Cannabis IPOs have been red hot in 2018.
Tilray (TLRY), one of the largest cannabis companies operating in Canada and the US, is a great example.
This early industry leader began trading on the US-based NASDAQ exchange on July 20 at $24.20. Today shares are up more than 300%, trading above $100.
These kind of huge gains in a short amount of time are unusual.
However – I see another cannabis IPO ready to go off on Thursday that reminds me a lot of Tilray.
Acreage Holdings (ACRG.U) is set to become the largest cannabis IPO in the history of the US cannabis industry.
Shares started trading on the Canadian Securities Exchange.
Estimates are predicting Acreage could be worth around $4 billion after the IPO – potentially making this the largest IPO in the history of the US cannabis industry.
There are two reasons this should be an exciting cannabis IPO.
Acreage Is An Early Industry Leader In The High-Growth US 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 already one of the biggest cannabis companies in the US.
The company has an impressive portfolio of cannabis assets, starting with cultivation all the way down the supply chain to dispensaries.
Acreage currently operates in 12 states, including high-growth states California, Oregon and Massachusetts.
Here’s a closer look at some of its greenhouses and dispensaries.
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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
Moving forward Acreage will continue to expand. After the IPO, Acreage will have hundreds of millions in cash on the balance that it will use to expand current facilities and potentially acquire smaller competitors.
Acreage Has the Best Political Connections in the North American Cannabis Industry
Acreage has the best political connections in the entire US cannabis industry.
In the US, Acreage has hired former Speaker of the House John Boenher to serve on its advisory board.
Boenher was one of the most powerful US politicians and has spent the last 30 years operating deep in US politics.
In Canada, former Prime Minister of Canada Brian Mulroney has been offered a seat on the Board of Directors when the IPO is complete.
Mulroney was Canadian Prime Minister from 1984 to 1993 and was a central figure in the creation and negotiation of NAFTA.
Acreage has also named the former Governor of Massachusetts Bill Weld to its Board of Advisors.
This is a powerful and very well connected political team – and that is a huge competitive advantage for Acreage. It will help the company influence cannabis legislation and secure hard to get operating permits.
The Final Word on the Acreage Cannabis IPO
Acreage is an early industry leader in the high-growth US cannabis industry. It also has the best political connections. I am expecting a lot of interest in Acreage when shares begin trading on the Canadian Securities Exchange on Thursday, 11/15/18.
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