Bright Green Corporation (NASDAQ: BGXX), one of the very few companies selected by the US government to grow, manufacture and sell cannabis and cannabis-related research products, went public on the NASDAQ Tuesday, becoming the first U.S. plant-touching company to list on a major U.S. stock exchange.
Trading under the ticker symbol BGXX, Bright Greens’ stock opened at $15.99, after the NASDAQ issued an $8 reference price Monday for what is called a direct listing, according to Bloomberg.
At one point, shares traded as high as $36.00 before closing at $25.25, reflecting a 216% increase over the reference price. Bright Green’s market value at Tuesday’s closing price was nearly $4 billion although the company has yet to generate sales.
Road From Cannabis Research To The NASDAQ
Cannabis’ illegal federal status precludes plant-touching companies from listing on major U.S. exchanges like the NASDAQ and NY Stock Exchange.
At the end of March, 2022, when Bright Green announced it had filed an S-1 form with the SEC, the company disclosed 157.6 million shares of stock held privately by 425 stockholders of record as of Feb. 28.
The company moved forward, with DEA assurances.
“We will operate legally under all applicable laws and be authorized by the federal government to sell cannabis commercially for research and manufacturing purposes, export cannabis for international cannabis research purposes, and sell cannabis to DEA-registered pharmaceutical companies for the production of medical cannabis products and preparations,” Bright Green Corp. said in its prospectus.
Is A DEA-Dependent Business Model Reliable?
Some in the cannabis investment industry say the move raises the question of whether a business model based on DEA approval is realistic from a financial standpoint.
There are several entities registered with the DEA as “Bulk Manufacturer Marihuana Growers” that can grow and sell flower and extract to researchers registered with the federal agency. Those researchers are usually at universities, pharmaceutical companies or similar.
Dr. Sue Sisley, head of the Scottsdale Research Institute, which is among the DEA cannabis cultivation registrants, said business models based on the DEA registrations are bound to fail.
“The entities who are trying to build a business model around these few research registrations won’t be successful. The demand for research cannabis is minimal,” Sisley said, per MJBiz.
“This is not a lucrative business model and never will be. It takes over 10 years to develop drugs that get FDA approval – and is massively more complicated when it comes to agricultural products that have complex chemical composition with tons of different bioactive molecules.”
