Tilray IPO Blazed a Trail Few Other Cannabis Companies Will Follow

Article by Andrew Willis, Globe and Mail

STREETWISE Tilray IPO blazed a trail few other cannabis companies will follow ANDREW WILLIS

Tilray Inc. chief executive Brendan Kennedy is a seriously smart guy. We’re talking Yale University MBA and the good sense to start investing in marijuana producers seven years ago, when legalized cannabis was something that only seemed possible after an evening in the basement with a bong.
Mr. Kennedy just made serious money taking his company public on a U.S. stock exchange. Tilray sports a US$6-billion market capitalization, and a stock price that is up more than three-fold since making its debut on NASDAQ in July. As one of the first cannabis companies to go public on the easily accessed NASDAQ exchange, Tilray has won a dedicated following among U.S. retail investors.
You would think Tilray’s success would make the company something of a trailblazer, with rival CEOs at privately owned cannabis businesses scrambling to emulate Mr. Kennedy’s approach by filing for an IPO on a U.S. exchange. Canopy Growth Corp., the largest Canadian cannabis producer by market cap, has seen a similar upswing in U.S. investor interest since listing on the New York Stock Exchange in May.
Yet few of Mr. Kennedy’s peers plan to follow the path that Tilray so successfully forged, according to lawyers and bankers focused on the sector. They predict the dozens of cannabis companies lined up to stage initial public offerings will head to Canadian markets. The bulk of the action will continue to be on the Canadian Securities Exchange (CSE), which set records for financing activity over the first half of the year by hosting 25 marijuana-related IPOs that raised a total of $1-billion.
The logic behind choosing to go public on the CSE rather than the NASDAQ speaks volumes about CEO sentiment on cannabis markets. The decision is driven almost entirely by timing. No one knows how long the cannabis boom will last, and the sector has shown considerable volatility. It’s far easier and quicker to go public in Canada, so that’s where companies are choosing to list. And recreational marijuana will be legal in Canada in October.

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