Marijuana News Today: U.S. CBD IPO Could Be Huge
In the marijuana news today, we have what may become one of the biggest opportunities for gains yet in the legal cannabis industry: a potential U.S. cannabidiol (CBD) initial public offering (IPO).
Vertical Companies just closed a funding round that netted it $58.0 million, putting the company’s valuation at $285.0 million. This is as it prepares for the IPO on the Nasdaq of its spinoff CBD company, Vertical Wellness. (Source: “Hemp Spinoff Aims to Raise $50 Million and List on Nasdaq This Year,” Bloomberg, April 2, 2019.)
Vertical Companies’ Series A financing ahead of the CBD IPO grew from its initial level of $20.0 million. The company now hopes to raise an additional $50.0 million for Vertical Wellness and have the stock hit the Nasdaq by the end of the fourth quarter of this year.
At the same time, Vertical Wellness is expanding its production capacity, with 2,000 acres of farmland in Kentucky that will produce more than $400.0 million worth of hemp-derived CBD by the end of this year. The company also has a 90,000-square-foot processing and manufacturing facility in Kentucky. (Source: Ibid.)
This will be the first U.S. cannabis IPO ever (if no other company beats it out of the gate). As such, this could be among the biggest opportunities for gains yet in the marijuana industry.
Remember Tilray Inc (NASDAQ:TLRY). Tilray stock went public on the Nasdaq and saw more than 1,000% in gains in a few short weeks. While much of that then disappeared, those who invested early saw huge returns that remain to this day.
But Vertical Wellness will be an entirely different beast, since it will be the first CBD IPO that gives investors exposure to the U.S. market, as well as being the first CBD IPO in general (a very lucrative segment of the cannabis industry).
Since the legalization of hemp cultivation via the Agriculture Improvement Act of 2018, CBD has effectively become legal across the U.S., since it can be derived from hemp. This has created, in essence, the first legal U.S. market for cannabis across the entirety of America.
Therefore, the upcoming Vertical Wellness IPO will allow investors one of their very first shots at buying into the U.S. cannabis market—with huge potential for growth for years to come. That’s a very exciting prospect.
Now, I’m not saying that this IPO will be able to replicate the Tilray IPO, but there is a very real possibility that similar gains will be seen from Vertical Wellness stock when it hits the market.
The marijuana news today was rather positive in terms of the pot stock market, with many stocks climbing in early-morning trading. While no price movement was particularly jaw-dropping, we were seeing healthy gains of a point or two across the board.
OrganiGram Holdings Inc (OTCMKTS:OGRMF, CVE:OGI) had one of its better mornings, gaining two percent. Over the past five days, OrganiGram stock climbed about 11%.
OGRMF stock continues to impress with healthy gains as it remains one of the few companies in the legal marijuana industry to be largely considered undervalued.
Remember that OrganiGram also enjoys one of the better price-to-earnings (P/E) ratios, which is often a good indicator of how accurately a stock is priced.
Moving forward, OrganiGram still has many possible opportunities for growth. These include a U.S. stock listing, a major partnership, or an acquisition. All three developments could push big gains for OrganiGram stock.
OGRMF stock remains one of my favorite picks in the cannabis industry, and this past week of gains only reinforced my belief that the stock is on a growth path in 2019.
Another marijuana stock that saw decent gains to start the day was Cronos Group Inc (NASDAQ:CRON). Cronos stock gained about two percent in early-morning trading today and finds itself up by about the same percentage over the last five days.
This is a good change of fortune for CRON stock, which has been reeling ever since the company’s financial report came in under analysts’ expectations.
To be fair, however, Cronos has outperformed other companies in similar situations—like CannTrust Holdings Inc (NYSE:CTST), which had a similarly poor showing in its latest quarterly report but suffered far more in the stock market as a result.
This points to a greater confidence in Cronos stock, as well as a quarterly report that wasn’t actually—on the whole—terrible.
That situation may have opened the door for future gains down the line since expectations are likely lower now, meaning that Cronos has the opportunity to outperform in its next earnings report.
The next set of financial numbers is going to have a huge impact for Cronos no matter what. Either they’ll be strong and put the company on the right path, or they’ll be weak again and begin a trend that will likely prove disastrous for CRON stock.
In any case, investors ought to watch Cronos very closely in the next quarter.
OGRMF and CRON Stock Performances
The performances of OGRMF stock (black line) and CRON stock (blue line) over the past week are seen on the chart below.
Chart courtesy of StockCharts.com
The marijuana news today is the best all around it has been in a while.
This year has been very strong for marijuana stocks, but there have been few groundbreaking news events. A U.S. cannabis IPO would be such an event.
If Vertical Wellness can replicate the same hype that Tilray was able to generate with its IPO, this could be among the best opportunities to see huge growth in a short period in the pot stock market.
Meanwhile, OGRMF stock continues to impress while CRON stock looks to bounce back following its weak earnings report.