Shares of Green Thumb Industries (GTBIF 0.59%) were jumping 8.7% as of 11:11 a.m. EST on Tuesday. The big gain came after the multistate cannabis operator announced the U.S. sale of up to 10 million shares. Green Thumb already received and accepted an offer from an institutional investor to buy around 3.1 million shares. This sale, which will close today, will provide $100 million to the company.
In most cases, stock offerings cause a company's share price to fall rather than rise. That's because the value of existing shares is diluted by the new shares. So why didn't Green Thumb follow this typical pattern?
It's probably partially because investors realize that the additional $100 million the company will receive will enable Green Thumb to expand even more in the rapidly growing U.S. cannabis market. Also, this is Green Thumb's first public stock offering registered with the U.S. Securities and Exchange Commission (SEC). For a single institutional investor to so quickly buy a large stake in the company speaks volumes about the expectations for Green Thumb.
As CEO Ben Kovler stated in the press release announcing the transaction, "Institutional investors are waking up to the great American cannabis growth story. This investment reflects the very real interest, understanding, and momentum behind the potential $100 billion U.S. cannabis opportunity that is happening now."
This is without question an exciting time for U.S.-based marijuana stocks like Green Thumb. However, that excitement could build.
There's a pretty good chance that the U.S. will decriminalize marijuana at the federal level in the not-too-distant future. This would pave the way for Green Thumb to list its shares on a major U.S. stock exchange.