Harborside joins the wave of US cannabis companies listed on the Canadian stock exchange

"I think this marks a very important step in the growth of the cannabis industry," said CNN Business Steve DeAngelo, co-founder of Harborside as a medical cannabis dispensary in 2006, and president emeritus. of the society. "When you have an organization like Harborside with deep-rooted activism and very intense involvement in this activism, it has now been able to become a for-profit cannabis company worth an estimated $ 300 million. Canadian dollars. " is a great validation. "

Harborside is a vertically integrated operator, which means it controls companies that grow, manufacture, process and sell cannabis. The company holds more than two dozen culture, manufacturing and retail licenses in California, which is now one of 11 states where the recreational use of cannabis has been legalized.

The bustling Harborside flagship store in Oakland resembles a rustic Apple Store, where edible objects, sprays, creams and other forms of cannabis are displayed in sleek cabinets and wooden and glass shelves.

In the last 12 years, the Oakland Health Clinic and another Harborside site in San Jose have generated more than $ 400 million in sales. In 2018, these clinics generated revenues of C $ 50 million, according to regulatory reports.

Harborside Inc. owns or operates six clinics in California and Oregon and has entered into agreements to purchase two health clinics and a culture operation in Northern California.

An investment capital increase of C $ 19.65 million and the currency of the public The CSE list will help Harborside achieve these goals, Harbourside CEO Andrew Berman told CNN Business.

"We are very focused on California," Berman said of the company's plans for the next 12 to 18 months. "The market is too important to be missed now."

Harborside signed a letter of intent to acquire Airfield Supply Co., a health center and dispensary based in San Jose, California, as part of a stock transaction. of a total value of 41.8 million US dollars, indicate securities deposits. The acquisition, which is expected to be finalized in 12 months, also implies that Harborside is raising $ 60 million, according to documents filed with Canadian securities regulators.

Harborside spent a lot of time and money setting up its operational headquarters before becoming a publicly traded company. The company has reorganized its head office, put in place leadership familiar with compliance with regulatory requirements and put in place standard operating procedures, said Berman.

Harborside officials remain attentive to the brand and the long-standing role of society in the cannabis activist movement.

"We do not want to lose what we have built in this whole process," said Berman.

The reverse takeover process that Harborside uses to register with CSE allows private companies to forego some of the more expensive aspects of a public offering by combining their activities with an already public company. And unlike a more traditional public offering for savings, Harborside does not generate proceeds from the reverse merger itself, but will be better able to raise money by issuing shares for years to come.

Cannabis companies that operate under state-regulated programs have limited access to capital in the United States. Big banks and private equity firms are reluctant to invest and stock exchanges are reluctant to list the shares of US companies that deal directly with the illegal substance at the federal level. As a result, these companies have migrated to the Canadian Stock Exchange, which has been openly welcoming cannabis companies for more than five years.

On Monday, about 170 cannabis companies were listed on the CSE, about 40 percent of which operated in the United States, said Richard Carleton, CEO of the stock market. US cannabis companies have raised $ 3.2 billion in 2018 and are poised to exceed that total this year, Carleton said, noting that nearly $ 1 billion was collected by cannabis companies in the US. CST to date.

In the case of Harborside, the company was acquired by Lineage Grow Company, which operated two cannabis stores in Oregon.

As long as the US federal law does not allow cannabis companies to conduct their banking operations openly – and efforts to this end are making progress in the House of Representatives – US cannabis companies "touch plants" will continue to seek options such as reverse takeovers in Canada, "said Harrison Phillips, vice president of Viridian Capital Advisors, a cannabis investment and advisory bank.

If the federal bank laws were to change, then CSE companies could switch to larger exchanges such as the Toronto Stock Exchange, NYSE or Nasdaq, he said.

"This is hyper-growth, so companies need to be able to leverage so much capital and deploy them to support their growth," Phillips said.