Merida Archives - Green Market Report

StaffMarch 8, 2023

This story was republished with permission from Crain’s Detroit and written by Dustin Walsh.

Skymint

Ingham County Circuit Court Judge Joyce Draganchuk appointed immediately Gene Kohut, a partner at Detroit-based business advisory firm Trust Street Advisors, as the receiver in what is likely the only recourse for the investor. Marijuana companies cannot avail themselves of financial obligations in bankruptcy court. Marijuana remains a Schedule 1 narcotic under the federal Controlled Substances Act, leaving marijuana businesses without the benefit of protection under the U.S. bankruptcy code.

Oversupply Pressures

Lenders Kept Lending

Debra BorchardtJanuary 12, 2022

Leafly Holdings Inc. and cannabis SPAC Merida Merger Corp. I (NASDAQ: MCMJ) (a special purpose acquisition company sponsored by Merida Capital Holdings) announced that it has entered into a $30 million convertible note purchase agreement with new investors led by Cohanzick Management LLC and affiliates, an investment management firm. This supplemental financing, which will close immediately prior to the closing of the proposed business combination between Leafly and Merida, will help to ensure full funding of Leafly’s current multi-year business plan. The stock was jumping almost 18% in pre-market reading to lately sell at $9.97.

In addition, Merida announced that Merida’s special meeting to vote on the proposed business combination, originally scheduled for January 14, 2022, will be postponed to give Merida stockholders sufficient time to evaluate the terms of the note financing and certain additional information. It was originally expected to close in the fourth quarter of 2021. As a result, the date for holders of Merida public shares to request redemption will be extended to two business days prior to the date that the meeting is held to vote on the proposed business combination. Merida and Leafly entered into a second amendment to the Merger Agreement so that the proceeds to be received from the note purchase agreement would be counted towards Merida meeting the minimum cash condition required by the Merger Agreement.

“This agreement provides additional funding certainty as Leafly enters the next phase of our journey as a public company,” said Yoko Miyashita, Chief Executive Officer of Leafly. “Having accelerated our growth trajectory in 2021, we look forward to using this significant new capital to expand our leading cannabis marketplace and further enhance our technology platform, delivering more personalized consumer shopping experiences and driving more value to our retail partners.”

“Leafly is a rapidly growing platform with tremendous brand loyalty and market leadership,” said David Sherman, President and Founder of Cohanzick. “This investment demonstrates our confidence in the Leafly team and in the strategy they are implementing to create significant long-term value for stakeholders across the cannabis ecosystem.”

Details of the Transaction and Notes

The $30 million financing will be in the form of unsecured convertible senior notes due 2025. The notes will bear interest at a rate of 8.00% per annum, paid in cash semi-annually in arrears on July 31 and January 31 of each year. The notes will be convertible at the option of the holders at any time before maturity at an initial conversion share price of $12.50 (80 shares of the company common stock per $1,000 principal amount of notes or accrued and unpaid interest, if any, thereon). In addition, the company has the option after one year to redeem all or a portion of the notes for cash equal to the principal or force the conversion of the notes after two years based on pre-agreed share price thresholds.

Original Transaction

Merida has announced in August that it had chosen Leafly as its qualifying transaction for the SPAC. Ther Merida Merger Corp. is slated to adopt the Leafly name and its common stock is expected to be listed on the NASDAQ under the ticker symbol LFLY. The combined company’s transaction values at an implied, fully diluted enterprise value of approximately $385 million and equity value of approximately $532 million, subject to any redemptions by Merida stockholders. The company is projecting revenue of approximately $43 million in 2021 and $65 million in 2022, representing a roughly 52% annual growth with gross margins of roughly 88% as Leafly further penetrates current markets and capitalizes on its strong position in the newly legalized East Coast.

Leafly struggled at the beginning of the pandemic and laid off 91 employees. It had been a part of the private equity Privateer Holdings portfolio, but then the company was spun out to be independent. In its early days, former Leafly founders Cy Scott, Brian Wansolich and Scott Vickers departed Leafly to launch another Seattle-area marijuana data company, Headset. Leafly had created a back-office product to help dispensaries run their business called Leafly Insights and Headset was essentially the business that Leafly Insights looked to be emulating. The company raised $2.3 million in October 2019 even as it was announcing plans to scale back its growth. Overall the company has raised approximately $38 million.

Headset recently completed a raise of $3 million of new capital led by Althea, a private equity investment firm. According to Geekwire, Headset has raised about $23 million.

Debra BorchardtAugust 9, 2021

Cannabis online marketplace company Leafly Holdings Inc. and the SPAC (special purpose acquisition company) Merida Merger Corp. I (NASDAQ: MCMJ) sponsored by Merida Capital Holdings have signed a definitive agreement for a business combination. When the transaction is complete, Merida will adopt the Leafly name and its common stock is expected to be listed on the NASDAQ under the ticker symbol LFLY. The combined company’s transaction values at an implied, fully diluted enterprise value of approximately $385 million and equity value of approximately $532 million, subject to any redemptions by Merida stockholders. It is expected to close in the fourth quarter of 2021.

Leafly provides a subscription-based platform for more than 7,800 brands and 4,600 paying retail subscribers. Approximately 55% of North American retail licensees are currently subscribed to its marketplace and advertising services. As a non-plant touching platform with leading brand recognition, a user-friendly experience, and an established position in core growth markets, Leafly is well-positioned to capitalize on accelerating legalization trends and e-commerce adoption across North America. Based in Seattle, Washington, Leafly has a highly engaged audience of more than 125 million annual visitors to understand, select, and reserve cannabis products from licensed retailers.

Existing Leafly shareholders will roll 100% of their existing stake in Leafly and, upon closing, are expected to own approximately 72% of the combined company on a pro forma basis, assuming the company receives 100% of the proceeds currently held in trust. The transaction is expected to generate proceeds of up to $161.5 million, subject to any redemptions by Merida stockholders. This follows and is inclusive of Leafly’s recent $31.5 million capital raise led by leading cannabis-focused investors, including Merida Capital Holdings, Delta Emerald Ventures, SOJE Capital, and Leafly’s existing shareholder base. The proceeds of the capital raise and transaction provide Leafly with substantial capital to enhance its advertising and platform technology, expand its marketplace, and execute customer acquisition initiatives.

Peter Lee, President of Merida Merger Corp. I said, “Merida Capital is very excited to be involved in this transformative event for Leafly. We have seen firsthand how consumers respond to Leafly’s innovative technology and proprietary insights. Leafly has a proven flywheel and clear and achievable growth plans, and we look forward to leveraging our team’s demonstrated track record with other high growth ancillary cannabis companies to support their transition to the public market.”

Leafly plans to accelerate retailer monetization with retailers seeing 14x Return on Ad Spend and in the early stages of monetizing the more than 7,800 brands on the Leafly platform. The company is projecting revenue of approximately $43 million in 2021 and $65 million in 2022, representing a roughly 52% annual growth with gross margins of roughly 88% as Leafly further penetrates current markets and capitalizes on its strong position in the newly legalized East Coast

Leafly struggled at the beginning of the pandemic and laid off 91 employees. It had been a part of the private equity Privateer Holdings portfolio, but then the company was spun out to be independent. In its early days, former Leafly founders Cy Scott, Brian Wansolich and Scott Vickers departed Leafly to launch another Seattle-area marijuana data company, Headset. Leafly had created a back-office product to help dispensaries run their business called Leafly Insights and Headset was essentially the business that Leafly Insights looked to be emulating. The company raised $2.3 million in October 2019 even as it was announcing plans to scale back its growth. Overall the company has raised approximately $38 million.

Yoko Miyashita, Chief Executive Officer of Leafly, said, “For the past decade, we have focused on building a unique, legally compliant marketplace with an equal emphasis on educating consumers and enabling them to reserve cannabis products from legal, reputable providers. With this transaction, we are looking forward to entering the next phase of our company’s journey – creating more personalized consumer experiences, driving more value to our retail partners, amplifying brands on our platform, and further scaling our presence in local markets as legalization continues. Our consumers recognize Leafly as one of the most trusted brands in cannabis, and we do not take that trust for granted. We are excited to partner with Merida’s deeply experienced team to create even more value for our consumers, partners, and shareholders.”

Debra BorchardtDecember 20, 2018

Regulatory compliance software company Simplifya has secured $3 million in Series C funding from private equity fund Merida Capital Partners. In addition to the $3 million, the company said that there was the possibility to raise an additional $2 million.

Merida Capital Partners is a private equity fund that targets fundamental growth drivers within the cannabis industry. The Merida team has been working with state legal cannabis companies since 2009 and investing in cannabis-related companies since 2012. It has invested in companies like KushCo Holdings (OTC: KSHB), GrowGeneration (OTC: GRWG) and Canndescent.

Simplifya said the new round of funding will be used for continued growth and expansion, both nationally and internationally. The new investment follows a $3 million Series B funding round that was closed in February 2018, which was used to add human capital and capture market opportunities. Since the beginning of the year, the company has nearly tripled its staff and quadrupled its client base.

Simplifya introduced its web-based compliance tool in Colorado in late 2016, and it expanded its services this year to include California, Maryland, Massachusetts, Michigan, Nevada, Oregon, and Ohio. It is currently being utilized by cannabis retailers, cultivators, and product manufacturers in dozens of localities across the eight states.

“Across the U.S. and around the world, cannabis prohibition laws are crumbling and giving way to tightly regulated systems of cultivation, product manufacturing, and sales,” said Simplifya CEO Marion Mariathasan. “Regulatory compliance is critical to the success of every business that enters these new markets. It can be difficult in such a nascent industry, where rules are quickly evolving and the whole system is constantly under the microscope. Simplifya makes it as simple as possible for cannabis companies to maintain compliance, so they can focus more attention on growing their businesses and gaining their footing in this new industry.”

Simplifya’s web-based self-auditing system distills complex state and local regulations into a simple series of yes-or-no questions to facilitate self-audits, identify areas of noncompliance, hold employees accountable for remediation, and generate management and audit reports. Simplifya’s SOP feature automates the assigning, tracking, and versioning of standard operating procedures, while its Smart Cabinet feature houses all of a business’s most important compliance documents under the same roof.