When it comes to new publicly traded companies in the cannabis sector, 2020 has been a very quiet year, but a small U.S. firm is looking to make a little noise.
According to a report by BNN Bloomberg, Chicago-based Verano Holdings plans to go public before the end of the year with a valuation in the neighborhood of US$3 billion.
The multi-state cannabis grower is aiming to re-ignite investor interest in the marijuana sector, after a steady cooling period that began in 2019.
The road Verano Holdings is taking to get there, however, is not without a few twists.
According to the Bloomberg report, Verano will offer up to US$75 million in shares through a reverse takeover, or RTO, of Majesta Minerals, a Calgary-based company listed on the Canadian Securities Exchange. If the RTO succeeds, Verano will be listed on the CSE.
According to the terms of the deal, Majesta would value Verano at US$2.88 billion.
Once the deal is completed, Verano would be the third largest cannabis company in the U.S. by revenue and the fifth largest by valuation, on the heels of competitors Curaleaf Holdings (OTC:CURLF), (CSE:CURA) and Cresco Labs (OTC:CRLBF), (CSE:CL).
Verano operates in 14 states, has 46 retail outlets and eight production sites. In the last year, it had US$121 million in revenues and US$42 million in adjusted EBITDA, earnings before interest, taxes depreciation and amortization. According to Bloomberg, citing an investor presentation, the company estimates it will end 2020 with approximately US$380 million in revenue and US$160 million in adjusted EBITDA.
In November, Verano announced the acquisition of Alternative Medical Enterprises, a cannabis company operating in Florida and Arizona.
If Verano successfully pulls off its IPO, the move could mark a significant point in the wider cannabis sector landscape: the beginning of renewed interest in the U.S. marijuana markets.
Not only is the U.S. continuing on the path to federal legalization with election season seeing six states endorse the move to legalize weed, but U.S.-based single and multi-state operators continue to build on profitable results.
Canadian companies, on the other hand, which garnered all the attention in Canada's post-legalization period, continue to struggle to post profitable earnings results and make headlines as they write down on assets and products.
Pot Now Accounts For $14.6 Billion To Canadian GDP
While Canadian publicly traded cannabis companies continue to struggle, the news is not all bad.
Earlier this month, the latest GDP report outlined how cannabis now contributes about C$14.6 ($US11.43) billion to the Canadian economy in September, according to the latest figures released by Statistics Canada. That is a significant increase from the previous C$8 ($US6.26) billion estimate.
StatsCan also said Canadian household spending on cannabis in the third quarter of 2020 was pegged at C$8.49 (US$6.64) billion, up from C$6.76 (US$5.22) billion in the same period in 2019.