Tilray, the first cannabis company to conduct an initial public offering on a U.S. exchange, closed up 32 percent.
According to Financial Times reporting, Tilray’s shares sold for a listing price of $17, higher than the original indicated range of $14 to $16 a share. The IPO raised $153 million.
And at $22.39 at the close of trading on Thursday (July 19), the company had a market value of nearly $2 billion.
“It is a big deal for the cannabis industry’s expansion plans,” said Matthew Kennedy, an IPO market strategist at Renaissance Capital, which runs exchange trade funds that buy newly listed shares.
Brendan Kennedy, Tilray’s chief executive, revealed that 70 percent of the buyers of the IPO were U.S.-based investors, 18 percent Canadian and 12 percent from outside North America, including London, Frankfurt and Hong Kong.
“It is a validation for us and the entire sector that [cannabis] is a global opportunity,” Kennedy said. “It signifies a global shift in perception.”
Since it launched in 2014, Tilray has yet to turn a profit, recording a net loss of $7.8 million in 2017 and $5.2 million for the three months ended in March.
These recent funds will help with an expansion plan to increase its production space from about 60,000 square feet to about 912,000 square feet, as well as debt repayment, working capital and acquisitions.
This is a step forward for the cannabis industry, which is still struggling to reach the financial mainstream. Last month, a U.S. Senate panel voted to block an amendment that would allow banks to open accounts for marijuana businesses without being punished by federal regulators.
The current policy forces many marijuana businesses to operate on an all-cash basis, which is “a big problem because it’s great for organized crime, it’s great for money laundering, it’s great for theft and larceny, it’s great for cheating on taxes, it’s great for cheating on your payroll,” said Senator Jeff Merkley (D-OR), the sponsor of the amendment, before the vote. “We’re really facilitating crime by not enabling the banking industry to provide basic services.”