MassRoots, a Denver-based social network for marijuana enthusiasts, has filed plans for a secondary stock offering — shares it hopes to be able to list on the Nasdaq exchange.
MassRoots filed paperwork with the U.S. Securities and Exchange Commission on Monday, registering for a new offering and confirming that it has applied for uplisting to the Nasdaq Capital Market.
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Company officials expect to receive a decision from Nasdaq within the next six weeks. If approved, MassRoots would be the first non-biotech cannabis-related company approved for listing on the major U.S. exchange.
MassRoots, which went public last year, currently trades over the counter, limiting the pool of potential investors. The penny stock closed Monday at $1.57, well below its 52-week high of $7.01.
Investment banking firm Chardan Capital Markets is underwriting the secondary offering.
Money raised by the offering would provide working capital and go toward accelerating user growth, expanding services for businesses, developing new mobile app features and meeting Nasdaq’s enhanced corporate governance and reporting requirements, according to the SEC filing.
On an industry level, a successful Nasdaq listing by MassRoots could also lay the groundwork for other cannabis-related companies to consider going public, said Alan Brochstein, a certified financial analyst and founder of 420Investor.com.
“Getting off the OTC and on the Nasdaq is a pretty rare occurrence in general,” Brochstein said.
But Brochstein cautioned that it’s not a “golden ticket” to success, either.
“Just because they’re on the Nasdaq isn’t a reason to buy them,” he said. “It would help them to attract more investors, but it’s not a guarantee of success.”
To be listed on the Nasdaq Capital Market, MassRoots must meet certain financial and liquidity standards related to income, company market value, stockholder equity, number of shares that are publicly held and share bid and closing prices.
MassRoots CEO Isaac Dietrich declined to comment Monday, citing the required quiet period following the SEC filing.
Founded in 2013, MassRoots now claims 775,000 users, who share cannabis experiences, learn about dispensaries and keep tabs on legalization efforts through the mobile app. Businesses use the network to advertise to cannabis consumers.
Earlier this year, MassRoots was named a semifinalist in the Extreme Tech Challenge at the Consumer Electronics Show. The grand prize was a chance to pitch Virgin Group founder Richard Branson.
Emilie Rusch: 303-954-2457, firstname.lastname@example.org or @emilierusch