When it comes to newly listed companies in the cannabis sector, 2020 has been a very quiet year, but a small American company wants to make some noise.
According to a report by BNN Bloomberg, Chicago-based Verano Holdings plans to go public before the end of the year with a valuation in the vicinity of US $ 3 billion.
The multi-state cannabis grower is aiming to rekindle investor interest in the marijuana sector, after a steady cooling off period that began in 2019.
The road that Verano Holdings takes to get there is not without a few twists, however.
According to the Bloomberg report, Verano will offer up to $ 75 million in stock through a reverse acquisition, or RTO, of Majesta Minerals, a Calgary-based company listed on the Canadian Securities Exchange. If the RTO passes, Verano will be listed on the CSE.
Under the terms of the deal, Majesta would value Verano at $ 2.88 billion.
Once the deal is closed, Verano would be the third largest cannabis company in the US by sales and fifth largest by valuation, on the heels of competitors Curaleaf Holdings (OTC :), (CSE 🙂 and Cresco Labs ( OTC :), (CSE :).
Verano operates in 14 states, has 46 outlets and eight manufacturing locations. Last year, it had US $ 121 million in revenues and US $ 42 million in adjusted EBITDA, earnings before interest, depreciation and amortization. According to Bloomberg, referring to an investor presentation, the company estimates that it will end 2020 with approximately $ 380 million in revenue and $ 160 million in adjusted EBITDA.
In November, Verano announced the acquisition of Alternative Medical Enterprises, a cannabis company operating in Florida and Arizona.
If Verano successfully achieves its IPO, the move could mark an important point in the wider cannabis industry landscape: the beginning of renewed interest in the US marijuana markets.
Not only is the US continuing the path to federal legalization with the election season in which six states endorse the move to legalize cannabis, but US-based operators with one or more states continue to build on profitable results.
On the other hand, Canadian companies, which gained all the attention in the post-legalization period in Canada, continue to struggle to achieve profitable earnings results and make headlines as they write on assets and products.
Pot Now Accounts for $ 14.6 Billion in Canadian GDP
While Canadian publicly traded cannabis companies continue to struggle, the news isn't all bad.
Earlier this month, the latest report outlined how cannabis is now contributing approximately C $ 14.6 ($ 11.43) billion to the Canadian economy in September, according to the latest statistics from Statistics Canada. That's a significant increase from the previous estimate of C $ 8 ($ 6.26) billion.
StatsCan also said Canadian household spending on cannabis in the third quarter of 2020 was pegged at C $ 8.49 (US $ 6.64) billion, up from C $ 6.76 (US $ 5. 22) billion in the same period in 2019.
