An American multi-state cannabis operator run by a former Deutsche Bank executive will make its public debut on the NEO Exchange Monday, making it the third U.S. cannabis company to go public on Canada’s newest stock exchange over the past month.
Jushi Holdings Inc., a relatively unknown cannabis producer and retailer operating across six U.S. states will begin trading on the NEO with a market cap of approximately $490 million — that’s less than a quarter of the average market value of the largest U.S. multi-state operators such as Acreage Holdings Inc, Harvest Health & Recreation Inc., and Curaleaf Holdings Inc.
“We needed that liquid currency for potential future acquisitions,” said Erich Mauff, chief executive officer and founder of Jushi, in explaining why he chose to take his company public. “The regulatory burden is also much less onerous if you’re a public company as opposed to a private one,” Mauff told the Financial Post over the phone on Friday.
American cannabis companies looking to access Canadian public markets are barred from listing on any exchange operated by the TMX Group, until cannabis becomes legal at a federal level south of the border. As such, the Canadian Securities Exchange (CSE) has become home to a slew of U.S. cannabis companies, especially over the last 18 months.
More recently, the NEO Exchange has started emerging as a potential alternative to the CSE for cannabis companies. In late April, the exchange clinched its first billion-dollar listing with the public debut of American medical cannabis producer Columbia Care Inc. It is now home to over 70 corporate and ETF listings, ten of which are cannabis-related.
“We had discussions with both NEO and the CSE. What I can say is, the CSE was just not able to give us a delineated timeline that we needed to become public quickly. We did not want to wait,” Mauff explained. The NEO Exchange, on the contrary, “turned things around quickly”, according to Mauff.
Jushi, which will trade under the symbol NEO:JUSH, has most of its assets in the cannabis retail space, as opposed to cultivation. The company owns five retail locations in California with plans to open more, and 15 cannabis stores across Pennsylvania.
Mauff is particularly optimistic about the opportunities that exist in California, given a recent push by state lawmakers to sanction licences for thousands of new cannabis stores. Assembly Bill 1356 has been working its way across the California legislature and would mandate 2,200 new cannabis stores throughout the state, thrice the number that are currently in operation.
“We have been buying assets there for two years and I can tell you that the market is anything but saturated,” he said.
Mauff was formerly vice chairman of corporate finance for Deutsche Bank and had spend decades working in the banking sector. Jushi’s co-founder is Jim Cacioppo, a former hedge fund manager who ran a US$600 million hedge fund that focused on distressed businesses during the course of the 2008 financial crisis.
Jushi also has a Canadian cannabis connection — it has a royalty agreement with New Brunswick-based licenced producer Organigram Holdings Inc., and former CEO and chairman of Organigram Dennis Arsenault is a company board member.
• Email: [email protected] | Twitter: VanmalaS
Copyright Postmedia Network Inc., 2019
