Several European cannabis start-ups are preparing to launch initial public offerings in New York, capitalizing on a US proposal to reclassify marijuana as a less dangerous drug and recent decriminalization efforts in Germany. This move comes despite depressed share prices among larger players in the sector.

London-based Grow Group, a medical cannabis distributor, aims to debut on Nasdaq in early 2025 with a valuation target exceeding £100 million. Since its founding in 2017, the company has raised over £12 million. CEO Benjamin Langley highlighted a recent period of restricted funding due to global risk aversion but noted a current uptick in investor interest, especially from venture capital.

Somai Pharmaceuticals in Lisbon plans a Nasdaq IPO targeting a €250 million valuation, with potential secondary listings on the Toronto Stock Exchange or the London Stock Exchange. CEO Michael Sassano of Somai, specializing in cannabis product extraction and distribution, sees favorable timing amidst regulatory changes.

Wellford Medical, based in London and active in medical cannabis manufacturing and distribution across the UK and Germany, also eyes a Nasdaq listing. Co-founder Joshua Roberts sees potential synergy between US regulatory shifts and Germany’s legislative reforms as advantageous for market sentiment.

The US Drug Enforcement Administration’s proposed reclassification of cannabis, moving it away from its current status as one of the most dangerous drugs, could significantly impact taxation and facilitate easier clinical research in the US, the largest cannabis market globally. Meanwhile, Germany’s recent decriminalization of cannabis possession and home cultivation has further spurred industry optimism.

Despite previous market volatility, companies preparing for IPO emphasize the importance of rebuilding investor confidence alongside regulatory developments. Michael Sassano notes lingering social taboos surrounding cannabis despite its legalization trajectory in various countries.

In Canada, where recreational cannabis legalization in 2018 initially drove significant market growth, oversupply and competition from illicit markets have tempered stock performance, reflecting caution in the sector’s evolution.

Canopy Growth, once Canada’s leading cannabis firm, and Tilray Brands from the US have both seen their market values plummet by 98% since their respective peaks in 2019 and 2018.

Shares of New York-based Curaleaf, the world’s largest cannabis company, have also dropped by 75% from their peak in 2021. However, founder and executive chair Boris Jordan attributes much of this decline to stringent regulations.

“Governments need to make a clear decision on whether cannabis should be legal or illegal. If it’s legal, they must provide support and establish a regulatory framework that allows cannabis companies to thrive,” Jordan emphasized.