Before going public, marijuana companies should consider these five tips

(This is an abridged version of a story that appears in the August issue of Marijuana Business Magazine.)

A growing number of cannabis businesses are turning to public markets in the United States and Canada as they hustle to raise the capital needed to compete in the green rush.

“These companies are really starting to see the public markets as a viable option for them to raise capital, and clearly over the past two and three years, we’ve seen the pace and number of firms going public really accelerate,” said Jason Paltrowitz, executive vice president of corporate services at OTC Markets Group, which manages trading platforms for more than 10,000 over-the-counter securities.

“Every year it has grown exponentially on itself, and this year will be no exception,” Paltrowitz added.

While going public offers a host of upsides, including quicker access to capital, the move is a complicated maneuver that carries risks for companies that don’t do their due diligence, according to Matt Karnes, founder of New York-based GreenWave Advisors.

“There are major costs and compliance issues to consider that could become burdensome if you’re not prepared,” said Karnes, a CPA who provides financial analysis, auditing and accounting services to U.S. marijuana firms.

As more companies consider taking the public plunge, Marijuana Business Magazine asked industry experts to offer their insights, lessons learned and top tips for making the move.

Click here to learn their thoughts on:

  • The importance of getting your company’s infrastructure in order.
  • Determining which exchanges are better for you – U.S. or Canadian.
  • Which route your company should take – initial public offering or reverse takeover?
  • The time and money you’ll invest in taking your company public.
  • Changing your entrepreneurial mindset once your company goes public.
3 comments on “Before going public, marijuana companies should consider these five tips
  1. Brett Roper on

    As one of the few profitable as well as being one that has NO ‘going concern statement’ or ‘material weakness’ elements in our filings, I would add one more critical element in that you should surround yourself with knowledgeable people that know the process via real time experience and not just claims of I know what I know. A good SEC experienced attorney, PCAOB auditor, and other experienced advisors are a must. Make sure they are not just ‘riders’ wanting to serve on your board for stock and compensation or other benefit but bring real value to your organization should you determine a public company element is in your best interest. See our article in this years State of Marijuana Markets Report where we provide a much deeper dive into options. In closing, I highly recommend staying away from a Reverse Merger or RTO solution as they refer to it in Canada.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *