Chicago-based cannabis firm Verano Holdings confirmed Tuesday plans to go public on the Canadian Securities Exchange (CSE) via a reverse takeover (RTO) of Majesta Minerals Inc., a dormant mining company.
The transaction includes the previously announced deal for Alternative Medical Enterprises (AltMed), which has operations in Florida and Arizona, and values the combined companies at $2.8 billion.
Both deals are expected to close during the first quarter of 2021.
In connection with the RTO, Verano also plans to raise between $50 and $100 million by selling subscription receipts at $10 apiece.
Existing Verano shareholders will receive 73.84% of the converted shares, while AltMed shareholders will get 22.5%. Another 3.5% of converted shares will be available to investors who participate in the private placement.
In a news release, Verano CEO George Archos said the move to go public would provide the company with funds to expand.
“Becoming a public company will give us access to capital to execute our long-term strategy of expanding into limited-license, high-growth markets and scaling both our wholesale and retail operations into new and existing markets,” he said.
News of Verano’s intent to list on the CSE was first reported by BNN Bloomberg, which earlier this month obtained an investor term sheet detailing the cannabis company’s finances and its plans for an IPO.
According to the BNN Bloomberg report, Verano generated $121 million in revenue and $42 million in adjusted EBITDA last year.
The official announcement comes just one month after Verano said it would acquire AltMed for an undisclosed sum. The two companies boast eight cultivations facilities and 48 retail locations across 14 states.
Verano expects to end 2020 with $380 million in revenue and $160 million in adjusted EBITDA, according to BNN Bloomberg, and the RTO will make it one of the largest publicly traded players in the U.S. cannabis industry.
The top American cannabis firms — Curaleaf Holdings, Green Thumb Industries, Cresco Labs and Trulieve, among others — are all publicly traded in Canada due to the federal prohibition on cannabis in the U.S.
Founded in 2014 by Archos, a restaurateur, Verano was one of the first companies to receive a medical marijuana growing license in Illinois. The company has since expanded into 12 U.S. states with 19 retail locations and 440,000 sq. ft. of cultivation space.
According to the Chicago Tribune, Verano has three Zen Leaf-branded dispensaries in Illinois, and it plans to open two more locations.
Verano’s RTO comes less than nine months after the company mutually agreed to scrap an $850 million deal with Arizona’s Harvest Health & Recreation. It also follows recent announcements from California-based e-commerce platform Weedmaps, and New York-based Subversive Capital, which plan to take their respective cannabis ventures public through special purpose acquisition vehicles.
Additional information is available in the news releases, linked below.
Verano Holdings Enters into an Agreement for a Go-Public Transaction in Conjunction with AltMed Merger
Majesta Minerals Inc. Announces Definitive Agreement for Reverse Takeover by Verano Holdings, LLC