As investors look to get into pot stocks ahead of a potential legalization of the drug in Canada, MedReleaf Corp. just pulled off the largest initial public offering for a medical marijuana producer in North America, raising C$100.7 million ($75 million).
The number of Canadians using medical marijuana has tripled from last year to some 153,000, according to Vahan Ajamian, an analyst with Beacon Securities Ltd. in Toronto. Prime Minister Justin Trudeau—s administration plans to make Canada the first Group of Seven nation to legalize recreational use by July 2018.
[related_articles location=”right” show_article_date=”false” article_type=”automatic-primary-section” curated_ids=””]“Production is struggling to catch up,” Ajamian said. “Then you throw on recreational in 12 to 13 months from now and obviously that—s going to give more traction for shareholders.”Markham, Ontario-based MedReleaf priced its shares at C$9.50 apiece on Tuesday. That would give the company a valuation of about C$859 million, and make it the second-largest publicly traded medical marijuana company in Canada behind Canopy Growth Corp. when it starts trading on June 7, according to Bloomberg data.
MedReleaf is the second IPO for a pot producer in Canada after CanniMed Therapeutics Inc. raised C$69 million in December. Other listed companies, including Canopy, have gone public mainly through reverse takeovers.
MedReleaf sold C$80.7 million worth of shares from the treasury and another C$20 million from existing shareholders. The company will list on the Toronto Stock Exchange under the ticker LEAF. The offering was led by GMP Securities.
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