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Vertical, a California cannabis company, is splitting its hemp and CBD business, which it aims to make public on a major US stock exchange.
The new entity, Vertical Wellness, will be headed by the aptly named Smoke Wallin. He will badume the role of CEO of hemp, while Todd Kaplan, the founder of Vertical, will remain the CEO of the company's marijuana division.
Vertical Wellness will grow hemp and produce branded CBD products for the US market, while Vertical will focus exclusively on California, where marijuana containing THC is legal.
Wallin, who was previously CEO of a number of alcohol brands before becoming president of Vertical last year, said the split would likely occur in mid-February. Existing shareholders – those who purchased before the split date – will have holdings in Vertical Wellness and Vertical.
The company is now looking to raise funds from institutional donors to pave the way for its publication, Wallin told Business Insider.
Read more: Aurora Cannabis prepares to break into US $ 1.6 billion CBD market
Vertical Wellness is aiming for a NASDAQ listing – Wallin was one of his clbadmates at Vanderbilt School with Adena Friedman, Nasdaq CEO – but the company is not determined to decide whether it will pursue a direct listing like Slack, or will engage bankers and go through a more traditional IPO.
Wallin said his team is also considering a reverse merger, although this is his least favorite route.
Since the federal government pbaded the Farm Bill last December, hemp – a cannabis plant variety containing tiny amounts of THC, the compound that makes you grow – is legal everywhere in the United States, although plants containing THC remain prohibited. by the federal government.
Prior to the adoption of the Farm Bill, major US stock exchanges such as the NASDAQ and the NYSE did not allow cannabis companies selling products in the United States to list them, be they hemp or otherwise.
Hemp is a source of CBD, or cannabidiol, a non-psychoactive compound that has manifested itself in all areas, from high-end gummy candies to infused water. The CBD market could reach 22 billion dollars in the world by 2022, according to the Brightfield Group industry research firm.
Read more: Marijuana could be the biggest growth opportunity for struggling beverage manufacturers as millennials abandon pot beer
Some institutions have indicated that the Farm Bill provides sufficient legal basis for investing directly in companies that do not touch marijuana plants containing THC, Wallin said.
When he met hedge funds to raise funds for Vertical last summer, Wallin said he was attracting a lot of interest, but investors in those funds – usually pension funds or insurance companies – would in no way dispute the smell of federal illegality.
"There was a lot of what I would call" pbad the hat "deals, where partners would invest their own money or pool to invest outside of their funds," Wallin said.
Now, "the company is not tainted by the THC side," Wallin said. "So, if you're an institution that did not previously hold Vertical stock, there's now a way to do it."
Having real institutional support is essential for a company like Vertical Wellness that is trying to grow quickly. After all, hemp cultivation is a capital-intensive operation, and it will be difficult to develop a supply of sufficient quality to meet the rising demand for CBD.
"I want to spend my time working for the company and not raising money," Wallin said. "Every Marriott, Hiltons, Nestle and Coke in the world wants a piece of CBD."
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