Last year has been an interesting year for cannabis companies overall. The first half of 2018 saw marijuana companies share prices surge dramatically, before tumbling and losing much of their gains over the last quarter. Despite this, most companies finished the year with some profits in comparison to where they started last January, with Tilray (NASDAQ: TLRY) and Cronos Group (TSE: CRON) being the largest winners so far.
While the hype behind cannabis companies might have died down a bit, many companies have been strengthening their fundamental position through mergers and acquisitions or opening new facilities and dispensaries. While the stock markets might fluctuate, the reality is that many companies are cementing their place as industry leaders in the years to come.
At the same time, 2019 seems to be a particularly promising year for numerous reasons. For one, the U.S. appears to be moving quickly towards a more pro-cannabis agenda, with politicians on both sides of the isle sponsoring pro-cannabis legislation of some sort. In many ways, cannabis legalization could be one of the only things both parties can agree on going forward.
Keeping that in mind, it’s not surprising that we could see a surge of marijuana IPO’s in the coming year, especially in the United States. Here are a few of the most notable companies to look out for over the next 12 months.
Verna Holdings is a Chicago-based firm spread out over six different states and is one of the only 18 companies to receive a license to grow cannabis in Illinois. Last October, the company received an $88 million investment from another Canadian company, Scythian Biosciences Corp, alongside an additional $32 million in extra funding. Although the company 5-year-old company has declined to provide revenue figures, Verano did state that its revenue rose by 157 percent between 2016 and 2017.
“We are planning to go public in the first quarter of 2019 on the CSE, since it is a better way for us to grow strategically,” said CEO and co-founder George Archos, confirming that an IPO for Verano is on the horizon.
However, one possible hiccup for Verano going forward comes from the recent controversy surrounding Aphria Inc (NYSE: APHA)(CSE: APHA). Scythian Biosciences was one of the company’s targeted secondarily in a report from short-sellers, and the surrounding drama could be enough to tarnish Verano’s reputation by extension, having receiving significant funding from them in the past. Regardless, the fundamentals behind the firm are strong enough in and of themselves to warrant sufficient investor curiosity when they do go public.
Cannalife Capital Corp has already made announcements that it’s planning to go public in 2019, so this inclusion is not going to be a surprise to most investors out there. The Vancouver-based company has been operating by acquiring leading cannabis brands across North America, while also promising future investors access to high-growth marijuana investment opportunities.
According to their website, Cannalife plans to raise over $100 million over the next two years to invest a number of their most promising brand acquisitions. The primary key behind their strategy is that, unlike Canada, the United States market is fragmented on a state-by-state basis and lacks the established, national presence major Canadian cannabis firms possess.
CannaLife executives have confirmed that they will undergo another round of private fundraising before going public, so the company will likely see an IPO during the latter half of 2019.
While there are hundreds of Californian cannabis business’s operating in the state, none are allowed to list on large American exchanges since marijuana still remains illegal on a federal level. However, while producers and cultivators will have to abide by these regulations, companies that provide ancillary services and don’t actually touch the plant itself might have more luck in breaking through onto a major exchange.
California-based KushCo Holdings Inc is one of the largest marketing and packaging solution providers to the cannabis industry. With revenues of $52.1 million in 2018 – a 281% increase from last years $18.8 million – the company has a sufficiently strong market presence to make it attractive to potential investors. Although the company did report full-year losses of $10.2 million last year, it was confirmed by CEO Nick Kovacevich that KushCo purposefully went in the red to grow its top line before it returns to profitable operations in 2020.
KushCo executives also said that they are planning to list on the NASDAQ or NYSE sometime in the first few months of 2019, and many expect the company to be a safer option for cannabis investors rather than putting their money into specific retailers and cultivators that are competing amongst eachother.
Pharmacielo is an interesting firm to look out for in 2019. Although based in Canada, the company owns a license to grow and process cannabis in Columbia and is the only fully licensed producer of medical marijuana oil products. Pharmacielo also owns 15 million square feet of combined cultivation facilities and owns Columbia’s only patient and e-clinic service with over 80,000 patients currently registered.
To many people’s surprise, Colombia is a market with strong potential and happens to be a prime geography for cannabis growth. However, the recent Aphria accusations regarding their Latin American and Caribbean acquisitions might end up making investors more reserved about investing in a company that operates predominantly in South America. Only time will tell whether this will play a role in Pharmacielo’s future IPO.
Founded back in 2011 in Santa Barbara, California, Raw Garden is another notable cannabis firm that’s planning to go public in the coming months. As a leading concentrate-producer in the state, it’s been revealed that Raw Garden recently underwent a private placement and plans to go public sometime during 2019. In 2018, the company reported $13 million in revenue and estimates that figure could go as high as $72 million in 2019.
Cannabis oil remains one of the fastest-growing markets within the industry, with some analysts expecting it to grow to as much as $22 billion by 2022. This, coupled with recently relaxed hemp regulations in the United States, means that Raw Garden is well poised to meet its ambitious revenue expectations going forward.
Some analysts have felt that the marijuana IPO craze has faded, especially in Canada where multiple established firms are consolidating their presence in the market already. When coupled with bearish market sentiments over the past few months as firms struggle to face chronic supply shortages across the provinces, many investors worry that maybe these new firms won’t be able to live up to their promises – a sentiment that could hamper future IPO’s.
However, there are still many fantastic companies itching to make themselves public to investors, and opportunities still remain plenty to invest on the ground floor of these firms.