This U.S.-based cannabis firm began trading on the Canadian Securities Exchange in November 2018.
Currently, medical marijuana is legal in 31 American states, while nine have also legalized recreational use. This company has cannabis licenses in 13 states, and operates 40 dispensaries across four of the nation’s most populous states. In its efforts to navigate U.S. federal restrictions on cannabis, the company has attracted major business and political figures to its board of directors, including the former Speaker of the House of Representatives and a former prime minister of Canada. Expanded legalization holds significant potential for firms like this, but there’s no guarantee of success.
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ACREAGE HOLDINGS, $22.70 U.S., symbol ACRG.U on the Canadian Securities Exchange (Shares outstanding: 21.4 million; Market cap: $485.8 million; TSI Cannabis Quality Rating (CQR): ; www.acreageholdings.com), is a U.S.-based owner of cannabis licenses and assets in 13 states, including California, Illinois, Florida and New York. It now operates more than 40 dispensaries, both for medical and recreational users, which are legal in those states.
The Canadian Securities Exchange (CSE), formerly the Canadian National Stock Exchange (CNSX), is one of our country’s alternative stock exchanges.
The CSE lets U.S. cannabis companies with U.S. operations list and trade on its exchange. However, the TSX (Canada’s largest stock exchange) doesn’t accept U.S. cannabis firms for trading, because of U.S. federal law against cannabis production and use.
You can trade Canadian Securities Exchange stocks through your broker. You can also get stock quotes at www.thecse.com.
On July 23, 2018, Acreage announced that it had raised $119 million U.S. in funding to prepare for a planned initial public offering (IPO) this fall on the CSE.
The company has used the new cash to buy additional licenses and brands leading up to going public. It already held the exclusive rights to country singer Willie Nelson’s marijuana brand. Cannabis users in the U.S. have long celebrated the musician as an icon of the pot legalization movement.
Acreage began trading on the CSE as a public company on November 15, 2018. Through its IPO, the company raised $314.2 million U.S. by selling 12.5 million shares at $25 U.S. each.
Over the last four years, Acreage has focused on acquiring statewide licenses to sell recreational and medical marijuana. It has also purchased cultivation, processing and dispensing operations.
So far, the company has no financial results available as a public company. However, it reported pro-forma revenue of $27.9 million for all of 2017, with a loss of $48.0 million. For the six months ended June 30, 2018, pro-forma sales were $14.1 million, with a loss of $16.9 million.
In the past year, both John Boehner, the former speaker of the U.S. House of Representatives and Bill Weld, the former governor of Massachusetts, joined what was then the company’s board of advisors to help it deal with regulatory matters.
Both former politicians are now on the newly formed board of directors. They should help Acreage gain greater understanding of current efforts to ease U.S. federal restrictions on cannabis, and how to respond if and when U.S. marijuana policy changes. Boehner, in particular, has encouraged public support for legalizing marijuana to help treat chronic pain and post-traumatic stress disorder (PTSD) in military veterans.
Other Acreage board members now include former Canadian prime minister Brian Mulroney, Douglas Maine, former CFO of IBM, and Bill Van Faasen, chair emeritus of Blue Cross and Blue Shield of Massachusetts.
The November 2018 U.S. Midterm Elections saw the Democrats take control of the U.S. House of Representatives. As well, Michigan voted to legalize recreational use of cannabis, while Utah and Missouri legalized it for medical use. (A recreational measure in North Dakota failed, though medical cannabis remains legal there.)
Those states join 31 others that have already legalized medical use, including the nine states that have also embraced recreational consumption.
The Midterms produced another potential catalyst for marijuana legalization. After the election, U.S. President Donald Trump effectively fired Attorney General Jeff Sessions—a fierce long-time opponent of marijuana legalization.
During his contentious time in office, Sessions rescinded the Obama-era decision to forego enforcement of the federal cannabis ban in states that have legalized marijuana use and have implemented regulations to control it.
Whatever stance Trump’s new attorney general takes, it’s likely that the movement towards legalizing cannabis nationally in the U.S. will continue—driven by public opinion, demand from patients, and the industry’s experts and advocates.
Future expansion of the U.S. market—through individual states or federally—holds significant potential for producers and sellers like Acreage. The prominent members of Acreage’s board of directors give it an above-average chance of building a business, but no guarantee of profit for investors.
Acreage Holdings has a 3-Leaf Cannabis Quality Rating (CQR). The stock is a speculative buy for aggressive investors who want exposure to the marijuana industry.
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