U.S. cannabis firm PharmaCann plans IPO as New York weed legalization lifts demand

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PharmaCann, one of the 10 original cannabis licensees in New York, has confidentially filed for an initial public offering that could value it at well over $1 billion, sources familiar with the matter told Reuters.

The planned IPO would help PharmaCann raise funds before New York state begins recreational weed sales, expected sometime next year. The IPO could take place this fall, one of the sources said.

PharmaCann, which operates in five other U.S. states, is likely to seek to dual-list its shares on the Canadian Securities Exchange and for over-the-counter trading in the United States, one of the sources said.

PharmaCann has tapped Canadian investment bank Canaccord Genuity (CF.TO) for the offering. Canaccord is expected to be the lead underwriter, while more banks are likely to be hired, the sources said. Canaccord did not offer an immediate comment.

Sources declined to be identified as the information is not public.

New York in March became the 16th U.S. state to legalize the sale of recreational marijuana, kickstarting a race from companies to secure a position in a market expected to be among the world's biggest.

Canadian rival Cronos Group Inc (CRON.TO) took a 10.5% stake in PharmaCann for $110.4 million in June. That deal valued PharmaCann at $1.1 billion, and the IPO would likely be a higher valuation, the sources said.

PharmaCann rival AWH Holdings Inc (AAWH.PK) listed in May, and the shares have climbed 38% since, giving it a market value of $1.9 billion

Despite growing state-level legalization of marijuana, it remains federally illegal and companies like PharmaCann, which grow or sell the plant, are prohibited from listing on the Nasdaq and the New York Stock Exchange.

Some 18 U.S. states have now legalized recreational use of weed, while 36 allow medical use. U.S. legal cannabis sales could reach $45 billion in 2025, according to analysts at JMP Securities.

PharmaCann had agreed to be taken over by New York rival MedMen Enterprises Inc (MMEN.CD) in 2018 for around $700 million, but that deal fell apart the following year.

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