The New York Stock Exchange may be giving the green light to a cannabis company listing.
Innovative Industrial Properties Inc. filed an S-11 on Oct. 17 to be a public company and to list at the Intercontinental Exchange Inc.’s owned market. New Cannabis Ventures broke the news Monday evening. It will be the first publicly-traded cannabis-related Real Estate Investor Trust (REIT) and, if approved, would be the first cannabis company to be traded at the venerable NYSE.
The Exchange declined to comment on the company and instead sent along a document that defines the listing process. If Innovative Industrial Properties gets approved, then it could list in four to six weeks. However, the document states, “the Exchange may deny listing or apply additional or more stringent criteria based on any event, condition, or circumstance that makes the listing of the company inadvisable or unwarranted in the opinion of the Exchange.” In other words, don’t get too excited for now as they may just say no.
The REIT plans to sell 8.75 million shares at $20 a share and use the symbol IIPR. The total number of shares is 10 million, giving the company a $200 million valuation. The first tenant is PharmaCann, which is also one of the first licensed medical marijuana companies in New York. PharmaCann is selling its its 127,000 square foot building in New York to Innovative Industrial Properties and then leasing it back for $30 million. The deal is expected to close in the next couple of months.
Innovative Industrial Properties plans to focus its holdings in New York, Illinois, Maryland, California, Arizona, Washington, Nevada, Massachusetts and Oregon. All states with some form of legalized marijuana.
Alan Gold will serve as executive chairman of the company and brings to the table a strong history in the realty business. He co-founded Alexandria Realty (NYSE: ARE) and Biomed Realty Trust (formerly NYSE: BMR). Biomed was acquired by Blackstone in a $7 billion transaction in January. Paul Smithers will serve as the company’s chief executive officer
PharmaCann is based in Illinois where it runs two medical marijuana plants and four dispensaries. It won one of the first five licenses awarded in New York State and can build four dispensaries. PharmaCann has about 15 employees in its Hamptonburgh facility, but plans to employ approximately 70 people once the facility is completely up and running. PharmaCann spent about $25 million on building the lab that features 16 grow rooms and can grow medical marijuana year-round.
Jeremy Unruh, general counsel for PharmaCann said the company chose to sell the building as a way to raise money. “Financing is challenging in cannabis. You don’t get construction loans like normal companies. We had millions tied up in this facility, so it made sense.” Unruh said that this facility is easily one of the largest in North America and could be one of the top three largest in the world. “I can say Alan Gold and Paul Smithers have a tremendous track record in the bio-tech field,” he added.
New York’s medical marijuana program is off to a slow start. The tight restrictions on the patient population has resulted in only roughly 8,000 people signing up and there are only about 800 doctors that are making medical marijuana recommendations. However, the Department of Health has made many suggestions to improve the program and if those are implemented then business could improve.
By Deborah Borchardt - Forbes/Oct. 18, 2016
Photo: Spencer Platt, getty
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