Tilray Inc. is boldly going where few marijuana growers dare—Wall Street. The Canada-based marijuana production and processor has officially become the first company in the once-clandestine sector to debut on Nasdaq Inc.’s NDAQ, +0.69% Global Select Market exchange. Tilray TLRY, +7.83% , which filed for its initial public offering in June, late Wednesday priced its IPO at $17 a share, raising $153 million. The stock will begin trading Thursday under the ticker symbol TLRY. The company has crafted the deal to offer a dual share class structure. Class 2 shares, which is what investors are paying for, will receive one vote per share, and the Class 1 shares will have three votes per share. At the moment, Seattle, Wash.-based Privateer Holdings Inc., a venture-capital firm with a sole focus on the marijuana industry, holds all 75 million of the Class 1 shares. A group of undisclosed institutional investors owns roughly 8 million preferred shares, which will convert to Class 1 shares with the closure of the offering. Here’s what you need to know A first for a pot company While Tilray is not the first cannabis company to list on the Nasdaq — at least one, Cronos Group Inc. CRON, +4.02% is cross-listed on the Nasdaq and TSXV — Tilray will be the first cannabis cultivator to raise capital via a Nasdaq listing. One other, called Innovative Industrial Properties Inc. IIPR, +2.26% , went public on the New York Stock Exchange, but unlike Tilray, it is more of a real-estate investment trust, not an actual pot producer. See also: The startup burning $1 million a month in hopes of selling $1 billion of pot a year Marijuana remains a decidedly complex regulatory issue in the U.S., but Canada has been fertile ground for the growing industry, according to Scott Greiper, president and founder of Viridian Capital Advisors, a U.S.-based investment bank that focuses on the cannabis sector. Canada is the first industrialized country to legalize recreational pot and has had a booming medical business for years; and it may have been no coincidence that Tilray filed for its IPO the day after Canada set the October date for adult recreational cannabis use. Here's how to invest in cannabis through ETFs Viridian has tracked pot-related capital markets transactions since 2014, and Greiper says that its investments have always been Canada-heavy as the institutional money continues to chase value up north. But as the cannabis industry’s perceived legitimacy — and legality — grows, American stock exchanges have warmed up to listing companies that grow and process the plant. That’s where Tilray fits in. “In general, U.S. capital markets have generally been closed to growers,” said Greiper. “Tilray is reflecting that exchanges like Nasdaq and New York [Stock Exchange] are starting to open up to the fact that cannabis is a legitimate marketplace. Every exchange is looking to be on the front lines of capital markets.” Read: Marijuana is legal in California, but buying it is neither cheap nor always easy Reflecting the changing times, several well-respected banks are backing the issue. In the U.S. the shares will be offered by a syndicate comprising Cowen, Roth Capital Partners and Northland Capital Markets. In Canada, shares will be offered by BMO Nesbitt Burns and Eight Capital. How Tilray makes money Essentially, Tilray grows cannabis, processes it and sells the finished product to patients in Canada, Australia and Germany through agreements with pharmaceutical distributors. Currently, the company grows marijuana in Canada and Europe. Tilray’s main product is processed cannabis, but in many ways the company’s financial statements resemble that of a manufacturing company: it requires plants and equipment, for example. Don’t miss: IPO boom has opened the window for some scary companies According to the prospectus, 28 countries have legalized weed for medical uses, and overall, including the black market, cannabis is a $150 billion business annually. Canada, the first industrialized country in the world to legalize recreational marijuana, is expected to be worth between C$4.9 million and C$8.7 million each year, which is roughly $3.7 million to $6.6 million in U.S. currency. In the first quarter of this year, Tilray logged a net loss of $5.2 million on sales of $7.8 million, compared with losses of $679,000 and revenue of $5 million in the year-earlier period. Overall in 2017, Tilray banked sales of $20.5 million and a net loss of $7.8 million. In Canada, Tilray sells its products directly to consumers via its e-commerce platform and telephone sales. It has also inked deals with a range of pharmaceutical distributors in Canada and elsewhere around the world, including the Novartis AG NVS, +0.77% subsidiary Sandoz. Growing weed is still a strange business In the first quarter of 2018, Tilray harvested 1,693 kilos of cannabis and sold 1,299 kilos at an average net selling price per gram of $5.94, up 7% from the year-earlier period. It cost the company an average of $2.81 to produce the pot, an increase of 13% from the same quarter last year. Attitudes and legal regimes about pot are changing across the world, as Tilray takes pains to point out in its SEC filing, but there remain a number of significant risks. In the long run, early investors and others in the cannabis industry are betting the U.S. will eventually change its federal laws to legalize the drug. What every cannabis investor should be paranoid about Where Tilray is permitted to operate under a federally sanctioned medical system — in countries such as Canada — marijuana is a thoroughly regulated industry that requires approval licenses for nearly ever aspect of the business. In Canada, for example, Tilray needs approval from at least two federal agencies to make its products, and each province has its own regulatory scheme as well. Tilray’s global ambitions In the company’s SEC filing, Tilray says it is poised to take advantage of the global change in regulatory regimes. It’s made agreements with existing pharmaceutical distributors in 12 countries, has four clinical trials in three countries and is among the first companies to have licenses for cultivation facilities in two countries — Portugal and Canada.<doc-sep>Amid a big year in markets for cannabis companies, Canadian medical marijuana company Tilray made its debut on the Nasdaq on Thursday — becoming the first pure-play marijuana company to go public on a major U.S. exchange. And Tilray President and CEO Brendan Kennedy told CNBC that the buzz around cannabis is only going to continue to grow. "Eight years ago you would have seen 90 percent of the revenues in Colorado would have come from products that would be smoked," Kennedy said Thursday on "Power Lunch." "Today it’s about 40 percent. Long term, I think we’ll end up with smoking being about 10 percent [of cannabis consumption] and all the other products being 90 percent." In fact, Kennedy envisions a world where consumers can order their cannabis "as a beverage in a bar." "Instead of alcohol, they’ll have cannabis," said Kennedy, who is also a member of Tilray's board of directors. "And they’ll have a low, or no-calorie product with no hangover." Tilray offered 9 million shares of its Class 2 common stock, which kicked off trading Thursday morning at $23.05 per share under the symbol "TLRY." The company said in an SEC filing in advance of the offering that it was looking to sell stock between $14 and $16 per share, which valued Tilray between about $1.3 billion and $1.5 billion. The IPO priced at $17 a share late Wednesday. Tilray cultivates, processes and distributes cannabis products to tens of thousands of medical marijuana patients across 10 countries, including Australia, Canada and Germany, through subsidiaries and agreements with pharmaceutical distributors. The company currently grows marijuana in both Canada and Portugal. Currently, products are available in 10 countries on five continents. And Kennedy said his company's customer base will only increase as "country after country around the world" seeks to legalize medical cannabis. He said the "shift away from an illicit market to legal market" would increase adult cannabis users globally from 3.5 million to about 40 million people, with other countries modeling Canada's regulatory framework. "What you’re starting to see in adult-use countries like Canada, is people will buy professionally branded, professionally packaged, tested products that are much safer than what’s available on the illicit market," Kennedy said. Tilray's move from public to private follows in the footsteps of Canadian marijuana giants Cronos Group and Canopy Growth. Cronos, a $1.1 billion company with medical marijuana growing and distribution operations in Australia, Canada, Germany and Israel, was the first pure-play, "plant touching" company to trade on a major U.S. exchange when it listed on the Nasdaq in February. Canopy, Canada's biggest marijuana company, followed soon after, listing on the New York Stock Exchange in May. Both traded on exchanges in Canada before their U.S. listings.<doc-sep>NEW A vastly improved search engine helps you find the latest on companies, business leaders, and news more easily.<doc-sep>Tilray, a five-year-old, British Columbia-based medical cannabis company that sells its products to patients, researchers, pharmacies and even governments, saw its shares get high (sorry) on the Nasdaq today, after the company priced 9 million shares at $17 apiece and watched them soar, closing at $22.39, a jump of slightly more than 32 percent. It was the first cannabis company to conduct a U.S. IPO, and in the process it raised $153 million, capital it will reportedly use in part to fuel its marijuana growing and processing facilities in Ontario. The momentum behind Tilray is a huge win for the cannabis industry, which has been growing like a weed (sorry again). Related startups attracted $593 million in funding last year, twice what they raised in 2016 and a meaningful jump from the $121 million invested in related startups in 2014, according to CB Insights. Among the different types of companies to garner investor dollars, shows CB Insights’ research, are: startups focused on research or distribution of medical marijuana products (as with Tilray); tools for ensuring compliance with state and federal marijuana laws; startups focused on payments for marijuana companies; startups collecting data and producing marketing insights about the industry; and companies creating novel strains and types of marijuana using new farming techniques. Tilray’s performance today is also a very positive signal for Seattle-based Privateer Holdings, a private equity firm that owned 100 percent of the startup as it headed into its offering. In fact, Privateer’s CEO, Brendan Kennedy, is also the CEO of Tilray. (Cannabis companies are weird.) Privateer has itself raised more than $200 million since its founding in 2010, including from Founders Fund and Subversive Capital, and it has used that money to finance, acquire and incubate companies. While it incubated Tilray, for example, it also owns Leafly, a large cannabis information resource that it acquired in 2011. Another of its portfolio companies is Marley Natural, a Bob Marley-branded cannabis line that it launched in partnership with Marley’s estate and that sells a line of cannabis strains, smoking accessories and even body care products. It isn’t exactly clear how much Privateer had sunk into Tilray (we have a press request into the company). Tilray announced C$60 million in Series A funding back in February, money it said had come from a “group of leading global institutional investors.” But according to its S-1, it was solely owned until today by Privateer. What we do know: Tilray remains unprofitable, reporting a net loss of $7.8 million last year. The company also cannot sell its products in the U.S. market, given that marijuana remains illegal under federal law, even though 30 states and Washington, D.C. have legalized it in some form. The reason: The U.S. government classifies marijuana as a schedule 1 drug, meaning it’s considered to have no medical value and a high potential for abuse. That could change, but as this Vox explainer makes clear, a review process for the current schedule would need to be initiated by either the U.S. Secretary of Health and Human Services or the Attorney General, and current Attorney General Jeff Sessions despises marijuana, saying once that “good people don’t smoke marijuana.” He seems to be among a dwindling minority. According to a Gallup Poll published last October, 64 percent of Americans favor legalization.<doc-sep>
Tilray Inc. landed a valuation topping $1 billion and became the first cannabis company to go public on the Nasdaq exchange Thursday, then received even more validation when shares popped more than 76% over Thursday and Friday. The hot IPO was just another first for a cannabis company that has made bold, global bets on an industry that for decades was run by drug cartels and Northern California growers and remains illegal under U.S. federal law. Tilray TLRY, +7.83% Chief Executive Brendan Kennedy said in an interview Thursday that after hundreds of meetings in 15 cities around the world, it was clear to him that investors were fascinated by the prospect of a global cannabis industry because of the implications for health care and recreational use where legal. Don’t miss: Five things to know about the Tilray IPO “I think the [IPO interest] signifies a shift in perception,” Kennedy said. “This is just the beginning, we take a very long term global view and we wanted to get this milestone as a validation for not only us but the entire sector.” Tilray priced its IPO at $17, higher than the $14 to $16 range it proposed in filing documents. Thursday’s IPO raised $153 million from investors world-wide and valued the company at $1.43 billion. Kennedy said that the book was 70% U.S. investors, 18% Canadian investors and 12% international subscribers from London, Hong Kong, Sydney, Frankfurt and elsewhere. “It is still day one in this industry, that’s how we think about it,” Kennedy said. “And the challenge that we faced with some investors is how this industry is going to change. I like to say Ziploc is the biggest brand in the cannabis industry and over the next few years you’re going to see that change, you’re going to see real brands and real companies.” See also:The startup burning $1 million a month in hopes of selling $1 billion of pot a year Scott Greiper, founder of Viridian Capital Advisors, a cannabis focused investment bank based in New York, agreed with Kennedy’s assessment of the importance of brands. In a July phone interview he said that the shift into branded pot is an underlying world-wide trend, and even in the U.S. where the market is more challenging because of the legal uncertainty. “The value is in the brands,” said Greiper. “Brands have loyalty among customers and brand opportunities are finally getting their legs.” Tilray is controlled by Privateer Holdings Inc., a Seattle-based private firm with a cannabis focus, and investors buying the now-available stock will have fewer voting rights than Privateer. But Kennedy says that institutional investors on the roadshow liked the fact that Privateer was retaining its stake in Tilray and not using it as an opportunity to cash out by selling its stock. “After the IPO there is an alignment of interests at this point and the investors … wanted Tilray to control its own destiny,” the CEO said. According to the company’s Securities and Exchange Commission filings, Tilray has made agreements with pharmaceutical distributors in 12 countries, has four clinical trials in three countries and is among the first companies to have licenses for cannabis cultivation in two countries: Canada and Portugal. Overall, it has approval to supply patients and researchers on five continents. What every cannabis investor should be paranoid about In the first quarter of this year, Tilray logged a net loss of $5.2 million on sales of $7.8 million, compared with losses of $679,000 and revenue of $5 million in the year-earlier period. In 2017, Tilray banked sales of $20.5 million at a net loss of $7.8 million. Kennedy said that investors should pay close attention to the amount of cultivation space the company has, which at the moment is located in greenhouses and indoor grow facilities in Portugal and Canada. He says Tilray is nearing 1 million square feet in product space, which at the beginning of the year produced about 8 million grams a year. “By the end of the year, we’ll be at a run rate of 90 million grams a year,” Kennedy said.