'High Times' is planning an IPO

Gene Kim

(Reuters) - The publisher of iconic marijuana enthusiast magazine, "High Times," plans to take the company public in the fall, two sources familiar with the situation told Reuters this week, as an increasing number of U.S. states legalize the drug.

Oreva Capital, which in June announced it had bought a controlling interest in High Times for $70 million, is selling the company to special purpose acquisition company (SPAC), Origo Acquisition Corp, for $250 million, the sources said.

SPACs like Origo have no assets but use IPO proceeds and bank financing to take companies public through acquisitions. High Times expects to list by October on Nasdaq, but it is unclear what the ticker will be, said the source, who wished to remain anonymous because he is not allowed to speak to the media about the deal.

Oreva and Nasdaq declined to comment.

Origo is taking High Times public at a time when eight U.S. states and Washington, D.C. have legalized recreational use of marijuana by adults.

Investors have shied away from most companies that have direct ties to the marijuana industry because the drug remains illegal under federal law. However, this listing creates an investment opportunity for retail investors in a company that is close, but not directly involved, in the sale of cannabis.

"This is a market that is growing at a 27 percent annual growth rate," said Troy Dayton, chief executive officer of cannabis investment and research firm the Arcview Group. The market is expected to exceed $22.6 billion in revenue in 2021, up from $6.7 billion in 2016, according to Arcview.

That demand continues to grow despite efforts by U.S. Attorney General Jeff Sessions to roll back federal protections for medical marijuana, Dayton said.

"While there is some saber rattling at the federal level, more states keep passing laws," Dayton said. In November, California, Massachusetts, Maine and Nevada passed laws to allow marijuana use for adults. "The train has left the station."

"High Times" magazine has 336,000 print and digital subscribers, as well as events, such as its Cannabis Cup, a music and product festival with awards.

(Reporting by Jessica Toonkel in New York; Editing by Lisa Shumaker)