It may not be an appropriate time for business to go public, but do not tell that to previous Canopy Development ( NYSE: CGC) CEO Bruce Linton. Linton is still involved in the marijuana industry through Vireo Health ( OTC: VREOF), and he’s likewise seeking to make a much bigger splash with the launch of a brand-new company called Collective Development. Provided the success he achieved in making Canopy Development into an industry leader, financiers may wish to keep a close watch on his latest company.
The company may be on the Nasdaq very soon
On March 2, Collective Growth filed to list on the Nasdaq exchange. The company is wanting to raise $150 million that it prepares to offer through 15 million units priced at $10 each. If authorized, Collective Development would trade under the ticker sign CGROU.
The company is considering the hemp and cannabidiol (CBD) markets. It remains the Canadian-based marijuana company’s finest way to penetrate the U.S. market, where the federal government restricts cannabis products with tetrahydrocannabinol (THC) levels in excess of 0.3%.
Image source: Getty Images.
However, in his newest endeavor, Linton is looking at more than just hemp-derived CBD items. He informed Yahoo Finance, “What we want to take is the entire plant and produce a benefit from every component of it.” While he didn’t provide specifics regarding what the business was going to do, he did suggest that they might be looking at obtaining some business, mentioning that “we have a great management team and we think we can discover some really excellent targets.”
Part of that management group includes previous Canopy Development CFO Tim Saunders, and Geoff Whaling, who is a chairman at the National Hemp Association.
Currently, there’s no word on when the brand-new stock might start trading. Given the sell-offs that have happened in the markets of late due to worries surrounding the coronavirus, it would not be unexpected if Linton and his management team chose to hold off on the listing for now.
Could Linton’s new business be a good buy for cannabis investors?
The advantage that Linton has is that he knows the cannabis market well and can likely find great deals of worth in this bear market. Where financiers might have concerns is that Canopy Growth had a hard time to avoid of the red and his brand-new business might need deep pockets. Canopy Growth has Constellation Brands as a crucial financier that can help guide the pot producer. It also didn’t harm that Constellation offered the company an influx of money with a $4 billion financial investment.
It’s a much different climate in the marijuana industry today, and investors are more worried about profits and money flow than they are simply about sales growth and capacity. That’s why Linton’s new company might run into obstacles raising cash.
Without using investors something new or an engaging technique, it’s difficult to see why Collective Development will be able to prevent the down course numerous pot stocks have been on for the past 12 months. Linton was terrific at sales and did an outstanding job of promoting and building up Canopy Growth to the industry giant it’s ended up being. However he might discover it more difficult to do amid a lot negativity in the cannabis sector as business have a hard time to fulfill financiers’ expectations.
Another concern financiers may have about Linton is his focus. Between Vireo, Collective Growth, and backing Mind Medicine– a company in neuro-pharmaceuticals, or psychedelics– Linton’s involved in several various services, and his attention might not be totally on this brand-new venture.
Key takeaway for financiers
Collective Development is an up-and-coming company to keep an eye on, but without any distinguishable reason as to why this business will be a much better investment than the pot stocks that are currently out there, investors might not see a factor to invest in the stock when it becomes readily available. Investors would be better off waiting to see some concrete outcomes from Collective Growth before thinking about buying shares of the company.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool recommends Charlotte’s Web. The Motley Fool has a disclosure policy.”> David Jagielski has no position in any of the stocks discussed. The Motley Fool owns shares of and recommends Constellation Brands. The Motley Fool recommends Charlotte’s Web. The Motley Fool has a disclosure policy“>