Cronos Group Inc (CRON)

[JohnCM]

Cronos-backed cannabis firm PharmaCann said to plan joint U.S./Canadian IPO at $1.1B+ value

Aug. 16, 2021
By: Jerry Kronenberg, SA News Editor

Cronos-backed cannabis firm PharmaCann has reportedly confidentially filed for dual U.S. and Canadian IPOs expected to value the company at more than $1.1B.

Reuters quoted unnamed sources Monday as saying that the legal-weed company has filed to list on the Canadian Securities Exchange and U.S. OTC market.

The move comes some two months after cannabis giant Cronos Group (NASDAQ:CRON) agreed to pay $110.4M for a 10.4% stake in PharmaCann, as well as to work jointly with the company.

PharmaCann currently operates the Verilife chain for cannabis dispensaries in six U.S. states, and also grows pot at sites in four states.

Reuters quoted sources as saying that an initial public offering could come this fall to raise money ahead of New York State’s plan to allow legal recreational-weed sales next year. PharmaCann already operates four medical-marijuana dispensaries in the Empire State, positioning it well for coming legal recreational sales.

Sources told Reuters that PharmaCann had a $1.1B valuation when Cronos made its investment, and that an IPO would likely bring an even higher value for the firm.

However, the news agency said PharmaCann declined to comment on any possible IPO plans. Sources also told Reuters that the company had received “multiple” takeover offers in recent months – including proposed deals with special purpose acquisition companies (“SPACs”) – and could go public that way or simply stay private.

PharmaCann previously reached an agreement in 2018 to merge with MedMen (OTCQB:MMNFF) at a reported $700M valuation, but the two sides later decided to nix that plan.

As for Cronos, Seeking Alpha contributor Vince Martin recently authored a bullish thesis for the stock, arguing that CRON “has taken a ‘slow and steady wins the race’ approach to cannabis, with an obvious eye on a fully legalized American market.”