DEA-Endorsed Cannabis Grower Makes History As First 'Plant-Touching' Firm On NASDAQ, Shares Soared

Zinger Key Points
  • Cannabis cultivation company makes historic debut on NASDAQ, but will it be successful?
  • One scientist says relying on DEA approval is not a good business model and the cannabis plant is too complex.

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 pointshares 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.”

Photo by Richard T on Unsplash

Market News and Data brought to you by Benzinga APIs
Posted In: CannabisNewsPenny StocksPoliticsFDALegalIPOsSuccess StoriesStartupsSmall BusinessAfter-Hours CenterMarketsGeneralBright GreenDEADr. Sue SisleyNASDAQ
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

The Benzinga Cannabis Capital Conference is coming to Florida

The Benzinga Cannabis Capital Conference is returning to Florida, in a new venue in Hollywood, on April 16 and 17, 2024. The two-day event at The Diplomat Beach Resort will be a chance for entrepreneurs, both large and small, to network, learn and grow. Renowned for its trendsetting abilities and influence on the future of cannabis, mark your calendars – this conference is the go-to event of the year for the cannabis world.

Get your tickets now on – Prices will increase very soon!