Without financials, Acreage Holdings places star power behind cannabis’ next IPO
By Jacqueline Havelka
Sep 02, 2018
Despite having nothing set in stone regarding a fixed date, investors expect marijuana firm Acreage Holdings to own one of the more significant IPOs of the year in an industry that has one nearly every other week. Without any financial statements, however, which won’t come until the company files, potential shareholders are betting big on Acreage’s brand power.
Acreage Holdings stole headlines in April when they named former Massachusetts governor William Weld and former House Speaker John Boehner to the board. And if that’s not enough, the company, which deals in cannabis cultivation, processing, and dispensaries in 15 states the exclusive right to use the Willie Nelson name and likeness with respect to cannabis products. Marijuana stockholders expectations are riding high on this IPO.
The company plans to use the IPO proceeds to expand their operations nationwide. Founder and CEO Kevin Murphy began those operations in 2012, quietly acquiring cultivation and dispensing licenses in Maine and then expanding those acquisitions to other states.
According to a statement released in August, Acreage Holdings raised nearly $120 million ahead of the IPO in what the company called the largest private round in US cannabis history. The capital raised is earmarked for the acquisition of land, properties, brands, and licenses. Concurrent with the capital raise, Acreage Holdings completed the roll-up of several strategic control positions in several states with either medical or recreational cannabis laws.
“The response we received from our investor partners was profoundly encouraging. The combination of monies raised and the roll-up cements Acreage as one of the best-capitalized companies in the industry with a footprint that is second to none,” Kevin Murphy, founder, and CEO of Acreage Holdings said in a statement. “This gives us an exceptionally strong investment proposition to bring into the public markets in our upcoming listing.”
Another cannabis company goes public in Canada
Acreage plans to list on the Canadian Securities Exchange, which is home to roughly 70 marijuana stocks, many of which went public via reverse takeover or another type of merger.
Murphy gave several reasons why Acreage is planning to list on the exchange, though like most other US cannabis companies before them, Acreage most likely is using positive cash flow to strike it rich quickly in an up-and-coming industry.
“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 noted in a statement. “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.”
In fact, access to capital markets has resulted in a tremendous amount of companies going public over the last six months. As Sproutly CEO Keith Dolo told PotNetwork recently when discussing his own company’s similar move, investor demand is strong in the cannabis industry at this moment in time, and capital is flowing.
“Accessing the capital markets and the money that’s existed within it, that’s just been a major driving force for pretty much why everybody, I would say at this point, or the majority of companies have looked towards going public,” Dolo told PotNetwork in a recent interview. “If it weren’t for that, the majority, I would believe, would just stay private at this point.”
Riding high on name recognition
The company also has many cultivation pioneers in its ranks. In August Acreage Holdings named Robert Daino as the new Chief Operating Officer at the company’s New York City headquarters. Daino led organizations of all shapes and sizes and was most recently CEO of Terradiol, a biopharmaceutical company that produces, manufactures and distributes medical cannabis products.
“As Acreage’s operations continue to grow in size and complexity across our various grow, processing, and retail business units, we will rely on Bob’s vast professional experience to ensure that we have the proper operational controls, administrative and reporting procedures, and management team in place to ensure financial strength and operational efficiency,” said Murphy in a statement. “Bob will play a critical role guiding Acreage towards becoming the world’s leading cannabis company and bringing safe, affordable cannabis to everyone who needs it.”
Big names like Boehner and Weld have helped the company forge partnerships with regulators, physicians, and medical researchers. Many investors see the company as well poised, particularly to build strong relationships with legislators as regulations evolve in the cannabis industry.
Weld is a very active board member. He just announced that he would be a keynote speaker at the upcoming October Second Annual Cannabis World Congress & Business Exposition in Boston, Massachusetts. Weld was elected and re-elected governor of the state in 1990 and 1994, respectively.
Weld’s keynote address will outline why cannabis should be rescheduled from a Schedule I drug on the Drug Enforcement Agency’s (DEA) list. “The effect of marijuana being a Schedule Class 1 narcotic in Washington is a seriously flawed idea,” Weld has stated. “Descheduling is the most constructive step that could be taken.” Weld will outline why rescheduling will lead to much-needed research on medical cannabis.
*An earlier version of this article incorrectly stated that Acreage Holdings holds exclusive rights to Willie Nelson’s marijuana brand.