A Minneapolis-based cannabis grower that is one of Minnesota's two designated suppliers of medicinal marijuana this week raised $51 million in a private placement of its stock and began trading Wednesday on the Canadian Securities Exchange.
Vireo Health International, trading as VREO, closed at $5.65 per share Thursday, up 13 percent, a market value of around $450 million.
Vireo gained the Canadian-exchange listing through a $3 million purchase of a dormant or shell company that had a public listing.
Vireo CEO Kyle Kingsley, a former Twin Cities emergency-room physician who started the company in 2015, said the additional capital and public listing will help "significantly expand our geographic footprint and our investments in intellectual-property development.
"We believe that science will drive the lion's share of long-term opportunity in the cannabis industry," he said. "From novel, efficient, scaled processing equipment to proprietary consumer products and our expansive intellectual property portfolio, Vireo has positioned itself as the cannabis company of the future."
Vireo previously raised $62 million in debt and equity to help finance operations and acquisitions, according to a Canadian regulatory filing.
Vireo chose to list on a Canadian exchange because the marijuana business over interstate lines is illegal in the United States.
About 30 states in recent years, including Minnesota, have unleashed the industry incrementally, from medical uses only to recreational adult usage.
The U.S. pot market is expanding rapidly. Legal spending should hit $22 billion by 2022, according to ArcView Market Research and BDS Analytics.
Seven of the 10 largest pot stocks by market value on the Canadian Stock Exchange are focused primarily on the U.S., according to Bloomberg. The more prominent Toronto Stock Exchange won't take them because its rules prohibit the listing of companies that aren't compliant with federal law where they operate.
The legal-pot stock market has proved very lucrative so far as money rushes in for now. For example, Canada's Horizons Marijuana Life Sciences Index ETF boasts more than $750 million in assets and has returned more than 60 percent to investors, making it the best-performing equity ETF listed in Canada. Vireo, one of several U.S. companies that operate multiple entities through state-regulated operations, is raising money in anticipation of expanded legalization of cannabis for medicinal and recreational purposes.
Vireo describes itself as a science-focused firm, approaching 400 employees in 11 states that "cultivates cannabis in environmentally friendly greenhouses, manufactures pharmaceutical-grade cannabis extracts, and sells its products at company-owned and third-party dispensaries."
Its Minnesota operation does business under the name Minnesota Medical Solutions.
The company lost $2.5 million on revenue of $17.6 million during the first nine months of 2018, according to the prospectus.
CEO Kingsley, 42, was paid $252,248 in 2018. He owns about 10 percent of the 110 million shares of Vireo.
Corporate officers and other insiders own up to 25 percent of the company.