference. The apparent support offered by President Trump breaks with the position of his Attorney General, Jeff Session, who has been an ardent opponent of legalized cannabis and most recently rescinded the long-standing Cole Memo; which was put in place by then-President Barack Obama.
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Original Post: Green Market Report: North America Inches Closer to Cannabis Legalization