How to Invest in Cannabis IPOs
The cannabis market has begun 2019 with a big rally following a horrible Q4. The Global Cannabis Stock Index, managed by New Cannabis Ventures, gained over 44% in January after having dropped over 44% in the 4th quarter. With the bullish tone in the market, many investors are looking for new issues, specifically initial public offerings (IPOs), which we are seeing with increasing frequency as the capital markets have opened to cannabis companies.
Those looking to invest in new listings should be aware that most of them are not IPOs but rather reverse-mergers, or reverse takeovers (RTOs) as they are known in Canada, where these deals are taking place. True IPOs represent the first time stock has been offered to the public, while RTOs are a quicker way to go public by merging into a company that has already had its stock trading previously. In both cases, investors can sometimes buy in before the stock begins trading, often getting a better price than where the stock commences trading after the IPO or RTO. Most retail investors won’t be able to access stock in advance of it trading public unless they are accredited investors who have a direct relationship with a