By Ciara Linnane, MarketWatch
Shares of Vireo Health International Inc. rocketed 26% Thursday, after the U.S. cannabis company said it has named cannabis entrepreneur Bruce Linton as executive chairman.
Linton, the former founder and co-chief executive of cannabis market leader, Canada’s Canopy Growth Corp. /zigman2/quotes/200603886/composite CGC -6.96% , /zigman2/quotes/202205609/delayed CA:WEED -3.64% will join the Vireo board and work closely with CEO and founder Dr. Kyle Kingsley to shape the company’s strategy and lead its capital markets activity.
It is Linton’s first major role since he was ousted from Canopy in July, amid pressure from the company’s biggest shareholder, Corona beer brewer Constellation Brands Inc. /zigman2/quotes/207737284/composite STZ -8.02% , which invested $4 billion in the Smith Falls, Ontario-based company last year.
“This is a science-backed marijuana company that met my criteria for best practices and a valid methodology,” Linton told MarketWatch in a telephone interview. “This struck me as a company doing a lot of good work that nobody knows about.”
Minneapolis-based Vireo /zigman2/quotes/208230606/delayed VREOF -16.77% /zigman2/quotes/204225479/delayed CA:VREO -11.58% was set up five years ago with a team led by doctors, scientists and engineers as a medical cannabis company that has developed into a multistate operator now active in 11 states, said Kingsley. The company has 400 employees and offices in New York, Montreal and Denver, alongside Minnesota.
“We really looked to bring in professionals that understand science and intellectual property,” said Kingsley, acknowledging that the company is “relatively unknown.”
Vireo went public in March on the Canadian Securities Exchange, the small exchange that has become the preferred destination for cannabis companies that are not allowed list on U.S. exchanges because of the continued federal ban on cannabis. Like many cannabis companies, Vireo went public through a reverse take over.
The company had $18.5 million in revenue in fiscal 2018, it has 13 patents pending, 11 manufacturing licenses, 32 dispensary licenses and 2 hemp licenses, according to its website.
It produces pharmaceutical-grade products for medical patients, as well as high-potency soft gels and vaporizer cartridges.
Linton and Kingsley are now looking at acquisitions that will make a good fit and are eyeing those states that are still in the early stages of developing their cannabis sector.
“If I were a tobacco company, I would want to talk to us about our IP,” said Linton.
Linton will be compensated in incentive warrants, which will be distributed in three tranches. The executive said the new role will be his main job for now, although he also have a 10% investment in a company specializing in psychedelic research and in a software company called Ruckify, that specializes in renting equipment, household items and other categories of goods that are rarely used and take up space.
“We need to change the word psychedelic, which still has too much negativity from the 1960s, it’s not the right baggage,” he said.
Ruckify, meanwhile, is partly a climate play, an area that Linton explored immediately after his ouster from Canopy in July.
Meanwhile, Canopy said Thursday it is planning to launch a wellness company with Canadian rapper Drake. No further details were immediately available.
Vireo shares have gained 7% in the month to date, while the ETFMG Alternative Harvest ETF /zigman2/quotes/204332491/composite MJ -5.09% has fallen 2% and the S&P 500 /zigman2/quotes/210599714/realtime SPX -4.42% has gained 1.8%.