High Times Regulation A Offer Formally Extended to June 30; Shares Likely to List Much Sooner
The parent of High Times magazine has formally extended its offer to the general public to June 30, but the shares are likely to list in the next few weeks, a person familiar with the matter told IPO Edge.
At the time of the IPO, investors who have already bought shares at $11 each will have the opportunity to sell them at a public offering price, which could be higher, the person said. High Times has made a string of acquisitions in recent months, sometimes issuing new shares. With roughly 31 million shares outstanding, the company has a valuation of around $350 million.
By leaving the offer open even after the stock lists, the company will retain an option to sell more shares to any investor under a so-called shelf. However, High Times would have no obligation to do so and may not sell any more shares.
In early December, High Times said it had raised $13.2 million from its IPO. Assuming investors continued to purchase shares at around the same rate since then, the company has probably raised at least $15 million.
In addition to cash from the sale of shares, High Times recently converted $28.6 million of debt to equity. That transaction dramatically reduced the company’s leverage and gave it scope to acquire some complimentary businesses.
For instance, High Times bought Spain’s Spannabis conference in January for $7 million. Spannabis will host its 16th annual industry conference in Barcelona this March.
High Times operates the renowned Cannabis Cup events along with Reggae On The River and the High Times Business Expo. The company also recently acquired DOPE Media for $11.2 million. DOPE has regional publications along with Dope Cup events that complement Cannabis Cup events. In December, Hightimes bought Buyers Industry Guide, owner of the BIG Show industry conferences. The B2B tradeshows gather twice annually in Miami and Los Angeles with over 10,000 industry guests annually.
A conference rollup strategy is smart for High Times on multiple counts. First, can use its existing sales infrastructure across events, reducing costs. The High Times brand is also stronger than any other in the industry, so more attendees may take interest in the events with the new affiliation.
Formally known as Hightimes Holding Corp., the company is raising up to $50 million in a Regulation A+ IPO open to all investors. The complete offering details are available at the company’s investing portal here. The company plans to use the IPO proceeds to invest in growth across both existing and new business platforms.
High Times has several other growth engines beyond conferences. For instance, until current management took over, the company had neglected to pursue a serious digital strategy. The company’s plans include the recent launch of an over-the-top streaming service that’s akin to a Netflix of cannabis, reflecting a fresh push to monetize the High Times brand.
The cannabis industry has drawn attention from investors and blue-chip companies in recent months as legalization in more U.S. states creates growth opportunities. Big Tobacco leader Altria recently announced a $1.8 billion investment in Cronos Group in December. Also, beer company Constellation Brands recently increased its stake in Canopy Growth with a $3.8 billion investment in the Canadian cannabis grower, a deal that surprised investors.
Once public, High Times will join other listed, growth-stage companies focused on the burgeoning cannabis industry. Those include MassRoots, which operates a mobile app for marijuana consumers to share and compare reviews. Another is KushCo Holdings, which offers products to marijuana dispensaries and growers. Most recently, Level Brands acquired cannabidiol (CBD) manufacturer cbdMD as the Farm Bill removed hemp from DEA oversight, clearing a path for broader CBD sales. The World Health Organization has also recently said that CBD, a hemp derivative without psychotropic effects, should not be under any international control at all.
Last year, IPO Edge published a detailed analysis of High Times. As the strongest brand in the marijuana world, it has great potential to expand even without entering the marijuana growing business. However, there’s no reason to rule out the possibility of the company eventually making such a move
John Jannarone, Editor-in-Chief