A weed company just went public on a U.S. stock exchange for the first time

Tilray, a British Columbia-based cannabis producer began trading on the Nasdaq Thursday morning under the ticker symbol TLRY, becoming the first weed company to complete an initial public offering (IPO) on an American stock exchange.

Tilray’s stock, priced at US$17 per share surged an impressive 25 percent in the first few hours of morning trading — as of 10.30a.m. Eastern Time, the stock was trading at just over US$21.

While Tilray is not the first company to trade on a U.S. exchange (Cronos Group and Canopy Growth are listed on the Nasdaq and New York Stock Exchange respectively), it is the first marijuana business to have raised capital entirely in the U.S. through a public listing, a strong indicator of growing appetite south of the border to invest the Canadian cannabis industry.

In less than three months, recreational cannabis will officially be legal in Canada, an experiment that only one other country in the world — Uruguay — has undertaken. Initial estimates expect the industry to be valued at over $20 billion by 2020.

The process that led up to the Nasdaq listing started over a year ago, according to Tilray CEO Brendan Kennedy. “As we met with potential American investors, many of them voiced concern that they did not have the ability to invest in companies listed on the Toronto Stock Exchange, so we were able to determine that there was a demand for an IPO on a U.S. exchange,” Kennedy told VICE News.

“In general, U.S. capital markets have generally been closed to growers. 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, Scott Greiper, founder of Viridian Capital Advisors, an American investment bank focusing on the cannabis sector told MarketWatch.

Tilray’s stock is was initially priced at US$17 per share, a number that was slightly higher that what most analysts had estimated, raising $153 million in total. Most major Canadian companies have yet to reach profit territory — the last three-odd years have been an exercise in borrowing to fund new production facilities in order to meet demand that the legal recreational market is expected to bring.

Tilray is no different — the company charted a loss of $7.8 million in 2017. Kennedy says that the capital raised in this IPO will be used to expand the company’s production facilities on Vancouver Island, London, Ontario and in Portugal, as well as pay down some of its debt.

The Canadian company is actually mostly owned by Privateer Holdings Inc., a private equity firm that focuses on the cannabis industry and has ties to billionaire Peter Thiel. Tilray currently has about 92 million shares outstanding — only 9 million of those shares are being sold as part of the IPO and the rest will continue to be controlled by Privateer and a group of undisclosed institutional investors.

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