Could Acreage Be the Next Tilray on the CSE?

Acreage-Holdings-IPO
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Editor’s Note: In a previous version of this story we stated Acreage Holdings would go public via an initial public offering. Acreage Holdings is in fact in the process of a reverse takeover. We apologize for the error and have updated the story. 

In this day and age, few things excite growth investors more than a new marijuana stock. With some tickers capable of making double-digit moves in a single trading session, serious opportunities lie ahead. One of these opportunities is the Acreage Holdings.

The company has created a lot of buzz in the financial media in recent months. Here’s what we know about this upcoming marijuana stock so far.

A Future Marijuana Stock to Consider

If you search for the company’s name, you’d see that “Acreage Holdings” did not exist until March 2018. That’s because the company had a name change.

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Previously, it was operating under the name of High Street Capital Partners LLC. According to management, the name change was part of their plan to pursue an IPO. (Source: “High Street Capital Partners, LLC Announces New Name and Strategy: Acreage Holdings,” Acreage Holdings, March 13, 2018.)

So, what exactly does the company do?

Well, if you think that the name High Street Capital Partners sounded a bit like an investment firm, that’s because the company was indeed in the investment business, except that it focused specifically on marijuana-related businesses.

The company’s founder and chief executive officer, Kevin Murphy, invested in The Wellness and Pain Management Connection in Maine back in 2012. And in 2013, the team added Kalyx Development, a multi-state provider of commercial and industrial space for the cannabis industry, to their portfolio. In 2014, High Street Capital Partners was formed.

Since then, the company has built a diverse portfolio in the American cannabis industry. Acreage Holdings currently has cultivation, processing, and dispensing operations across 14 states.

That’s right, up until this point, Acreage Holdings has been focusing on operations in the U.S. That makes it stand out because most of the popular marijuana stocks are based in Canada, a country that’s set to legalize recreational marijuana on October 17, 2018.

Still, while Acreage Holdings is based in the U.S., its stock will make its debut north of the border. The company intends to list its shares on the Canadian Securities Exchange (CSE).

Acreage Holdings: The Next Hot Weed Stock?

For those not in the know, CSE is not the biggest stock exchange in Canada. Right now, the Toronto Stock Exchange (TSE) is the largest stock exchange in Canada and the third-largest stock exchange in North America by market capitalization.

Why would an American company choose to list its shares on a smaller stock exchange in Canada?

According to Murphy, there are a number of reasons for the upcoming CSE listing, including “the positive reception that the Canadian institutional investment community has shown to the U.S. cannabis industry and to Acreage in particular.” (Source: “Acreage Holdings Announces Closing of $119 Million Private Round – Largest in U.S. Cannabis History,” Acreage Holdings, August 9, 2018.)

“Additionally, the CSE has become the exchange of choice for U.S. companies like ours,” he added. “The liquidity on the CSE is incredibly attractive to Acreage, and we know that retail investors in the U.S. have become comfortable with that exchange.”

Already Raised Millions

In August 2018, the company announced that in its Series E funding round, it secured $119.0 million of capital—the largest in the U.S. cannabis industry’s history.

Of course, because Acreage Holdings is still a private company at the moment, we don’t know what that $119.0 million of capital really means compared to its total valuation. But here’s a fact, with operations in 14 states, the company is one of the biggest players in the U.S. cannabis industry.

At the same time, the company’s presence is further boosted by having some high-profile board members.

In April, Acreage Holdings announced that John Boehner, former Speaker of the U.S. House of Representatives, would join its Board of Directors. This came as a surprise because Boehner opposed marijuana legalization when he served as the House Speaker. Also joining the company was Bill Weld, former Governor of Massachusetts. (Source: “John Boehner and Bill Weld to join Acreage Board of Directors,” Acreage Holdings, April 11, 2018.)

Having political insiders on its board could help Acreage Holdings navigate the uncertainties in the marijuana legalization process in the U.S.

Most recently, the company bolstered its board with big shots from the corporate world. On September 27, Acreage Holdings appointed two new Board members, former Time Warner Telecom CEO Larissa Herda, and former International Business Machines Corp Chief Financial Officer Douglas Maine. (Source: “Acreage Holdings Bolsters Its Board of Directors With Addition of Former Time Warner Telecom CEO Larissa Herda And Former IBM CFO Douglas Maine,” Acreage Holdings, September 27, 2018.)

With well-known names in politics and business, there could plenty of Acreage partnership opportunities going forward.

Acreage vs Tilray IPO

The reverse takeover of Acreage Holdings has gotten a lot of investors’ attention lately. This was, in part, due to the high-flying weed stocks in the current market. One that stands out is Tilray Inc (NASDAQ:TLRY), a marijuana producer and processor based in Canada. Having completed its initial public offering on July 19, 2018, Tilray was the first weed stock to debut on the Nasdaq stock exchange.

Using the word “dramatic” to describe the TLRY stock performance since its IPO would be an understatement. On the first day of trading, the company closed at $21.10 per share. Today, Tilray stock trades at $131.30 apiece, representing a total gain of 522% in just over three months.

Tilray Inc Stock Chart

Chart courtesy of StockCharts.com

For investors looking for marijuana stocks available right now, keep in mind that the Acreage Holdings hasn’t nailed down a date for its reverse takeover. But the company expects to go public sometime this fall. Based on the stock price performance of its cannabis industry peers, investors should be more than enthusiastic about this upcoming deal, to say the least.