Hot IPO Alert – Gage Cannabis Co.

The Company

Headquartered in Ayers, Michigan, Gage Cannabis Co. is a cultivator, curator, and retailer of high quality medicinal and recreational cannabis products. Gage also brings internationally recognized cannabis brands to market.

Gage is one of the largest vertically integrated operators in Michigan, which is the sixth largest adult-use cannabis market in the US in terms of sales, and the second largest medical cannabis market in the US. Gage has won several industry awards for dispensary design and branding, which it attributes to its “consumer-centric” culture.

Gage Cannabis Co.

Highlights

  • Gage began adult-use cannabis sales in Michigan in late 2019 and now has 13 licenses for dispensaries, with 7 active stores and 6 more in the works.

 

  • The Company has 4 licenses for cultivation, with 3 currently operational, as well as one processing license.

 

  • Gage is one of the largest cannabis cultivators and producers in Michigan. As of August 2020, Gage commanded over 10% of the medical marijuana sales in Michigan, despite only operating 1% of the state’s retail operations.

 

  • The average basket size of Gage retail customers had been more than $175 for the 5 months preceding Sept. 8, 2020 (that’s up from $130 in March 2020 – and by contrast, that’s nearly $100 higher than the average basket size for Michigan, which is $85). The Company plans to release newer data on sales closer to its IPO.

 

  • Gage and its affiliate brands have a large, active and engaged following online and on social media.

 

  • Jason Wild, who is the President of JW Asset Management with $1 billion under management, is a founding investor in Gage and has been involved with the company since 2017. A former pharmacist, Jason has an astonishingly successful track record as an investor in the legal cannabis space. He was an initial investor and is still a majority shareholder of multi-billion dollar cannabis company TerrAscend (CSE: TER; OTCQX: TRSSF), where he is also Chairman. He was also an early investor in multi-billion dollar cannabis companies Canopy Growth Corp (NASDAQ: CGC), and Cronos (NASDAQ: CRON). His Twitter handle is @JasonGWild – if you’re a cannabis investor, you’d do well to follow him.

 

  • Bruce Linton, founder and former CEO/Chairman of Canopy Growth Corp, is Executive Chairman of Gage. Linton also sits on the Board of Directors at MindMed (NEO: MMED; OTC: MMEDF), which recently had a very successful IPO. Gage says that Mr. Linton has been instrumental in opening doors within the industry, especially within the media.

Products / Partnerships

  • Gage’s product portfolio covers five classes: flower products, edibles, hardware, concentrates, and vape pens / disposables.

 

  • Its cultivation operations are called “small-batch growing” and are done 100% via hydroponics, which the company says are “sustainable.”

 

  • The company has a licensing agreement (procured in May, 2020) with SLANG Worldwide, which makes vaporizers, cannabis topicals, and a variety of edibles. SLANG possesses 65 SKUs and 6 distinct brands, sells its products in 13 states and 2 countries, and has a number of partnerships with U.S. based dispensaries.

 

  • Gage also has a partnership with an outfit called “Cookies,” a leading lifestyle and cannabis brand based out of California that has a massive following. Together they launched Cookies Michigan, which opened Jan. 31, 2020, and which Gage is operating.

Market

Michigan was the fourth largest adult-use cannabis market in the U.S. as of late May, 2020, reporting a US$54.6M increase in adult-use sales from March 2020 through May, 2020 and an 70% increase in the number of retailers during that time (March 2 through May 12).

Corporate and Financing Details

  • Gage is 60% owned by management and insiders. The company has raised $60 million and has $7 million in cash with no debt.

 

  • The Company recently closed its Regulation A, Tier 2 equity financing (an offering), which was comprised of the issue of 28,571,400 subordinate voting shares, which generated US$50M. This offering was oversubscribed by both institutional and retail investors. You can view the offering circular here.

 

  • Gage says the money will be used to expand its retail footprint, pursue acquisitions and help make Gage the leading cannabis brand in Michigan.

IPO date

The Company plans to go public on April 6th on the Canadian Securities Exchange, under the ticker GAGE. Gage plans to follow this up with an OTC listing.

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