U.S. cannabis firm PharmaCann plans IPO as New York weed legalization lifts demand -sources

Medmen Enterprises

16/08/2021 11:00

By Shariq Khan
    Aug 16 (Reuters) - PharmaCann, one of the 10 original
cannabis licensees in New York, has confidentially filed for an
initial public offering that could value it at well over $1
billion, sources familiar with the matter told Reuters.
    The planned IPO would help PharmaCann raise funds before New
York state begins recreational weed sales, expected sometime
next year. The IPO could take place this fall, one of the
sources said.
    PharmaCann, which operates in five other U.S. states, is
likely to seek to dual-list its shares on the Canadian
Securities Exchange and for over-the-counter trading in the
United States, one of the sources said.
    PharmaCann has tapped Canadian investment bank Canaccord
Genuity  CF.TO  for the offering. Canaccord is expected to be
the lead underwriter, while more banks are likely to be hired,
the sources said. Canaccord did not offer an immediate comment.
    A PharmaCann spokesperson declined to comment.
    Sources declined to be identified as the information is not
public.
    New York in March became the 16th U.S. state to legalize the
sale of recreational marijuana, kickstarting a race from
companies to secure a position in a market expected to be among
the world's biggest.
    Cresco Labs  CL.CD , one of the most valued U.S. weed
producers with a market capitalization of $5.6 billion, took a
10.5% stake in PharmaCann for $110.4 million in June. That deal
valued PharmaCann at $1.1 billion, and the IPO would likely be a
higher valuation, the sources said.
    PharmaCann, which currently operates four medical cannabis
retail stores and a cultivation facility in New York, submitted
paperwork for its IPO to U.S. and Canadian regulators during the
past 30 to 45 days, two of the sources said.
    PharmaCann rival AWH Holdings Inc  AAWH.PK  listed in May,
and the shares have climbed 38% since, giving it a market value
of $1.9 billion  urn:newsml:reuters.com:*:nL4N2MR37Y
    Despite growing state-level legalization of marijuana, it
remains federally illegal and companies like PharmaCann, which
grow or sell the plant, are prohibited from listing on the
Nasdaq and the New York Stock Exchange.
    Some 18 U.S. states have now legalized recreational use of
weed, while 36 allow medical use. U.S. legal cannabis sales
could reach $45 billion in 2025, according to analysts at JMP
Securities.
    PharmaCann has received multiple takeover offers in the last
few months, including from blank-check firms, the sources added.
Despite the confidential filing, PharmaCann could still decide
to scrap the IPO and stay private or take a different route to
go public, the sources said.
    PharmaCann had agreed to be taken over by New York rival
MedMen Enterprises Inc  MMEN.CD  in 2018 for around $700
million, but that deal fell apart the following year.

 (Reporting by Shariq Khan in Bengaluru
Editing by Denny Thomas and Jonathan Oatis)
 ((Shariq.Khan@thomsonreuters.com; Within U.S.+1 646 223 8780,
outside U.S. +91 80 6182 2681; Twitter: @shariqrtrs;))