Cannabis cultivator paves the way for marijuana companies on the NASDAQ exchange

07.19.18

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Tilray, Inc. officially launched its initial public offering on Thursday, becoming the first U.S. cannabis cultivator to directly list on an American exchange. Based on a better-than-expected share price of $17, the company raised more than $153 million in the offering.

The IPO is notable for two reasons:

1) Tilray was incorporated in Delaware in January 2018 and is, therefore, the first U.S. cannabis company allowed to list directly on Nasdaq.

The company’s U.S. presence is also bolstered by the fact that it will remain a controlled company even after its IPO, 93 percent owned and controlled by Washington-based Privateer Holdings, Inc., a cannabis-focused venture capital fund. (Tilray’s executive offices, however, are located in Canada.)

The only other cannabis company allowed to list its shares on Nasdaq is Cronos Group, Inc. (NASDAQ: CRON), which is a Canadian corporation that cross-listed its shares from the Toronto Venture Exchange (see our blog post on the topic here).

Tilray has also filed its long-form prospectus in Canada, but in a move that underlines the importance of the United States’ capital markets, the company does not propose to list its common stock on any stock exchange in Canada.

2) Tilray (NASDAQ: TLRY) is also the first Nasdaq-listed cannabis company to raise money in conjunction with its Nasdaq uplisting.

The only other exchange-listed cannabis company to conduct such a capital raise via the public capital markets is California-based Innovative Industrial Properties, Inc., which is listed on the New York Stock Exchange, and raised approximately $67 million in its IPO in December 2016.

Answering the question of whether U.S investment banks will underwrite offerings of international cannabis companies, Tilray’s IPO is underwritten by three well-known middle market investment banks: Cowen, Roth Capital Partners and Northland Capital Markets.

Tilray’s example seems to highlight that cannabis companies with significant Canadian operations can raise money on both sides of the border, despite the sale of cannabis in the U.S. remaining illegal under the Controlled Substances Act of 1970.