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PharmaCann, a major vertically integrated cannabis company in New York, intends to raise funds through an initial public offering (IPO).
According to inside sources, the company could see its valuation rise over $1 billion through its IPO filed in confidentiality. PharmaCann’s IPO offering could take place this fall, as the cannabis licensee seeks to raise funds ahead of the legalization of recreational weed sales in New York, sometime in 2022. Founded in 2013, the company is one of the 10 original cannabis licensees in New York, and also operates in five other US states. PharmaCann is present in Illinois, Ohio, Maryland, Pennsylvania, and Massachusetts.
According to sources, PharmaCann may opt for a dual listing of its shares. Potential investors will be able to buy the company’s shares on the Canadian Securities Exchange, and through over-the-counter trading in the United States. In the past 30 to 45 days, PharmaCann submitted paperwork for its IPO to US and Canadian regulators. For its Canadian listing, PharmaCann is partnering with Canadian investment bank Canaccord Genuity (TSX: CF). Although the cannabis company may enlist the services of other banks, Canaccord Genuity will feature as the major underwriter for PharmaCann’s shares. Due to the current confidentiality status of the deal, neither PharmaCann nor Canaccord has released public statements as of press time.
So far, 18 US states now legalize the recreational use of marijuana, and 36 permit it for medical purposes. According to analysts at JMP Securities, US legal cannabis sales could jump to $45 billion in 2025.
Proposed PharmaCann IPO – Major Move by US Marijuana Market Player
The legalization of recreational weed sales is fast spreading across several states in the United States of America. In March, New York became the 16th US state to permit the sale of the soft drug for recreational purposes. Soon after this move, several companies jockeyed to secure favorable footing in a market many anticipate to become one of the biggest in the world.
For example, Cresco Labs acquired a 10.5% stake in PharmaCann for $110.4 million in June. Cresco Labs is a publicly traded company and one of the most valued weed producers in the US, with a market capitalization of $5.6 billion. The Chicago-based company’s buy-in into PharmaCann now values the latter at $1.1 billion. It should be noted that this is a figure the anticipated valuation from the latest IPO is expected to surpass. Other companies that rival PharmaCann for market share are also getting involved in the action. In May, AWH Holdings Inc (CNSX: AAWH.USD) was listed and has seen its shares rise 38% to give the company a market valuation of $1.9 billion.
Despite notable examples of such listings by marijuana-producing companies amid increasing state legalizations, it is still a federal offense to sell the product. This is the reason PharmaCann and related companies can not list on the Nasdaq or the New York Stock Exchange.
In the last few months, PharmaCann received multiple takeover offers. However, despite its recent IPO filing, the company could choose to forgo and remain privately held. It could also choose to explore other avenues through which it can go public. It is worth mentioning that MedMen Enterprises Inc (CNSX: MMEN) struck a deal to buy PharmaCann for $700 million in 2019. However, the deal fell through in 2019.