(Adds confirmation by Vicente Fox adviser)
By April Joyner
June 19 (Reuters) - The company that owns High Times, a magazine devoted to marijuana culture, announced on Tuesday that it is launching an equity crowdfunding campaign ahead of its application for an initial public offering on Nasdaq later this year.
The campaign is intended to bolster the valuation of Hightimes Holding Corp while offering non-institutional investors greater access to shares than they would have in an IPO, said Adam Levin, the company’s chief executive.
For the offering, Hightimes has set a price of $11 per share, 10 percent below the price the company expects the shares to trade on Nasdaq. The company also announced that former Mexican President Vicente Fox would join its board of directors. Juan Garcia, a senior adviser to Fox, confirmed the announcement to Reuters.
The company announced its intention to go public last July, as Reuters first reported.
Its renewed push for an IPO comes as marijuana companies have gained a foothold on Wall Street. Two Canadian companies, Cronos Group Inc and Canopy Growth Corp , debuted this year on Nasdaq and the New York Stock Exchange, respectively.
Innovative Industrial Properties Inc, a San Diego real estate investment trust that owns medical-use cannabis facilities, went public in 2016.
U.S. cannabis companies face a roadblock to listing on the major exchanges. Marijuana remains illegal under U.S. federal law, though more than half of all U.S. states have legalized it for medical or recreational use. In Canada, however, medical marijuana is legal, and its senate recently voted in favor of allowing recreational use of the drug.
MassRoots Inc, a Denver cannabis social media network, unsuccessfully applied to list on Nasdaq in 2016. Levin said Hightimes has gained pre-clearance from Nasdaq. As a media company, it does not directly grow or distribute marijuana, though it runs events at which vendors have sold cannabis products.
A spokeswoman for Nasdaq declined to comment on Hightimes or whether U.S. federal law would bar it from listing on the exchange.
Levin said the U.S. debuts of Cronos and Canopy Growth signal a growing acceptance of the industry.
“The landscape is much different than it was several years ago,” he said. “When we initially filed, it was a big risk factor. No companies had been listed on the Nasdaq or the NYSE.”
He also pointed to the White House’s statement in April that the U.S. federal government would not crack down on states that have legalized marijuana as another positive sign.
Cannabis is still a budding industry: spending on the plant worldwide is projected to reach just $12.9 billion, according to Arcview Group, a cannabis investment and research firm. Canopy Growth, the largest Canadian marijuana grower, has a U.S. market capitalization of about $6 billion.
Legal and regulatory barriers have limited funding opportunities for companies in the space, Isaac Dietrich, the chief executive of MassRoots, said.
“Investors are looking for a pathway to liquidity, and that pathway is being cut off,” he said.
But others in the industry are hopeful as more cannabis companies have found their way onto U.S. exchanges.
Derek Peterson, the chief executive of Terra Tech Corp , based in Irvine, California, which grows and sells cannabis, said the company has taken steps to prepare for a listing on a major exchange, such as undergoing a reverse stock split on the over-the-counter market to boost its share price. Investors’ search for deal flow in a sluggish IPO market will lead to greater acceptance of marijuana companies, he said.
“When the opportunity opens up, there will be a tremendous amount of institutional capital chasing it,” Peterson said. “It’s just a matter of time.”
Reporting by April Joyner in New York; Editing by Lisa Shumaker