The Cannabis IPO market just produced another big winner. If my analysis is correct, the next great opportunity is right around the corner.
Tilray (TLRY) is an early leader in the global cannabis industry with a market cap of $2 billion. Tilray just became the first ever Canadian cannabis company to list shares directly on the US-based NASDAQ.
This groundbreaking IPO attracted a lot of attention from the financial media. Enthusiasm was running high for the Tilray IPO and the results did not disappoint.
Tilray shares jumped 30% in the first day of trading and up more than 62% in the first three days.
As you can see, Tilray has pulled back a bit. It doesn’t matter if you’re a short-term trader or longer-term investor, the Tilray IPO was a great opportunity.
If you nailed the Tilray trade, congratulations.
If you missed out on Tilray, don’t worry you’re about to get a second chance.
I see another cannabis IPO on the horizon that could be another big winner.
- Similar to Tilray, this young cannabis company is an early industry leader.
- The company already operates in 13 US states.
- This newbie secured the backing of powerful political allies.
Acreage Holdings is an early leader in the high-growth US cannabis industry.
Acreage is vertically integrated. That means it operates across the entire supply chain starting with cannabis cultivation all the way down to owning dispensaries on the retail side of the business.
They currently operate in 12 states with an impressive portfolio of cannabis greenhouses and dispensaries in high-growth states such as California, Oregon, and Massachusetts.
Here’s a closer look at some of its greenhouses and dispensaries.
CALIFORNIA – HSRC NORCAL
- Operates license to cultivate cannabis for distribution to dispensaries in the state
- 10,000 sq. ft. production facility
- Cultivation facility distributes to approximately 50 Bay Area dispensaries
ILLINOIS – NATURE’S CARE COMPANY, COMPASS
- Holds one of 22 licenses to cultivate and process cannabis
- Holds four of 53 licenses to dispense cannabis products
- Operates two dispensaries
- 35,000 sq. ft. of operational cultivation space (and an additional 35,000 square feet under construction)
MASSACHUSETTS – PRIME WELLNESS CENTERS
- Holds three licenses
- Has 68,000 sq. ft. of cultivation space available for expansion
- Prepared for the adult-use market in 2018
Acreage has one of the most impressive portfolios of cannabis greenhouses and dispensaries in the entire US cannabis industry. This company looks like a powerhouse.
And now investors will finally get a chance to own shares.
Acreage is set to go public this quarter.
Here are some more details from the press release.
On July 23 Acreage announced it has successfully closed its Series E funding round. The Company secured $119 million of capital. The proceeds raised will be used to prepare the company for its impending public listing.
It is believed that the $119 million raised represents the largest private funding raise in U.S. cannabis history. Acreage currently owns or operates licenses in 13 states and plans to use the monies raised to acquire additional licenses, brands and other properties to increase its reach, breadth of offerings and depth of management team. Acreage intends to list the Company this fall on the Canadian Securities Exchange (the “CSE”).
“We are planning on listing on the CSE for many reasons, including the positive reception that the Canadian institutional investment community has shown to the U.S. cannabis industry and to Acreage in particular. Additionally, the CSE has become the exchange of choice for U.S. companies like ours,” Murphy continued. “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. We expect to see a tremendous response to our offering this fall.”
I think this is setting up to be another very hot IPO because of two key factors.
1- Bigger is Better in the Cannabis Industry
Just like almost every other industry, bigger is better in cannabis. Simple math says that low-cost cannabis producers will benefit from better scales of economy. Acreage is one of the biggest in the US, and I expect its size to be a strong tailwind for sales and profitability.
2- Former Speaker Boehner Provides Major Political Connections
Acreage has hired former Speaker of the House John Boenher to serve on its advisory board. The young cannabis industry is heavily regulated. Companies need to have strong political connections to get the limited number of permits being handed out. Boehner is a huge plus in this capacity.
Risks to Consider:
The US cannabis industry is still battling legal issues that are preventing the industry from achieving its true potential. I still expect Acreage to perform well, but investors need to understand the legal risk and how it can weigh on shares.
The Big Picture:
Acreage is a direct play on the high-growth US cannabis market. It is one of the largest privately-owned cannabis companies in the US, owning an impressive portfolio of cannabis greenhouses and dispensaries in high-growth states. Shares are set to begin trading on the Canadian Stock Exchange this quarter. Stay tuned in for more details.
Editor, Cannabis Stock Trades
About the Author & Cannabis Stock Trades
Michael Vodicka is a Licensed Investment Advisor (Series 65), president and founder of the Vodicka Group Inc., a Registered Investment Advisor (RIA), a globally syndicated financial journalist, and editor of Cannabis Stock Trades. Michael and his wealth management clients have been investing in cannabis stocks since 2013.