Kratom has grown in popularity in the past decade. And now, more and more kratom businesses are springing up around the United States. But that’s to be expected. A growing number of people swear by the product. And as consumer spending increases, more people start opening new businesses to fill that demand. However, not everyone has the time, resources, or experience needed to run a successful company. So, instead, individuals look to invest in businesses to gain a piece of the projected growth in an industry. You see, when consumers believe in something they purchase, lots of them want to invest in that product’s future. And the stock market allows people the opportunity to take advantage of a business that’s already up and running efficiently, utilizing its prospects for a prosperous return on their investment.
However, depending on the industry someone wants to invest in, complications can arise when searching for a viable stock. And it appears that kratom companies fall under one such sector. Some argue a kratom company can’t go public in the US because kratom is a scheduled substance in a few states. But that’s untrue. Kratom remains legal on the federal level. So if the company exists where it’s legal, then that company can file an Initial Public Offering (IPO) with the Securities Exchange Commission (SEC). But the process for taking a company public would place additional burdens on a kratom business. A kratom company would need to apply and get approved by the SEC first.
SEC approval consists of a comprehensive process. A company needs to get audited and provide the necessary due diligence to the government agency. Then the SEC meticulously examines all the financial records on file and makes sure nothing is out of place. And that can create more complications for kratom businesses. At the moment, the US banking industry places undue restrictions on kratom companies. So kratom businesses must use high-risk merchant services to provide payment portals to customers like the cannabis industry. But sometimes, a kratom business might skirt the underhanded rules of the banking empire to give customers access to the standard payment processing facilities they’ve become accustomed to in our society. But if a kratom company went public, those types of options would get taken off the table for good.
Besides that fact, the Food and Drug Administration (FDA) continues to fight against the kratom industry. And in our country, federal and state laws continuously shift, depending on the agendas of the elected representatives in office. The threat of a federal ban would loom over a public kratom company. Plus, any potential state ban would jeopardize a company. But at least in that instance, the business could move locations. Still, the company would incur additional costs for a departure into another state. And that would reflect on the business’s bottom line. In return, it could hurt the shareholders of the public entity, which would make a conflict of interest arise from uncertainty.
Recently, stock offerings for companies in the cannabis and psychedelic sectors have become available to investors. Those stocks utilize plant pharmacological substances positioned within a gray area in our country. And these substances are illegal on the federal level. So, how did they get listed on the stock exchange?
Well, the weed stocks are Canadian companies. So, each of them belongs to legitimate businesses in a country where cannabis is legal. And the psychedelic companies are shooting for FDA-approved drugs using plant alkaloids. And one of those companies started its stock venture on the same platform that American weed companies use: the Over-the-Counter (OTC) Market.
You see, a company that wishes to go public on a stock exchange must jump through a lot of regulatory hurdles to get listed. But the OTC market offers more anonymity for businesses. The only thing a pink sheet-listed company needs to do to get listed for OTC trading is to submit the required form provided by the Financial Industry Regulatory Authority (FINRA). And those companies are under no legal obligation to be completely transparent with all their financial statements. For that reason, it is the preferred path for going public in the plant pharmaceutical industry.
The only kratom-affiliated company in the OTC market is Sibannac Inc. But the company doesn’t sell any kratom. Instead, the business is supposedly formulating a line of beverages that contain kratom alkaloids. However, that product still remains in development mode.
While there might not be any kratom companies listed on the stock exchanges, there appears to be one company affiliated with Mitragyna speciosa that was recently listed on the Nasdaq. But instead of selling kratom directly to the public, this biotechnology company, called ATAI Life Sciences, acquired the majority stake in Kures: a pharmaceutical research company that has utilized the kratom plant to create a medication derived from the mitragynine alkaloid found in its leaves.
ATAI Life Sciences had its IPO go public on June 18th, 2021. The company set the terms for its IPO and wanted over $200 million from its public offering. ATAI Life Sciences filed with the SEC to offer 16.42 million shares for the public to purchase. During the initial bid, the estimated price range of each share reached between $13 and $15 per share. But by the time the company hit its debut on the exchange, the stock opened at $21. The stock dropped slightly afterward. Right now, it hovers around the $18 mark. But it should gain some traction as some of its ventures put out news about the progress of drug trials. And should one of the companies ATAI has backed gets the coveted FDA approval, then its stock will soar.
And since the company is the only kratom-affiliated company on the stock exchange, it’s a stock to notice. A mitragynine-derived and FDA-approved drug would be valuable to its shareholders.
With the future of kratom resting in the hands of our elected leaders, it becomes difficult to decipher the direction the kratom industry must take. And individual kratom companies are constantly trying to navigate the political waters without disturbing the turbulent seas around them. Most kratom business owners would welcome the thought of seeing a kratom enterprise made public and listed on a stock exchange one day. Hell, the first one to do it would likely leave its competitors in the dust. However, the political climate for plant-based remedies keeps shifting in the wind. And it would make anyone in the industry wary of spending the time and resources to push forward with agendas that might never see the light of day.
Still, in every business, big plays of risk lead to large payouts. So we may see a kratom insider take the helm of the industry and push its boundaries to the limits. And then we could see a kratom company’s ticker placed on the Nasdaq. Only time will tell. But in the meantime, there are other avenues for investing in the kratom industry.
One way to make sure kratom businesses stay accessible to people like yourselves is to donate to a non-profit organization specializing in fighting for the kratom industry. The American Kratom Association (AKA) continues legality efforts for the tropical plant in the halls of Congress. And the advocacy group could be the key to purchasing kratom stocks in the future.