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Bill Peters, Investor’s Business Daily
LAS VEGAS — Acreage Holdings CEO Kevin Murphy said U.S. exchanges would be more open to marijuana stocks if the federal government loosened restrictions on banks.
On Thursday, Acreage completed a deal to go public that values the company at $2.8 billion and installs former House Speaker John Boehner and former Massachusetts Gov. Bill Weld on the board.
The stock arrived on the Canadian Securities Exchange via a reverse takeover. Acreage Holdings raised $314 million from around 30 to 35 institutional investors as part of that deal. The company trades under the ticker ACRG.U. Shares popped above 24 Canadian dollars Friday, after opening Thursday at 18.50.
Acreage, in going public, joins other marijuana stocks that debuted with a billion-dollar-plus price tag. Curaleaf, another U.S. cannabis company, went public with a valuation that surpassed $4 billion. U.S.-based MedMen, best known for its sleek dispensaries and chic marketing aesthetics, went public in May with a $1.6 billion valuation.
Acreage’s first day on the CSE also follows the resignation of Attorney General Jeff Sessions, who has long feared what he sees as marijuana’s potential harm to communities. It also comes after U.S. midterm elections in which three states voted to legalize medical or recreational cannabis and the Democrats took control of the House.
The company’s debut on the Canadian Securities Exchange ran in tandem with MJBizCon in Las Vegas. The conference, which runs through Friday at the Las Vegas Convention Center, has drawn more than 27,000 attendees. More than 1,000 exhibitors packed the convention center floor — booths with brightly lit floor panels, loud club music, vapes placed in fluorescent display cases as if they were jewelry, and massive metal pieces of cannabis-processing machinery containing conveyor belts, glass coils and balloon-size glass bulbs.
During a conference presentation Wednesday, in a megachurch-size presentation hall with its own jumbotron screens, Acreage’s Murphy said the U.S. exchanges could open up more to cannabis companies if legislation passed freeing up banks to work more closely with the industry.
While he expressed excitement about the company’s debut in Canada, he added: “I’m also saddened by the fact that I’m not ringing a bell in New York.”
Murphy took a moment to celebrate the departure of Rep. Pete Sessions, chair of the House Rules Committee, which observers say has stifled cannabis-friendly legislation during his tenure. How nice it was, Murphy said, “to see him looking for work.”
Boehner’s Cannabis Origin Story
Boehner’s appointment to Acreage’s board makes him the most high-profile name from U.S. politics to go as far as joining a pot company’s board. Boehner was once strongly against cannabis legalization, arguing it would lead to other drug abuse.
In an interview prior to the conference, Acreage President George Allen said the company first met with Boehner over lunch in January, not long after Sessions rescinded the so-called Cole Memo. Allen said the company met through a personal friend of both him and Murphy that knew Boehner. He declined to name the person.
The 2013 memo, issued by then Deputy Attorney James Cole, essentially told federal authorities not to burn their scarce resources cracking down on states that legalized cannabis and were managing their legal markets responsibly. The memo has been seen as clearing the way for a wave of state-level cannabis legalization.
In April, Acreage announced that Boehner and Weld would join Acreage Holdings’ board of advisors. The completion of the reverse takeover, in which a private company absorbs a public one and comes out the other end of the deal as a publicly listed firm, puts him and Weld on the board of directors.
Boehner in April tweeted that he was backing Acreage because his “thinking on cannabis has evolved.”
“I’m convinced de-scheduling the drug is needed so we can do research, help our veterans, and reverse the opioid epidemic ravaging our communities.”
Acreage Holdings’ board also includes former IBM (IBM) CFO Douglas Maine. Former Canadian Prime Minister Brian Mulroney is also joining the company’s board. So is former Time Warner Telecom CEO Larissa Herda.
Acreage Lawsuit, CEO’s FINRA Settlement
Acreage, under the name High Street Capital Partners, was founded in 2014. Helped by several years of acquisitions, the company now operates dispensaries and cultivation facilities in at least 14 states.
Allen said the company planned to serve the markets in the states where voters approved legalization last week. Michigan and Utah voted to legalize recreational cannabis. Missouri approved medical legalization. Allen said the company had been making connections in those states for potential business.
But as it expands, it also faces potential legal trouble for now.
The website New Cannabis Ventures reported that a company called EPMMNY was suing Acreage Holdings and a slew of other companies. The lawsuit, which New Cannabis Ventures posted online, seeks damages of at least $400 million.
The complaint alleges that Acreage and those companies worked to take away what the plaintiff says was its rightful ownership of 25% of a company called NY Canna. NY Canna, the lawsuit says, is a marijuana retailer and cultivator in New York state. The lawsuit accuses High Street, Acreage’s old namesake, of going behind the plaintiff’s back to acquire NY Canna.
“At no time during the process of High Street’s acquisition of NY Canna was EPMMNY ever consulted, advised or notified, nor did EPMMNY give its approval or consent thereto,” the lawsuit says.
Allen declined to comment on the lawsuit. Murphy, during the presentation this week, said the suit had no merit. He characterized the matter as a dispute between partners “pre-us getting involved.”
“You will come across a hater or two,” Murphy said.
Lawsuits have become more common in the cannabis industry, as companies gobble up a dispensary here or a license there. But the matter wouldn’t be Murphy’s first financial dispute. In January 2016, Murphy, who has some 30 years’ experience as a broker, settled with FINRA after the regulatory agency alleged he “failed to inform his broker in writing or receive preapproval” over a private sale of securities that he already owned, according to a regulatory disclosure filed last month.
As part of the settlement, Murphy agreed to remain outside the industry for 12 months. He also faced a $10,000 fine if he re-registered as a broker. He neither admitted or denied wrongdoing in the settlement. When asked in an interview Wednesday whether Boehner or Weld were aware of the settlement, Murphy said he was unsure.