- Vertical, a California-based cannabis company, is splitting its hemp and CBD business into a separate unit so it can go public on a major U.S. stock exchange.
- The department’s chief executive, Smoke Wallin, told Business Insider in an interview that he was in the early stages of negotiations with bankers to list NASDAQ.
- Wallin said he was also in talks with a number of hedge funds and other institutional investors to support the company before it went public.
Vertical, a California-based cannabis company, is spinning its hemp and CBD business, which aims to make it public on a major U.S. stock exchange.
The new venture, Vertical Wellness, will be headed by the aptly named Smoke Wallin. He will serve as the CEO of the hemp country, while Todd Kaplan, the founder of Vertical, will remain the CEO of the company’s marijuana business.
Vertical Wellness will cultivate 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 taking over as president of Vertical last year, said the split was likely to take place in mid-February. Existing shareholders – those who purchased before the split date – will receive shares in both Vertical Wellness and Vertical.
The company is now seeking to raise money from institutional supporters to lay the groundwork for going public, Wallin said in an interview with Business Insider.
Read more: Aurora Cannabis prepares to break into $ 1.6 billion CBD industry in the US
Vertical Wellness focuses on Nasdaq listing – Wallin was a classmate at Vanderbilt Business School with Nasdaq CEO Adena Friedman – but the company is not set to pursue direct registration as Slack or hire bankers and go through a more traditional primary. public offering.
Wallin said his team is also thinking about pursuing a reunion, although this is his least preferred path.
Since the federal government passed the farm bill last December, hemp – a variety of the cannabis plant that contains only minimal amounts of THC, the compound that makes you climb – has been legal in the United States, although plants containing THC remain banned by the federal government.
Prior to the adoption of the farm bill, major US exchanges such as Nasdaq and the New York Stock Exchange would not allow cannabis companies that sell products in the United States, hemp or others, to be listed.
Hemp is a source of CBD or cannabidiol, a non-psychoactive compound that occurs in everything from high-quality chewing gum to infused water. The CBD market could reach $ 22 billion worldwide by 2022, according to industry research firm Brightfield Group.
Read more: Marijuana may be the biggest growth opportunity for beverage manufacturers struggling as millennials give up potty beer
Some institutions have signaled that the farm bill provides a sufficient legal basis for investing directly in companies that do not touch marijuana plants containing THC, Wallin said.
When he met with hedge funds to raise money for Vertical last summer, Wallin said there was great interest, but that investors in those funds – usually pension funds or insurance companies – would not touch any deal with a breath of federal illegality.
“There have been many deals that I would call ‘hat transfer’ in which partners have invested their own money or pooled together to invest outside their fund,” Wallin said.
“The company is not tarnished by THC now,” Wallin said. “So, if you’re an institution that didn’t hold shares in Vertical before, now is the way to go.”
Having real institutional support is crucial for a company like Vertical Wellness, which is trying to grow fast. After all, growing hemp is a capital-intensive process, and developing enough quality supplies to meet CBD’s rapidly growing demand will be a challenge.
“I want to spend my time working in business, not raising money,” Wallin said. “All the Marriotts, Hiltons, Nestles and Coca-Cola around the world want a piece of CBD.”
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