Vertical Cos., which has designs on being the “Bacardi of cannabis”, is making quite the splash on multiple news outlets. I saw them on TV (see below) and a couple of articles as well (links to those below).
The question is, is this the right time? According to the MarketWatch article, their CEO thinks this is the best time to go public.
We want it to be regulated, because there’s so much bad product out there, including many that don’t contain the CBD they claim,” said Wallin. “We need clarity on the rules, and we need visibility in the supply chain. Consumers are buying CBD online and don’t know what they are getting, so, yes, we would welcome regulation.”
Wallin is confident that the increasing acceptance of cannabis among Americans will help drive sensible legislation, including a lifting of the federal ban. In the current political climate, it “might be the only issue that we can all get behind,” he said. “We’re in it for the long game.”
This will be the first U.S. cannabis IPO ever (if no other company beats it out of the gate). As such, this could be among the biggest opportunities for gains yet in the marijuana industry.
CBD Up Close – Business Analysis
There are a number of factors that are preventing consolidation in the CBD/cannabis markets right now. Currently, these markets are fragmented up and down the verticals but companies like Vertical Cos. have, in our opinion, the right strategy for this market at this time.
As long as there are no serious setbacks, the pace of consolidation is only going to increase. If a blanket end to prohibition occurs (it will probably happen for CBD first, followed by cannabis) sooner than expected then there will be a veritable feeding frenzy. CBD Up Close expects that larger companies will purchase smaller companies in all parts of the value chain and, at least early on, the companies doing the buying will have to pay elevated multiples of revenue to acquire companies in a rush to acquire more market share in the industry.
For potential takeover targets, the best way to position yourself for this is to run your company as much like a traditional company as possible. This should go without saying but what we mean by this is that you need to keep legitimate records, make sure that you follow all regulations and procure all necessary licenses, and, also, make sure that your key people have relatively clean backgrounds.
For investors, a diversified portfolio that either includes various companies throughout the value chain or at a specific level of the value chain makes the most sense. The CBD/cannabis market is, by all accounts, going to experience tremendous growth over the next decade as it first becomes legal and then as it encroaches upon established industries such as alcoholic beverages and alternative medicine.
Due diligence efforts will be key for investors, even more so than it is for traditional companies. Investors must have a thorough knowledge of the political and regulatory landscape in addition to doing due diligence on specific companies that you are considering adding to your portfolio.
Retail investors also have options, which we plan on going into further detail on at a later date.