As if to prove that point, Molson
Coors Brewing Co., the makers of Coors
Light, has teamed up with a Canadian
cannabis producer to develop cannabis-
infused beverages in Canada. Even facing
pressure from shareholders and slightly
dropping stock prices has not dissuaded
them from pursuing this venture. That
alone should say a lot about how confident
they are in the industry heading in that
direction. The potential upside simply
outweighs the potential downside.
That, primarily, is the point. The
potential of the industry is a huge driver of
investment. Everyone knows the profits
will be there and most likely come from
many different segments of the industry.
That fact is driving both investment and
innovation.
THE STRANGE WORLD OF IPOS
IPOs can, at first look, make very little
sense from the outset. Take the example
of MedMen, which was recently valued
during an IPO at $2 billion. When you run
their numbers, however, you see that they
have small revenues, no real profit, and a
relatively small number of locations (18
dispensaries as of this writing). They are
moving fast, and the market has rewarded
them for it.
Beyond that, look at a company like
Tilray, which grows marijuana, processes
it, and then sells the finished product
elsewhere, specifically to Australia,
Canada, and Germany. In July, they
filed for an IPO and were listed on the
NASDAQ, where it was valued at around
$1.5 billion and raised $153 million in the
IPO. As this magazine went to press, they
had a market cap of a whopping $7 billion!
Their successful IPO is based on a net loss
of $5.2 million just in the first quarter
alone. What does this say? How are IPOs
related to actual displayable business
success and profitability?
THE POINT? YOU CAN HAVE
A HUGELY SUCCESSFUL
IPO EVEN WITHOUT
PROVING WORTH AS A
“SUCCESSFUL” COMPANY.
IF SMALL COMPANIES WITH
NO EVIDENT PROFITS ARE
TURNING IN ENORMOUS
IPOS VALUED IN THE
BILLIONS, WHAT WILL
HAPPEN WHEN A COMPANY
WITH A PROVEN TRACK
RECORD OF SUCCESS
GOES PUBLIC? SOMETHING
JUST LIKE THAT IS ABOUT
TO HAPPEN. LOOK AT
THE MERGER OF SLANG/
ORGANA BRANDS/FIREFLY
AND THEIR UPCOMING IPO
THIS FALL.
percent higher profit margins than even
MedMen. What will Slang be valued at
with their IPO?
So what is the potential downside here?
Well, like most stocks, there is volatility
in the price. A small change could have a
huge ripple on the market. Given the fact
that legalization still isn’t a sure thing in
the United States, it can be hard to tell
what may happen in the future. Even so,
investment is something the big boys
are looking into, and more companies are
throwing their hats into the ring every
single day.
The market is growing and growing.
Times are, as the songs say, changing.
Will you be riding on the crest of that
wave or just let it pass by? Will you be a
buyer of companies or sell your company?
Volatility in the markets will dissuade
some, but at the same time, nobody wants
to leave money on the table. Fortunately,
in the growing industry of cannabis, there
is a lot of money to go around.
This
powerhouse
has
1,500
dispensaries—a
huge
distribution
network—market leading brands, much
more revenues, and something like 80
Tigray (TLRY) $10.5B market cap
Medmen (MMen.cn) $4.2B market cap
Green Thumb Industries (GTII.cn) $3.2B market cap
Canopy Growth (CGC) $11.7B market cap
Aurora Cannabis (ACBFF) $8.8B market cap
29
2
Alex Maness
Hampton, Virginia based entrepreneur,
consultant, and copywriter. Alex
Maness attended Old Dominion
University for a B.S. in Biology and an
M.S. in Biotechnology respectively.
After graduate school, he found his
calling in helping others achieve
their goals through a combination of
content marketing and curation.