CannTrust Holdings Inc. took a major step Monday toward persuading investors that it is one of the world’s most important cannabis companies by listing on the New York Stock Exchange.
CannTrust has not yet inked an eye-popping deal like Cronos Group Inc.’s /zigman2/quotes/206842762/composite CRON -3.21% /zigman2/quotes/202715342/delayed CA:CRON -2.44% $1.8 billion investment from Altria Group Inc. /zigman2/quotes/208895754/composite MO -2.56% , or Canopy Growth Corp.’s /zigman2/quotes/200603886/composite CGC -3.79% /zigman2/quotes/202205609/delayed CA:WEED -3.25% $4 billion deal with Corona beer maker Constellation Brands Inc. /zigman2/quotes/207737284/composite STZ -1.46% . But it has managed to sell as much pot as its larger rivals, at least in the early days of legal weed sales in Canada.
With a market value of roughly C$1 billion ($759.1 million) affirmed on the NYSE, CannTrust Chief Executive Peter Aceto told MarketWatch over the phone Monday that the listing will help investors.
“We want to broaden our investor base and give more investors access to the company,” he said.
Aceto made the case that CannTrust is “well positioned” to take advantage of the global opportunity for medical and recreational cannabis that he says is worth hundreds of billions of dollars.
“Half of that global revenue is going to be from medical, and we have proven leadership in medical,” Aceto said. “We have doctors, PhDs, professors, which help us create technology with cannabinoids and cannabis.”
MarketWatch has been tracking and profiling pot companies that trade on the major U.S. exchanges amid Canada’s legalization of recreational marijuana. For background and profiles of other companies, go here. Here is what you need to know about CannTrust:
What business is CannTrust in: medical or recreational?
Like many of the licensed cannabis producers in Canada, CannTrust began as a medical marijuana operation, supplying patients under the country’s system. According to Jefferies research, CannTrust has secured about 20% of the national medical market.
CannTrust is also in the business of selling recreational cannabis to Canadians and has four brands in the market so far. In terms of the recreational market, Aceto says that it’s still too early to tell which brands of his — or his rivals — are succeeding because there is more demand than supply. “Because of the supply challenges, whenever a product is available, it’s selling quickly,” he said. “Building a brand takes time.”
Aceto says that CannTrust is helping retail workers who sell pot — known as “budtenders” in the industry — learn about its products. By way of anecdote, products with a high amount of tetrahydrocannabinol — or THC, the psychoactive compound in pot, are selling very well. “But the jury is still out in terms of supply and demand,” Aceto said.
How much pot does CannTrust grow and at what cost?
CannTrust does have an overall issue with supply and to fulfill its needs it currently has struck a deal with Aleafia Health Inc. /zigman2/quotes/203485112/composite ALEAF -2.26% to buy wholesale pot, according to Jefferies analyst Owen Bennett.
In the third quarter, CannTrust sold roughly 1,300 kilograms of cannabis and equivalents in the period for an average price of C$8.37 a gram. Those sales amounted to revenue of C$12.6 million, which is about double what it sold in the year-ago quarter. CannTrust turned a small profit of roughly C$420,000 during the quarter
Analysts surveyed by FactSet expect fourth-quarter sales of C$21.2 million on losses of 4 cents a share.