The Impact Of Cannabis Direct Listing On May 9

The Impact Of Cannabis Direct Listing On May 9

By Yash

Until some years ago, the sale of cannabis in the country was mostly the domain of small dealers that used to function in fear of the local law enforcement officers. But now times have changed a lot. In the present times, new cultivators, distributors, and retailers of the plant can choose from a varied group of private, venture, and angel investors. The financial markets are also adding these firms to their listings. The usual path of the IPO does not appeal to many of these firms. Many go for a cannabis direct listing for a rapid route to the financial markets and to get the required capital. The previous year also gave us a lot of startup exits in this category. More than twelve firms in this space have already gone public or are planning to do so soon. The segment got another major leg up when Leafly announced its plans to go public. It is an online marketplace and content provider for cannabis. Under the official terms of the deal, the firm will opt for a merger with Merida Merger Corp International.


The latter is a buyer of firms that are focused on this segment. The deal went for an overall value of more than 500 million dollars. This deal is very interesting when looked at from different levels. The chief executive officer of the firm is a lawyer who joined a couple of years ago with the aim to navigate through the complex regulatory guidelines and reinforce the compliance-first culture of the firm. This was outlined in the post-deal presentation to the prospective investors by the firm. The growth potential of such firms has come from the broader legalization of cannabis users around the nation. Users are now searching for dispensaries instead of dealers. So, there is a good chance to transfer user spending from illegal to legal. The overall transfer is a very big market. As per the estimates of the firm, the licensed firms in this space represented a market of nearly 20 billion dollars in the previous years. That is just a part of the overall spending in the cannabis market, which went over 60 billion dollars. The Cannabis direct listing on May 9 of Bright Green Corp is another important step in that direction.


Bright Green Cannabis Direct Listing on May 9


Bright Green Corporation is situated in Fort Lauderdale, Florida. It is a firm that has received approval from the administration in the nation to produce legal cannabis. A few weeks earlier, it filed plans to list its shares directly for public trading on the Nasdaq. The firm has disclosed more than 150 million shares of stock held privately by more than 400 shareholders in February. The shares were valued at nearly five dollars per share in a private sale of shares the month before. This made the present valuation of the firm more than 600 million dollars. This would make it bigger than many cannabis firms in the country that trades on the Canadian Securities Exchange and the over-the-counter market. The firm worked with EF Hutton, a division of Benchmark Investments, to list its shares directly and float a public market price when the share lists itself on the financial markets.


The firm entered into a memorandum of agreement with the Drug Enforcement Administration in the previous year to grow cannabis for federally sanctioned research. The firm is predicted to win the final registration this month. This is hinged upon the completion of construction and an inspection by the administration of the growth facilities of the firm. The firm also said that it has plans to get another Controlled Substances Bulk Manufacturing License from the Drug Enforcement Administration. But there is no absolute guarantee that it will get the administration's final approval. The firm set its roots nearly three years ago when it was incorporated in Delaware. A few weeks later, it gave its assets to purchase more than a hundred acres of land in a couple of parcels and a greenhouse. The next year, it got a chance to purchase more than five hundred acres of land in a nearby location for more than two and a half million dollars.


The facilities present with the firm include a greenhouse to cultivate medicinal plants and herbs that are non-cannabis. The firm has also signed an agreement with Dalsem Complete Greenhouse Projects to complete the same. The firm is in the pre-revenue phase right now. It is led by the chief executive officer Edward A. Robinson. He used to be an executive at BMW Financial Services. There is also the chairman Terry Rafih, the owner and chief executive officer of Rafih Automotive Group. It is one of the biggest auto dealership networks in the nation of Canada.


Bright Green Corporation said in the prospectus, "We will operate legally under all applicable laws and be authorized by the federal government to sell cannabis commercially for research and manufacturing purposes, export cannabis for international cannabis research purposes, and sell cannabis to DEA-registered pharmaceutical companies for the production of medical cannabis products and preparations. We plan to sell cannabis to research institutions pursuant to our conditional approval from the DEA. Sales of THC cannabis products will be made only via bona fide supply agreements from existing DEA registrants and not directly to consumers. Given the competitiveness of the process to obtain a DEA registration to cultivate and process cannabis and the continued federal illegality of cannabis in the U.S., we believe we will be uniquely positioned to capture significant parts of the cannabis research supply market."


Gage Cannabis Has Also Opted for Cannabis Direct Listing in Canada


Another cannabis firm Gage Cannabis Co is going after a direct listing on the securities exchange of Canada. The firm is led by Bruce Linton, an old hand in the cannabis industry. The firm is seeking to take advantage of investors' increasing demand for cannabis producers in the country. This is because the industry is waiting for a verdict on a bill that will permit institutional investments and bring the overall sector on par with the way the tobacco and alcohol industries function. The lawmakers in the country made a statement in the previous week that the state of New York is very close to legalizing the use of recreational cannabis. Right now, the firm focuses on the Michigan market and operates a brand of cookies in the state. The firm was valued at more than 300 million dollars before its latest fundraiser a couple of years ago.


The firm has also asked some investment banks to conduct marketing for investors ahead of the cannabis direct listing. The shares were expected to start trading soon. Linton joined the firm as the executive chairman a couple of years ago. This was a few months after he quit the Canopy Growth corporation's board. This was a firm that he had founded nearly a decade ago. He had taken that firm public the next year and then changed it into one of the top cannabis firms using a number of deals.




One of the biggest factors for cannabis direct listing and the market growth of these firms beyond legalization is the ability of the users to get a product that functions well for them. One of the major hurdles to trying out marijuana is quite complex. There are numerous strains and form factors. These include flowers, concentrates, drinks, and gummies. This can make choosing a product difficult, if not intimidating, for the new users. There are also concerns regarding product safety and social stigma. The culture of wine taught many people the difference between a cheap bottle and fine wine. Similarly, the firms in this space are functioning to bring out the premium user tastes. They are attracting many new users who were not part of the underground purchase of cannabis.