Seattle’s Privateer Launches $100M IPO For Its Canadian Marijuana Company

Photo Credit: Tilray

Tilray, which both grows and sells medical marijuana in Canada, filed papers Wednesday for an initial public offering in the U.S. that could raise $100 million.

The company, a subsidiary of Seattle-based Privateer Holdings, supplies “tens of thousands of patients in 10 countries,” and hopes to capitalize on the pending legalization of recreational marijuana in Canada, its filing says.

Privateer, a holding company that also owns U.S. marijuana brands such as Seattle-based The Goodship and Marley Natural, launched Tilray in Canada in 2014. It later received a license from the Government of Portugal in 2017 to import and produce medical cannabis in the European Union.

In its filing, the company said it’s the first to legally export medical cannabis from North America to Africa, Australia, Europe and South America, but those overseas sales are a small fraction of its current business.

Its revenue grew 63 percent to $20.5 million in 2017, while its net loss was essentially flat at $7.8 million. For the first quarter of 2018, the company reported revenue of $7.8 million and a net loss of $5.2 million.

Tilray’s filing comes one day after Canada’s Senate passed an historic bill legalizing the recreational use of marijuana, becoming the second nation in the world and first G7 nation to legalize the drug nationwide.

Canadian Prime Minister Justin Trudeau announced Wednesday that recreational use of marijuana will be legal in the country on October 17.

Tilray has been preparing for legalization in Canada, in April launching a subsidiary to produce and distribute for the recreational market.

“We are witnessing a global paradigm shift with regard to cannabis, and as a result of this shift, the transformation of a multibillion-dollar industry from a state of prohibition to a state of legalization,” the company said in its filing.

The company has 330 employees, according to the filing, which does not specify how many shares it expects to sell, or how they will be priced.

Tilray is led by president and chief executive Brendan Kennedy, who is also one of Privateer’s three founders.

Its operations include a research facility in Nanaimo, B.C., and cultivation and processing sites in Ontario as well as in Portugal.

The filing says proceeds of the IPO will be used to pay off debt and increase cultivation and processing capacity.

Tilray’s filing with the Securities and Exchange Commission carefully notes that the company does not grow or sell marijuana in the United States — where cannabis is not legal under federal law despite an increasing number of states that allow recreational or medicinal use.

The IPO filing comes at a time when the IPO market in the U.S. is strong. There have been 107 IPOs with more than $50 million in market capitalization filed this year, up 30.5 percent compared to the same period in 2017, according to Renaissance Capital, which tracks IPOs. Those companies have raised $25.2 billion in 2018, up 44.2 percent over the previous year.