Getting in before the IPO is something usually held exclusively for insiders, brokers and accredited investors. Investing before the company goes public gives you a head start and makes it more difficult to take a loss as your entry point will be lower than the IPO price. Not all cannabis IPO’s have shot out of the gate, I’m sure everyone remembers Australis.
However, most have done well on opening day with continued success as the general public is constantly anticipating the next big thing, it’s human nature. One of our most read pieces of all time was a simple breakdown of the Canopy Rivers (RIV) IPO last year.
All three of our picks have something in common, they are US based. The United States has much more future profit potential and many of the MSO’s are still undervalued. A lot of money is being poured into the hemp sector down there as the US legalized hemp in December of last year, opening the door for more cautious investors who were afraid of investing in something illegal. With more than 10x the population and a stronger consumer culture, the US is a very attractive country for cannabis investments.
Here are our top 3 cannabis IPO’s to watch for:
We don’t know much about this company yet, other than Trent Kitsch and his HIKU/DOJA team are running the deal. For those who don’t know, Kitsch merged his company DOJA with Tokyo Smoke last year to create HIKU. HIKU was bought by Canopy for roughly $600 million. Before that, Trent sold his underwear company SAXX for a few million as well.
We spoke to Trent last year regarding building lifestyle brands in the cannabis space:
Trent’s track record on not only creating brands, but cannabis brands is impressive. Branding will be a big part of Stately’s venture as they will be actively searching for US partners to create the next big, sexy lifestyle brand south of the border.
While nearly every cannabis company went the medical and science route, calling their company meda-canna-leaf-releaf-blah-blah, Kitsch decided to create a lifestyle brand which suited the Pacific North West perfectly. Unfortunately for Canopy, the Canadian government has really ruined a lot of the magnificent branding that was behind DOJA with their insanely strict packaging restrictions. What was once a potential product to be showed off on a mantle now looks like radioactive waste from Chernobyl.
The US doesn’t have these packaging restrictions, so, Trent will be Trent and will probably create something millions will be lining up to buy.
The IPO date is still unclear, the company raised money at $0.20 recently in its first private placement, which is now closed. We will update readers if there are any further rounds.
The guys who brought you such names as Organigram, TGOD and PLUS Products are now working on a new deal called Hempfusion. Hempfusion currently sells products across the US in the multitude of states.
We have been critical of TGOD in the past for a lack of speed in building their greenhouses, getting into fights with the City Of Hamilton and raising insane amounts of cash before any meaningful revenue was going out. Say what you will about TGOD, they are marketing geniuses and know how to raise capital. TGOD also got around 4,000 non-accredited retail investors before the IPO, greatly de-risking the stock.
The IPO date for Hempfusion is unclear, but estimates have been anywhere from 12-24 months at this point.
The difference is, Hemptown has similar revenues to that of companies like Cronos (CRON) who are trading at over a $1 billion evaluation. Hemptown is making CBD products, but are also cornering the market on CBG, they went in big on buying seeds and bought 40% of the country’s supply. CBG is the predecessor to CBD & THC, making it an extremely valuable cannabinoid with much higher margins than CBD.
Hemptown grows its crop in the infamous Emerald Triangle in Oregon, a region infamous for cannabis production. The company will also have sizeable farms in California, Colorado and Kentucky.
Hemptown is looking to become one of the largest scale cannabis producers in the entire country, and are open to being acquisition targets to big companies like Red Bull & Coca Cola. The company has raised $23 million so far, and is currently working on raising another $15 million.
The best thing about this company right now is, non-accredited retail investors are allowed to invest for a short period of time in mid-July 2019before the current financing closes.
The IPO date is for October/November of this year.