In the midst of a downward trend on stock prices across the industry, licensed cannabis producers are currently looking for any way to drum up new business, from starting a pricing war to focusing on international expansion.
Today Cronos Group Inc. (NASDAQ: CRON; TSX: CRON) announced a new effort on that latter front by revealing the initial public offering for spinoff Cronos Australia Limited.
The company is a 50/50 joint venture with NewSouthern Capital Pty Ltd. and will see 40 million shares priced at 50 cents hit the Australian Securities Exchange next month.
Cronos Australia was founded back in February of 2018, and when the IPO closes slightly more than 30% of the company’s capital is expected to be held by Cronos Group.
Announcing the upcoming public offering and plans to expand the company’s business to new regions, CEO and Chairman Mike Gorenstein commented:
Recreational adult cannabis usage was legalized in Canada a year ago, but remains banned or heavily restricted in many other parts of the world as new legalization efforts are launched in a number of countries.
Aside from Europe and Asia, licensed Canadian cannabis companies have increasingly looked south of the border towards the U.S., where 11 states have fully legalized recreational usage and 33 have passed laws allowing medical patients access to cannabis products.
Those international expansions so far have not resulted in significant revenue gains however, and the industry is bracing for new quarterly earnings to land next month. Cronos Group will host an earnings conference call on Nov. 12, with senior management available to answer questions from stockholders that day.
The outlook for these upcoming reports remains grim despite a number of new product launches and the impending legalization of edible products, with rival companies like HEXO completely withdrawing their 2020 financial outlooks as revenue remains lower than expected.
In other Cronos news, the company recently closed the acquisition of Redwood Holdings to gain control of the Lord Jones line of CBD products, while tobacco exec Jody Begley also joined the Cronos board earlier this month.
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