Chicago Cannabis Giant Announces Stock Buyback Plan: It Was 'In Works' Before HHS Call To Reschedule Marijuana, CEO Says

Green Thumb Industries Inc. GTII GTBIF, the owner of RISE Dispensaries, announced on Tuesday that it has been given the green light for the repurchase pursuant to a normal course issuer bid of up to 10,486,951 of its subordinate voting shares from time to time over 12 months.

The Chicago and Vancouver-based company can spend up to $50 million for the repurchase program, as per a decision by the company's board of directors, of which Wendy A. Berger, one of many speakers at the Benzinga upcoming event, is a member.

Why It Matters

Ben Kovler, the company's chairman and CEO, said the move would result in "creating shareholder value without compromising our growth initiatives."

"This action was in the works before last week's announcement from the U.S. Department of Health and Human Services, which called for cannabis to be reclassified to Schedule III," Kovler continued.

The Dept. of Health and Human Services wrote to DEA administrator Anne Milgram last week calling for marijuana to be reclassified as a Schedule III drug under the Controlled Substances Act, which resulted in an uptick in cannabis stock prices.

"Having witnessed a 30-plus percent move in the sector based on news from Washington, D.C., we want the ability to take advantage for shareholders should the opportunity arise," Kovler continued.

The move would represent a shift from cannabis's status as a Schedule I substance, which deems marijuana as not having any medical benefits and places the plant in the same category as high-risk drugs like heroin.

"As Warren Buffett taught us in this year's Berkshire Hathaway annual letter to shareholders, 'The math isn't complicated: When the share count goes down, your interest in our [business] goes up," Kovler said. "Every small bit helps if repurchases are made at value-accretive prices.' We are excited about the future for Green Thumb and cannabis in America."

As of August 1, 2023, there were 209,239,033 shares outstanding.

What's Next

While the timeframe to purchase shares starts on September 11, 2023, and ends on September 10, 2024, Green Thumb is not obligated to buy any shares.

If management determines it has a better use for its cash reserves, it is under no obligation to continue to purchase shares and share purchases may be suspended or terminated at any time at Green Thumb's discretion.

GTBIF Price Action

GTI's shares traded $8.15% higher at $10.27 per share at the time of writing on Tuesday morning.

The Benzinga Cannabis Capital Conference, the place where deals get done, is returning to Chicago this Sept 27-28 for its 17th edition. Get your tickets today before prices increase and secure a spot at the epicenter of cannabis investment and branding.

Photo: Courtesy of Yiorgos Ntrahas on Unsplash