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For Tilray Inc., one of Canada’s oldest and largest legal producers of medical cannabis, it’s been a long road to the stock market.

It started 18 months ago when the Nanaimo, B.C.-based company began weighing a Canadian listing and held meetings with potential investors on both sides of the border. Then last summer, its plans shifted after 15 American asset managers told Tilray they’d be much more compelled to invest if it went public on a major U.S. exchange.

And that’s what happened this week.

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On Thursday, Tilray listed its stock on the Nasdaq, becoming the first cannabis grower to complete an initial public offering in the United States. It sold nine million shares at US$17 apiece in its IPO, raising US$153-million and valuing the business at US$1.6-billion.

The shares soared in their debut, jumping more than 30 per cent on the day to close at US$22.39.

High investor demand in the IPO made it possible for the company to sell its new stock above its previously disclosed range of US$14 to US$16. The offering – which according to a source was more than 12-times oversubscribed – was sold to investors mostly in the United States. They included some unnamed blue-chip mutual funds that had yet to invest in the cannabis industry and whose mandates prevent them from owning stocks listed outside the United States, said Brendan Kennedy, chief executive officer at Tilray.

“It’s validation for us as a company and for the sector as a whole,” he added. “We think it signifies a shift in perceptions and a step to further institutionalize the sector.”

Mr. Kennedy said Tilray’s marketing efforts ahead of its IPO meant he’s spent 100 hours in the air during the past month, travelling to meetings with potential investors in New York, Toronto, Edmonton, Denver, Boston, Baltimore, Chicago, San Francisco, London, Frankfurt and Hong Kong.

In recent years, dozens of early-stage marijuana firms with barely any operating histories have gone public in Canada in order to raise money. It costs millions to build and operate a cannabis production facility, and it hasn’t been easy for these companies to borrow money from banks or sell equity as a private entity.

The stock market has been much more generous in 2018, spurred by a stunning winter rally in pot stocks. Public cannabis companies raised about $3.6-billion in the first six months of the year, according to a research report by Canaccord Genuity.

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“This industry is changing with velocity unlike anything I’ve ever seen,” Mr. Kennedy said.

The biggest players have used their cash positions and inflated share prices to boost their businesses, expanding their production at home and abroad and buying up companies across the supply chain. Tilray, the last of the major Canadian producers to go public, was largely on the sidelines.

Mr. Kennedy doesn’t mind much, though. He says he’s in it for the long haul.

“This is an industry filled with puffery, grand pronouncements and empty promises,” he said. “That’s not us. We’re methodical, we hit milestone after milestone, we break down barrier after barrier and we take a very long-term view on this industry.”

The company was founded and financed by Seattle-based private equity firm Privateer Holdings Inc. and its investors, including Peter Thiel’s Founders Fund. This February, Tilray raised $60-million from 10 investors, nine in the U.S. and one in Canada – Toronto’s Anson Funds. The U.S. backers include San Francisco’s Farallon Capital and New York’s Indus Capital, according to regulatory filings.

These early investors exercised their options to participate in the IPO, Mr. Kennedy said.

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Tilray’s valuation of US$1.6-billion is less than Canada’s four largest growers and the same as MedMen Enterprises Inc., the U.S. cannabis retailer with 15 stores in three states that went public this May.

Mr. Kennedy said Tilray’s investors were looking to support a company that is regulated by the U.S. Securities and Exchange Commission and abides by U.S. accounting standards. In Canada, he said the accounting principles result in income being booked faster than it should and inventory given a higher value than it may be worth.

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