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Other - JANUARY 25, 2018

MedMen plans to go public, two cannabis firm merge

by Andrea Zander

Multi-state cannabis operator MedMen plans to go public in Canada early in the second quarter of 2018, listing on the Canadian Securities Exchange.

Canada plans to legalize recreational and medical marijuana nationwide by this fall, becoming the second country in the world to do so after Uruguay.

MedMen operates dispensaries and production facilities in three states — California, Nevada and New York — and has 700 employees. The company reports a total equity investment to date of $150 million.

The market for marijuana in California, the world’s sixth-largest economy, is expected to reach $3.7 billion this year and more than $5.1 billion in 2019, according to research firm BDS Analytics.

In 2016, MedMen launched its first fund and raised $100 million. MedMen Opportunity Fund pursued strategic investments in supply-constrained, high barrier to entry markets and diversified on both an asset and geographic basis. And in 2017, the company announced it would launch a second fund. Later the decision was made that it would be easier to go public instead, and the fundraising effort stopped, according to Green Market Report. Investors in both funds will receive shares in the public company. According to CNBC, the funds attracted former BlackRock CIO Chris Leavy, who chaired the first fund, and former Goldman Sachs investment banker Ruth Epstein.

In other news, two major players in the Canadian medical marijuana market are set to create one of the world’s biggest pot production firms in a $1.1 billion cash-and-stock deal. Canada’s No. 2 marijuana producer, Aurora Cannabis, has agreed to buy smaller rival CanniMed Therapeutics Inc. for C$1.1 billion ($852 million).

The deal marked the world’s biggest marijuana industry transaction, bringing the value of cannabis deals so far this year to $1.2 billion, more than double 2017’s total, itself a record, according to Thomson Reuters data.

Also, this month licensed marijuana producer Aphria signed a deal to buy Broken Coast Cannabis, a cannabis producer on Vancouver Island, in a transaction it valued at C$230 million ($187 million) in cash and stock.

And ETFMG Alternative Harvest, a U.S. exchange-traded fund that started trading on Dec. 26, 2017, may also be attracting investors, according to the Financial Post. The ETF is dominated by Canadian stocks, including Cronos Group Inc., Canopy Growth Corp. and MedReleaf Corp. and has risen 13 percent to a market value of approximately $48 million as of Jan. 2. Canada’s Horizons Medical Marijuana Life Sciences ETF reached a value of C$540 million ($431 million) as of Jan. 2.

The ETFMG Alternative Harvest ETF tracks 30 companies likely to benefit from the increasing global acceptance of various uses of the cannabis plant.

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