U.S. marijuana producer MedMen began trading in Canada on Tuesday, adding to Canada’s growing list of marijuana stocks and making it the latest cannabis company in either nation to tap its neighbor for more investments.
The listing, on the Canadian Securities Exchange, follows Canadian marijuana stock Canopy Growth Corp.’s (CGC) debut on the New York Stock Exchange last week. Cronos Group (CRON), another Canadian marijuana producer, became the first pure-play marijuana stock to list on the Nasdaq in February.
As marijuana legalization spreads across North America and more companies find paths toward cash in Canada and the U.S., investors have grown more comfortable opening up their checkbooks for the industry. Corona parent Constellation Brands (STZ) took a stake in Canopy last year. Other big beer, wine and liquor companies are also weighing what the marijuana industry’s growth means to them. “We are marching steadily toward a future where buying and using cannabis products will be just as normal as buying wine or beer,” Andrew Modlin, MedMen co-founder, said in a statement on Tuesday. Listing on the Canadian Securities Exchange, the company said, “gives American cannabis companies broader exposure to a global investor audience.”
MedMen began trading under the ticker MMEN. The company went public via a reverse takeover deal with Ladera Ventures.
In a reverse takeover deal, or RTO, a private company takes control of a public one. Such deals have become the preferred way to go public for marijuana companies. The shell companies used in those deals have become popular enough with cannabis and blockchain companies for some to worry about a shortage.
Cassels Brock, a law firm that served as counsel to MedMen for the listing, said in a recent report that due to “the large number cannabis and blockchain companies choosing to go public by way of RTO, the demand for these public shell companies has skyrocketed.”
MedMen has more than 800 employees and 18 licensed marijuana facilities in California, Nevada and New York. In connection with the reverse takeover deal, the company raised roughly $110 million through a private placement. That latest fundraising boost gives the company an implied enterprise valuation of $1.65 billion, it said. Still while Canadian pot companies can list on U.S. markets, U.S. marijuana companies cannot list on the Nasdaq or the New York Stock Exchange. Even as Canada prepares to legalize recreational usage, the U.S. federal government still outlaws cannabis. New, big legal U.S. markets, like California, have stumbled out of the gate.
Scotts Miracle-Gro (SMG) CEO Jim Hagedorn this month said California’s approach to legalization “overly complex.” The slower-than-expected progress hurt sales of Scotts’ hydroponics business during the last quarter. Hagedorn called on Congress pass legislation that allowed more “states’ rights” over marijuana.
Canopy Growth was up 5.2% in the stock market today. Cronos Group edged down 0.3%, below its 50-day line. Constellation Brands rose 1.2%. Scotts Miracle-Gro was essentially flat.