Cannabis companies are using a ‘backdoor’ strategy to tap the public markets — and it’s fueling an M&A boom
|11/06/2018||Posted by BusinessMediaguide.Com under General World News||
- Many US-based cannabis companies are going public on the Canadian Securities Exchange in a nontraditional way — a so-called reverse takeover.
- Reverse takeovers are when a private company buys a shell company that’s already publicly-traded.
- It’s a strategy to become a public company quickly, particularly in an industry that’s federally illegal in the US.
- Going public means these companies can roll up competitors using their stock as the cannabis industry enters a wave of consolidation. But there are drawbacks to the strategy, according to lawyers.