Colorado Cannabis Firm Files for IPO — in Canada

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A U.S. company with primary facilities in Boulder, Colorado, has filed to list its stock on the Canadian Stock Exchange (CSE). Stanley Brothers Holdings Inc. makes and distributes cannabidiol (CBD) products made from industrial hemp. Its best-known products are trademarked with the name Charlotte’s Web.

The name refers to a famous children’s story and indicates the non-psychoactive nature of the company’s products. Industrial hemp contains less than 0.3% by weight of THC, the component of marijuana that produces the high.

The filing came in the same week that the U.S. Senate passed its version of the 2018 Farm Bill that legalizes the cultivation of hemp in the United States.

According to the company’s prospectus, Charlotte’s Web is the top brand by market share in the CBD supplements segment, a market that the company expects to grow from U.S. revenue of $174 million in 2016 to $1.6 billion in 2021.

Stanley Brothers also reports other impressive data about its business:

Revenue grew from US$14.7 million in 2016 to US$40.0 million in 2017, representing growth of 172% year-over-year

Gross profit grew from US$9.6 million in 2016 to US$29.9 million in 2017, representing growth of  212%; gross profit as a percent of revenue was 65% and 75% in 2016 and 2017, respectively

Adjusted EBITDA grew from US$2.0 million in 2016 to US$14.1 million in 2017; adjusted EBITDA as a percent of revenue was 14% and 35% in 2016 and 2017, respectively

For the three months ended March 31, 2018, the Company generated revenue of US$13.1 million, gross profit of US$10.5 million and Adjusted EBITDA of US$4.5 million

If the U.S. Farm Bill makes it through the House and is signed by the President–and still includes the provision that makes industrial hemp legal–the Stanley Brothers Canadian IPO may prove to be prescient. The company says it plans to expand production capacity and cultivation infrastructure at its Colorado and Kentucky farming operations.

Didn’t we mention Kentucky before? Home of Senate Majority Leader Mitch McConnell who personally saw to it that restrictions on hemp were lifted in the Farm Bill? Surely that’s just a coincidence.