High Times parent hustles to lure cannabis investors; here’s what you need to know

(This story has been updated to correct the company’s valuation.)

The parent company of the iconic marijuana culture magazine High Times is looking to attract a large number of small investors as the publication works to go public, bolster its brand and shore up a balance sheet mired in debt.

The company, High Times Holding Corp., has set out to raise up to $50 million through a Regulation A+ offering. The relatively new funding tool allows companies to raise up to $50 million through a wider pool of investors – both those with and without deep pockets.

But paperwork filed late Tuesday with the U.S. Securities and Exchange Commission could signal that the company’s fundraising efforts – some of which have been unconventional – may be stalling out.

Here’s a breakdown of what investors should know:

What’s the deal?

For its initial public offering (IPO), the company is peddling 4.5 million shares at a price of $11 per share with its sights set on a listing on the Nasdaq. But the firm still needs to meet a number of financial and regulatory benchmarks for that to happen.

Among the stipulations: The company must receive a minimum of $17.2 million from the offering, according to filings with the U.S. Securities and Exchange Commission (SEC).

If it can’t list on the Nasdaq, High Times has said it would turn to over-the-counter markets in the United States or to Canada exchanges.

If High Times is able to raise the full amount – which would give the company a $288 million valuation – about $16 million would be used to expand the firm’s events lineup and bankroll potential acquisitions.

The company currently has a stated valuation of $225 million – a value “arbitrarily determined by the Company and not based on book value, assets, earnings or any other recognizable standard of value,” according to its SEC filing.

But another large chunk – at least $13.5 million – would go to pay off debts to Chicago-based ExWorks Capital, according to High Times’ prospectus.

That could be an issue for prospective investors who would essentially be covering the wagers placed by current High Times investors.

A look at the company’s financials reveals sizable losses and sluggish sales. High Times posted $14.5 million in sales in 2017 – down slightly from $14.6 million in 2016. Losses in 2017 rang in at $24.7 million, widening from $2.9 million in 2016.

In an investor presentation High Times hosted on YouTube in August, CEO Adam Levin laid out the firm’s strategy to grow, adding that the company has had more than “4,000 shareholders invest to date.”

But on Tuesday, High Times filed paperwork to extend its offering period from Sept. 13 to Oct. 31.

The maneuver is a possible signal that the California-based firm is still working to reach its fundraising goals, although High Times officials could not be reached for comment.

Credit cards, Bitcoin

High Times has deployed unconventional efforts to lure investors as it leans on rules tied to Reg A+ offerings that allow companies to advertise their IPOs on websites and via social media to reach smaller investors.

In early August, High Times said it would accept the cryptocurrency Bitcoin from potential investors eager to buy stock, but the firm backed off that pledge later in the month.

In a filing with the SEC, the company said the announcement was “distributed in error.” No additional details were disclosed.

The firm has also used email blasts like the following one sent to subscribers in August:

“High Times has been a major cannabis supporter for the past 44 years, and now we’re excited to give our community the opportunity to join us as shareholders and have the chance to watch their investment grow with the company.

“You can become a shareholder today with a minimum investment of $99 using your credit or debit card.”

The tactics garnered criticism from some industry analysts, including Alan Brochstein, founder of 420 Investor.

“This type of solicitation, while legal, is unethical to me, and it further solidified my negative assessment,” Brochstein told Marijuana Business Daily. “No one should buy stock on a credit card.”

Matt Karnes, founder and managing partner at GreenWave Advisors, said the move “calls to question (High Times’) ability to secure funding in a traditional manner.”

High Times’ pitch: Bet on the brand

Karnes also noted that High Times is “a well-established brand with international recognition” and, if properly positioned, could “present a compelling opportunity for investors.”

That’s exactly what the company’s leaders are banking on as they make their pitch to investors.

“High Times is a brand that everybody knows … (both) those in the cannabis industry and not in the cannabis industry,” Levin told listeners during the August presentation. “It’s the Amazon of cannabis.”

In 2017, Levin’s Oreva Capital purchased a controlling stake in the company for $42 million. At the time, it was one of the largest deals in the cannabis industry.

Under Levin’s management, the company has continued to ramp up its event-based programming, such as the Cannabis Cup, which generated more than 75% of the firm’s revenue in 2017.

The company also is working to grow its share of revenue coming in from licensing deals. Through that line of business, the High Times name has been slapped on everything from bongs and cannabis accessories to home urine test kits.

If all goes as planned, the company’s name could even be associated one day with a line of dispensaries – or other plant-touching lines of business, Levin has said.

“We have a brand that hasn’t been monetized yet,” Levin said in August. “Now is that opportunity.”

Lisa Bernard-Kuhn can be reached at [email protected]

13 comments on “High Times parent hustles to lure cannabis investors; here’s what you need to know
  1. biffula on

    I threw 500 bucks at it. Almost like a $10 bet on a hard eight on the craps table. If it pays out, yeah for me, if not, I’m not going to the poor house because of it.

  2. DARF38 on

    High Times has been around since I was a kid. I’ll invest $500. Then afterwards I will watch the money roll in or just roll another joint.

  3. Barry C on

    Why not. Many states legalized growing of marijuana so many people will want information and tools to do it correctly. Like myself. Even if $500 doesn’t make us millionaires, most likely we just break even or make few thousand dollars.
    I’m in!

  4. Smokey The Bear on

    Same here.. 500 bucks to see an old company restart and reboot their cannabis cup would be worth it.. They should come to MA and help a brother out with a dispensary ?

  5. Clay on

    While this looks good and I really like and respect High Times the things they are known for have slipped away to other legal publications. If I were running this project I would tie the magazine to a brand of Cannabis but it would have to be distinct. And the only way to do that is to tie it with high end (High Times) sativa. Brand nothing that isn’t 80 to 100 percent sativa. I say this because after reading tons of reviews high end sativas are short on quantity because they cost more to grow and yield less product. That would be the intelligent thing to do before the opportunity passes them by. And instead of planning startups just do what Trader Joe does. Go to local in that state small growers and set them up to produce your brand.

  6. Robert Young on

    HighTimes for me has been in and out of my life throughout but it always left a certain taste in my mind. Unusual and unique but informative and interesting. I splurged $200 knowing it could flourish or dip into the valley of stems and seeds…sifting through in hopes of a surge of high profits. Lol!

  7. Sheila on

    I’m impressed that High Times is going after Events business/revenue. There’s real growth potential there. Does anyone know if they have real competition in this space?

    • Nick on

      Of course there is ‘real competition’ in that space. Promoting events can be extremely rigorous business. Hightimes has the media avenues to do it.

  8. Nick on

    I gave them 550.00 just for fun, and then asked for it back a week later after seeing some other investment opportunities that seemed like more fun. It’s been 7 weeks and they haven’t returned any emails or live chats until last week 🙂 lmao. last week they said “it’s processing”, and I’m thinking, it took 1 day to take my money and 6 weeks to give it back, maybe they really are broke.

    • thermometer on

      behind the curtain this company is doing a restructuring by trying to infuse new money into its meager sales. bottom line this is no different than playing on the crap table in Vegas. if you have money to burn, this is one company that can do that for you and your money


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