Most of the IPO excitement has been focused on a number of upcoming, multi-billion-dollar tech start-ups such as Lyft , Uber, Pinterest, and more. Those not paying attention to the cannabis sector, however, would miss one important IPO that is also setting an industry first.
Greenlane Holdings Inc plans to go public on the NASDAQ, raising $98 million dollars in its IPO. As a company that doesn’t directly interact with the plant, Greenlane’s listing on the NASDAQ would make it the closest thing to a U.S. cannabis company available on a U.S. exchange.
With cannabis illegal on a federal level, marijuana companies have resorted to listing predominantly on Canadian exchanges as a means of shortcutting regulatory hurdles preventing access to public funds. Companies like Tilray and Aurora are able to list on U.S. exchanges because their recreational weed assets are located in Canada.
Cannabis companies that don’t directly touch the plant, however, are able to skirt past this ruling and list publicly. Based out of Florida, Greenlane sells cannabis vape hardware and other accessories such as pipes and rolling papers across the country. Its most significant business comes from wholesaling various cannabis products such as nicotine vape pens.
While there are a couple of companies that have already listed on U.S. exchanges, these companies aren’t directly operating in the cannabis industry. The two businesses in question are Innovative Industrial Properties Inc , a marijuana real-estate investment trust, and Turning Point Brands Inc , which has mainly focused on tobacco products but has signaled that it’s interested in pursuing cannabis products in Canada.
Greenlane expects to sell around 5.3 million shares according to MarketWatch. At a target share price between $14-16 each, the cannabis company will end up raising just below $100 million and will list under the ticker symbol GNLN on the NASDAQ sometime next week.
In comparison to other large cannabis companies, Greenlane has already revealed its revenue numbers which are comparable to many other giants in the industry. In 2018, sales doubled from $88.3 million last year to 178.9 million, with the vast majority of these revenues coming from the United States. In comparison, Canopy Growth Corp posted fiscal 2018 revenues of around $58.7 million.
One potential hurdle for Greenlane is that, like many other cannabis companies that have posted financial figures recently, its rapid expansion has seen the company operating at a net loss. Greenlane lost $5.9 million in 2018, as opposed to 2017 where the company saw a net income of $2.3 million. Many cannabis companies that have reported losses have seen significant declines in stock prices as investors react negatively to what has been a long-standing lack of profitability for these firms.
Recently, companies like Organigram Holdings (TSXV: OGI) and Aphria Inc have seen their stock prices drop over 10 percent on Monday upon reporting financial results that, while impressive revenue-wise, saw the companies operate at a negative loss.
Whether Greenlane’s IPO will be as successful in comparison to some of the more closely anticipated public offerings is yet to be seen. Either way, the listing of Greenlane on the NASDAQ represents another step forward for the industry as a whole.