Unwelcome by Wall Street, Another U.S. Cannabis Company Goes North
Acreage Holdings is the latest company poised to pursue an RTO in the Canadian stock market.
Back in April, Acreage Holdings made headlines after announcing that former U.S. House Speaker John Boehner, a long-time opponent of marijuana, had joined its board of directors. Then came William Weld, the former governor of Massachusetts.
Four months later, the cannabis company is again in the spotlight, having completed what is believed to be the largest private capital raise in the cannabis industry to date -- $119 million. Acreage is now poised to pursue an RTO, or reverse takeover, in Canada most likely in September, according to CEO Kevin Murphy.
During an interview with CNBC, Murphy said that Canada is where "we are most welcome today." When I asked him what he meant by that, he explained that as a U.S. operator in the cannabis industry, "we don't have the opportunity to be listed on the Nasdaq or the New York Stock Exchange (due to cannabis’s federal illegality). In turn, we’ve been welcomed by the cannabis community and the banking community in Canada with open arms; we’ve been afforded the opportunity to be on the Canadian exchange, and so that is the path that we've chosen."
Asked about Acreage’s timing, Murphy said it's all about the seasons. "We feel as though September is a much better time in which to go out and roadshow, given we will be through the doldrums of the summer months,” he said.
Murphy said that most of the $119 million raise had been subscribed by non-institutional investors. This raises the question: Who was it that gave the company that much money?
While not getting into specifics, Murphy said, "when we set out to raise capital, we decided to go for the quicker movers -- essentially family offices and high-net-worth individuals. And we raised the money in just 10 weeks."
Murphy said the speed in which he raised capital couldn't have been possible with institutions, which historically take much longer to do due diligence.
“High-net-worth individuals and family offices are much more nimble as it relates to making investments because they don't have to go through a committee, they don't have to get board approval," Murphy said. "They can essentially just make the investment. So, that coupled with the fact that institutions feel more comfortable in more liquid investments where they can buy and sell some participation on a moment's notice, we believe that the institutional market will you know enjoy the opportunity to invest with us when we take this company public.”