SPAC Archives - Green Market Report

StaffStaffMarch 24, 2021

4min5540

The OTC Markets Group (OTCQX: OTCM) announced that the latest cannabis SPAC Mercer Park Brand Acquisition Corp. (OTCQX: MRCQF), trading today on OTCQX under the symbol “MRCQF.” Mercer Park has said it was formed with the intent to focus on branded product businesses in cannabis and/or cannabis-adjacent industries. Mercer Park Brand Acquisition Corp. is the fourth Special Purpose Acquisition Company (SPAC) to join OTCQX in the past year.

“Trading our shares on the OTCQX® Market will raise the Mercer Park Brand SPAC profile and enhance liquidity ahead of our upcoming Qualifying Transaction. Qualifying to trade on the OTCQX® Best Market reflects our commitment to holding our Company to the highest standards of disclosure, corporate governance, and compliance,” said Jonathan Sandelman, CEO and Chairman of Mercer Park LP.

The Mercer Park SPAC executed a letter of intent in connection with a potential transaction, which would if consummated, qualify as its qualifying transaction. Accordingly, the company will be permitted until May 13, 2021 (24 months following the closing of its initial public offering) to conclude its qualifying transaction. The SPAC was originally formed in 2019 when it proposed an IPO of $250 million.

Mercer Park, the sponsor of Mercer Park Brand is a limited partnership indirectly controlled by Mercer Park, L.P., a privately-held family office based in New York, New York.

Mercer Park Brand’s board of directors:

  • Jonathan Sandelman (Chairman), Chief Executive Officer of Mercer Park, L.P.
  • Sean Goodrich, Chief Executive Officer and Co-Founder of American Family of Brands.
  • Charles Miles, Consultant, Recapture Partners.

Mercer Park Brand’s officers are:

  • Louis Karger, Chief Executive Officer.
  • Carmelo Marrelli, Chief Financial Officer and Corporate Secretary.

Mercer joins what is becoming a crowded SPAC landscape in the cannabis industry. Earlier this month, Greenrose Acquisition Corp. (NASDAQ: GNRSU, GNRS, GNRSW) said it had entered into definitive agreements to acquire four cannabis companies, which it has dubbed The Platform. The companies are Shango Holdings Inc. (Shango), Futureworks LLC (d/b/a The Health Center), Theraplant, LLC, and True Harvest, LLC. The total initial transaction value is $210 Million with a maximum earnout of $110 million. Greenrose plans to initiate an offering of $150 million in equity and debt securities and plans to use the net proceeds for the acquisition of the Platform and general corporate purposes.


Debra BorchardtDebra BorchardtMarch 15, 2021
shutterstock_256424509.jpg?fit=1200%2C800&ssl=1

14min5040

Cannabis SPAC (special purpose acquisition company)  Greenrose Acquisition Corp. (NASDAQ: GNRSU, GNRS, GNRSW) has entered into definitive agreements to acquire four cannabis companies, which it has dubbed The Platform. The companies are Shango Holdings Inc. (Shango), Futureworks LLC (d/b/a The Health Center), Theraplant, LLC, and True Harvest, LLC. The total initial transaction value is $210 Million with a maximum earnout of $110 million. Greenrose plans to initiate an offering of $150 million in equity and debt securities and plans to use the net proceeds for the acquisition of the Platform and general corporate purposes.

Greenrose said it will be renamed The Greenrose Holding Company Inc. and is expected to transition its listing from the Nasdaq Capital Market to the OTCQX Best Market. Additionally, Greenrose intends to list on the NEO exchange after the close of the transaction. The Platform will have operations in seven states, including nine dispensaries and over 300,000 sq. ft. of cultivation producing approximately 120,000 lbs. of flower per year. The pro forma 2021 revenue and adjusted EBITDA guidance is $158 Million and $56 Million, respectively.

“The companies we are bringing to market fully align with Greenrose’s core objectives,” said Mickey Harley, CEO, and Director of Greenrose. “We are targeting strategic assets in several key states that present opportunities for further consolidation as we seek to deepen our presence, particularly in the West. Additionally, we are entering high growth, limited license markets, and newly recreational markets. The Platform provides significant revenue, Adjusted EBITDA, and cash flow right out of the gate, which we expect will help us drive our growth strategy.

“Across the Platform, we are targeting acquisitions with the highest quality retail alignment and superior cultivation capabilities, selling the most reputable products in their respective markets at premium prices. On a state-by-state level, we plan to build upon high growth, limited license markets like Nevada, as well as newly recreational and limited license markets like Arizona and Michigan. In emerging medical markets with recreational potential like Connecticut, where our company is generating strong cash flow, we are excited about this growth potential as the market evolves. In established but highly fragmented markets like California, Colorado and Oregon, the goal will be to take advantage of the consolidation opportunities those markets offer, recognizing the favorable risk-reward dynamics of such markets vis-à-vis the newer, limited license markets. We also anticipate evaluating select distressed and undervalued assets.”

Platform Overview by State

STATE FOOTPRINT AND HIGHLIGHTS
Arizona One 74,000 ft² cultivation facility and one processing facility
California One dispensary, one distribution business
Colorado Three dispensaries, three cultivation facilities with 58,500 ft² of total cultivation capacity and one processing facility
Connecticut One 68,000 ft2 combined cultivation, processing, manufacturing and packaging facility under expansion to add another 30,000 ft2; one of four exclusive growers statewide
Michigan Three dispensaries, one 25,000 ft² cultivation facility and two processing facilities
Nevada One dispensary, one 20,000 ft² cultivation facility with room to expand to 50,000 ft² and one processing facility
Oregon One dispensary and an additional dispensary license, two cultivation facilities totaling 10,000 ft² of indoor capacity and 3

Paul Otto Wimer, Greenrose President, commented: “Our collective executive management team has extensive M&A experience and has multi-decade experience in business leadership, operational management and corporate finance. We expect the potential pipeline of longer-term opportunities to expand now that recreational legalization has become more widespread following the 2020 election. As we develop and expand our Platform, we plan to leverage the experience of our combined management team and our scale to accelerate growth.”

Company Key Geography and Assets Highlights
Shango
  • Arizona, California, Michigan, Nevada, Oregon
  • Six dispensaries and one additional Oregon license
  • Four cultivation and three processing facilities
  • Vertically integrated in Michigan with three dispensaries, 25,000 ft2 cultivation facility and two processing facilities
  • Vertically integrated in Nevada with one dispensary, one 20,000 ft2 cultivation facility, with current expansion of an additional 30,000 ft2, and one processing facility all within a 72,000 ft2 facility
  • Vertically integrated in Oregon with one dispensary and two cultivation facilities with 10,000 ft2 of total indoor cultivation capacity and 30,000 ft2 of total outdoor cultivation capacity
  • Agreement to manage True Harvest’s Arizona cultivation operations
  • One dispensary and distribution company in California
The Health Center
  • Colorado
  • Three dispensaries
  • Three cultivation facilities and one processing facility
  • Cultivation assets with total capacity of 58,500 ft2
  • Vertically integrated assets to anchor horizontal consolidation of market
  • Focus on the Denver metro marketplace
  • High-end products at affordable prices
Theraplant
  • Connecticut
  • One combined cultivation, processing, manufacturing and packaging facility
  • One of only four growers in Connecticut
  • High barriers to entry
  • Cultivation facility with 68,000 ft² of current capacity, with additional 30,000 ft2 of capacity under construction
True Harvest
  • Arizona
  • One cultivation facility and one processing facility
  • 74,000 ft² cultivation facility currently under internal expansion to double capacity from 4 to 8 cultivation rooms, run by Shango growers
  • Expands Shango footprint in Arizona
  • Currently under expansion to double capacity
  • Accelerated consumer demand in new recreational market

Debra BorchardtDebra BorchardtFebruary 22, 2021
money2.jpg?fit=960%2C640&ssl=1

6min5800

Privately-held multi-state cannabis operator Parallel and special purpose acquisition corporation (SPAC) Ceres Acquisition Corp.  (OTCQX: CERAF) have entered into a definitive business combination agreement involving a transaction that, if completed, would result in Parallel becoming a public company. The investors have an over-subscribed private investment in public equity (PIPE) of $225 million. The deal is expected to close in Summer 2021.

The deal values Parallel at an implied enterprise value of $1.884 billion with expected net revenues of $447 million in 2021. The expected pro forma cash on hand of $430 million at the close, including the $225 million from the PIPE and $120 million of cash held in Ceres’ escrow account assuming no redemptions.

William “Beau” Wrigley Jr., Chairman and CEO of Parallel said, “This transaction will enable Parallel to accelerate existing investments to transform not only our company but also the cannabis industry, as we seek to disrupt the more traditional beverage alcohol and healthcare spaces. As a public company, we will have access to capital to grow our national footprint through new licenses and M&A, improve our cultivation and production capacity, expand our established retail footprint, develop and launch rare cannabinoids products with therapeutic benefits, and conduct important clinical research in partnership with the University of Pittsburgh Medical Center. We look forward to working with the Ceres team and benefiting from Scooter Braun’s expertise and extensive influencer network to reach our diverse consumers with creative omnichannel approaches that will fuel Parallel’s leadership in the cannabis industry.”

Formerly Surterra Wellness

In June of 2019,  Surterra Wellness closed on the initial $100 million Series D funding round and expanded its Board of Directors.  The company noted back then that the participants in the round included existing and new investors including former Patrón Spirits Company CEO, Ed Brown. At this time, Parallel is operating in five states that have the potential to see significant growth in cannabis sales, including FloridaPennsylvaniaMassachusettsTexas, and Nevada. It has a total of 42 brick-and-mortar dispensaries. Plus, an e-commerce infrastructure that supports the next phase of cannabis distribution, including online order-ahead, curbside pickup, and home delivery sales, which is expected to drive strong net revenue generation.

Ceres

The company said in a statement that the combined publicly listed company is expected to have Class A Subordinate Voting Stock and Class B Multiple Voting Stock. The Class B Multiple Voting Stock will have 15 votes per share and will be held by Beau Wrigley and his affiliate entities upon close. The Class A Subordinate Voting Stock will have one vote per share and will be the publicly traded class of stock upon the closing of the Transaction.

Scott “Scooter” Braun, Co-Founder of Ceres Group Holdings said, “I have carefully watched the cannabis industry and Parallel stands out as a leader in the space. With a culture of compliance and strong values, a commitment to social equity, and disciplined growth and innovation, I’m thrilled to work with Parallel. Together, Ceres and Parallel have the experience and reputation to drive growth and create value for all their stakeholders. Beau and his team stand out among the pack and bring to the table their deep experience and business acumen to run a public business of this size and I believe Parallel is primed for massive growth in the sector. I’m honored and excited for the opportunity.”

Joe Crouthers, Chairman and CEO of Ceres Acquisition Corp said, “Ceres’ deep cannabis and consumer experience, coupled with Scooter’s powerful network, makes Ceres an ideal partner for a well-positioned, well-led, high growth cannabis company like Parallel. The Ceres team has organized a set of truly unique resources that aims to open the top of the consumer awareness funnel and help fuel growth – from capital to cannabis to marketing to an extensive network in entertainment and access to consumers – we look forward to supporting Parallel’s transition to a publicly traded company.”


Debra BorchardtDebra BorchardtJanuary 15, 2021
Monogram3-scaled.jpg?fit=1200%2C801&ssl=1

7min5330

TPCO Holding Corp. (OTCQX: SBVCF, SBVQF) completed its qualifying transaction to acquire CMG Partners Inc. better known as Caliva and Left Coast Ventures, Inc. with global icon, entrepreneur and MONOGRAM founder, Shawn “JAY-Z” Carter and entertainment powerhouse Roc Nation. TPCO said it expects pro forma revenues of $334 million in 2021.

Shawn “JAY-Z” Carter, The Parent Company’s Chief Visionary Officer, said, “This is an incredible time for this industry. The end of cannabis prohibition is here, and The Parent Company will lead the charge to a more expansive and inclusive cannabis industry. We are paving a path forward for a legacy rooted in dignity, justice, care, and consistency. The brands we build will redefine growth, social impact, and social equity. This is our time. I’m proud and excited to lead the vision of The Parent Company.”

Jay-Z recently launched his premium cannabis line called Monogram, whose flower is cultivated at The Parent Company’s flagship growing facility in San Jose, California, using a batch-by-batch approach. The company said that each plant receives personalized attention from the company’s expert growers, who grade and select every flower by hand. The team is led by Cultivation Ambassador DeAndre Watson, who has been working with the plant for over 25 years. The packaging is matt black and looks as if it’s inspired by a high-end cosmetics line.

Common Shares and Warrants are now trading on the NEO Exchange under the symbols “GRAM.U” and “GRAM.WT.U”, respectively, and remain trading on the OTCQX under the symbols “SBVCF” and “SBVQF,” respectively. Beginning January 19, 2021, the OTCQX symbol “SBVCF” will change to “GRAMF.”

Michael Auerbach, Chairman of SCAC and The Parent Company, added, “This is an industry-defining moment. With its experienced management team, advanced infrastructure, industry-leading operational efficiencies, proven strategy of brands, and cultural influence, The Parent Company will help shape the future of cannabis in the U.S. and beyond as well as begin to repair and rectify the wrongs of prohibition.”

The Parent Company listed the following investment highlights in a company statement:

 Progressive Operational Platform –

  • TPCO owns its supply chain, enabling the company to leverage scale and profitably produce and distribute a broad portfolio of cannabis products for every consumer segment. The vertically integrated, omnichannel strategy maximizes gross profit and EBITDA margins, scales consumer reach, generates proprietary consumer data, and beats the illicit market on price, quality, and convenience.
  • Omnichannel Platform – TPCO’s scalable omnichannel business offers customers convenient express or scheduled delivery, and in-store or curbside pick-up, all through a single user-centric e-commerce platform, Caliva.com. This omnichannel e-commerce platform, offering both a robust portfolio of high-margin owned brands as well as third-party brands, allows The Parent Company to rapidly scale its direct-to-consumer reach to all Californians. Coupled with its powerful sourcing and low-cost manufacturing capabilities, this omnichannel platform offers consumers across California compelling pricing and convenience while remaining profitable.
  • Exclusive Brand Partnerships and Leading Cultural Influence – Brand strategy and marketing playbook led by Shawn “JAY-Z” Carter and Roc Nation, leveraging unparalleled cultural influence of leading artists and entertainers to build the most valuable and scalable brand portfolio in cannabis. JAY-Z officially launched the first his flagship cannabis line, MONOGRAM, on December 10, 2020.
  • Unrivaled Consumer Reach  TPCO currently reaches over 50% of consumers in California through Caliva.com, its existing direct-to-consumer platform. The Parent Company will have the greatest consumer reach of any cannabis company in California, reaching 75% of consumers in the state by the end of 2021 and almost 90% by the end of 2022 through scaling of its omnichannel platform.
  • Strong Balance Sheet –The Parent Company is the most well-capitalized cannabis company in the United States and will pursue an aggressive M&A strategy to accelerate growth, market share gains, and profitability.
  • Industry-Defining Social Impact  Led by Shawn “JAY-Z” Carter, The Parent Company will fund The Parent Company Social Equity Ventures with an initial target of $10 million and an annual contribution of at least 2% of its net income to invest in minority-owned and Black-owned cannabis businesses and contribute to the effort to rectify the wrongs of prohibition through diversifying both the business leadership and workforce of the cannabis industry. Beyond investing, the fund will also support organizations and programs focused on diversifying the cannabis workforce through job fairs and placement, industry training and education, as well as Social Equity application support.

Steve Allan, The Parent Company’s CEO, said, “With both the most comprehensive vertically integrated platform and brand portfolio in California, and the healthiest balance sheet in cannabis, we will reshape the industry in the world’s largest cannabis economy.”


StaffStaffDecember 18, 2020
stocks.jpg?fit=960%2C640&ssl=1

4min6720

 Clever Leaves begins trading today on NASDAQ after completing its business combination with blank check company, Schultze Special Purpose Acquisition Corp (NASDAQ: SAMA) under the ticker CLVR. At $205 million, this is looking like the biggest cannabis SPAC deal to close this year.

The company has operations and facilities in Colombia, Portugal, the United States, Canada, and Germany. Clever Leaves currently cultivates over 1.9 million square feet of greenhouses. It exports medical cannabis products to over 14 countries on 5 continents. Clever Leaves’ Colombian operation is the only medical cannabis facility in the world to receive both INVIMA and EU GMP certifications for extracts – Clever Leaves is also the first company to legally export cannabis from Colombia. Clever Leaves said it has established significant infrastructure and positioned itself to achieve global reach between its Colombia operations, its Portuguese cultivation facilities, and its global distribution infrastructure in the EU, which is currently headquartered in Germany.

George J. Schultze, Chairman and CEO of SAMA before the transaction occurred said, “We are very pleased to have completed our merger with Clever Leaves, which delivers attractive value to our stockholders. We believe that Clever Leaves is now among the best-capitalized companies in the cannabis industry and is well-positioned for substantial growth and profitability based upon its disruptive, low-cost and vertically integrated operating model. We look forward to working with its outstanding and highly accomplished management team to create significant value over time.”

Clever Leaves will have more than $80 million in cash on its balance sheet at closing. The company said it has raised approximately $225 million of capital to date, including substantial investments from institutional investors with a demonstrated track record in the cannabis sector.

Kyle Detwiler, CEO of Clever Leaves, added, “Partnering with the SAMA team represents a great opportunity to take our industry-leading platform to the next level as we are now poised to benefit from a significantly enhanced balance sheet, Nasdaq listing, and SAMA’s experience assisting companies such as ours in prudently compounding profitable growth. We expect that our combined expertise and resources will further enable us to accelerate the commercialization of Clever Leaves’ high-quality products as well as expand the company’s operations and distribution in attractive markets around the world.”

Clever Leaves’ branded nutraceutical manufacturer, Herbal Brands, will provide additional distribution capabilities for non-cannabis related products and the company said it is well-positioned in the event of legalization in the United States. Clever Leaves employs a staff of approximately 500 globally.


Debra BorchardtDebra BorchardtDecember 14, 2020
Weedmap.jpg?fit=1024%2C576&ssl=1

20min6000

This interview has been slightly edited for grammatical purposes.

Green Market Report Editor-in-Chief Debra Borchardt:  

So first, congratulations. That’s quite a feat to have pulled off this year. Certainly, SPACs have been the way to go. Most of the deals in cannabis this year have been with the public companies, not so much on the private side. So, kudos to you guys for doing that.

Weedmaps CEO Chris Beals:                         Thank you.

Green Market Report:   I had a question regarding your numbers in 2019 versus your numbers in 2020. It seemed your net income really dropped in 2019 and then it bounced back in 2020. And I was curious what you did to make that happen?

Chris Beals:                         So, we’ve gone through a cyclical approach to investment, just with building out this “business in a box” in sort of the tech platform. Keep in mind, we’ve essentially built this entire operating system in the last three years. Two things underpin that. One was that I believed in embarking on this strategy that we’ve seen increased economies of scale. So, we’d be able to launch successive pieces of software more cheaply because we’d increasingly be able to rely on parts of the sort of a software layer where the data normalization work we were doing to preceding pieces. But the other is we’d be able to lower our cost of acquisition or our cost of adoption by doing things like having self- onboarding occur and that sort of thing. One of the things that we’ve done is we go through successive waves of investment. So, we’ll invest heavily in building out the next suite of the platform and then work to make sure that we have adoption in product markets before we cycle forward. We also, periodically, we’ll have some heavier investment periods when we see the market’s open and given that the last few years from a macro view has been a bit muted in terms of the rapid expansion most people expected.

Green Market Report:   Back in 2019 you guys had some negative headlines about listing dispensaries that weren’t licensed and then you started 2020 on a mission to eradicate those unlicensed operators from Weedmaps. Is that complete?

Chris Beals:                         Not only is it complete, what we’ve done is something that frankly, I don’t think there’s any other sort of marketplace I’ve seen out there do it, which is we’ve been rolling out sort of this enhanced verification process for businesses that want to be on the site as opposed to say what you see with the Googles (NASDAQ: GOOGL) and others of the world relying on their section 230 defense and that sort of thing. In part, I think that’s a natural extension of the amount of work we do on the policy side that we build into sort of our software compliance stack. It’s all part of the same cycle, but yeah, so we have that enhanced verification with the marketplace side, but also that same sort of enhanced verification exists for businesses using the WM business.

Green Market Report:   Looking at the revenue, your revenue estimates from ’21 to ’22, you jumped from $205 million to $300 million, and then ’22 to ’23, you estimate a jump, another pretty big jump, from $300 million to $440 million. What is going to get you there? Because granted your previous increases have been pretty respectable, but they seem like they’ve been a little more consistent in the size. And then all of a sudden we have these huge jumps, but then you also say within your investor presentation that you’re not really relying on new markets. So, what’s going to be behind that big jump from ’21 to ’22? To me, it would seem like it would be reliant on these new markets, but you’ve said that you’re not really baking that in.

Chris Beals:                         So, we’ve driven over the last five years a 40% CAGR. And as you look on the go forward, that’s essentially a carry forward of that 40% CAGR. Although we have a large and very effective policy team, a lot of that allows us to build this compliance by design, and with the WM business suite, we typically sort of on the go forward look, take a fairly conservative view in terms of our estimates when markets will open, maybe aggressively conservative. Given what happened in this last election, but separately, we can’t have our go-forward projections be sort of reliant on the vagueries being exactly when a certain market opens. So, we built in the conservatism for that reason.

In terms of the “go-forward” what you see on the go forward is actually a continuation of that roughly 40% growth rate we’ve historically had. The other thing that’s worth noting is on the marketplace side, not only the largest and sort of most effective marketplace for cannabis, we also have a dominant position in terms of actual cannabis’ rivals. And so, a lot of us don’t realize this, but people who consume cannabis once a month or more are less than 10% of the population we’d estimate. When you look across the Weedmaps marketplace user base, over 90% of those users consume monthly. In fact, over 70% consume daily. And so, the thing that’s interesting is we’re actually right now by far the cheapest way for cannabis businesses to reach consumers, but we’re also the most effective once they do reach them.

We have about a 50 cent cost per click, which is a fraction of what it would cost to go out and try and aggregate demand on generalized platforms or out of the home. Separately, we’re driving an almost 15% conversion rate across our platforms and at best, you’re looking at likely a low single-digit conversion rate on the sort of any other platform, not to mention the fact that getting to these consumers is incredibly valuable. You sort of go out and sort of try and attract demand in a generalized sense. 90 to 95 cents on every dollar you spend are effectively wasted because you’re not actually hitting a cannabis consumer.

Separately, on the WM business suite, we offer this entire operating system for retailers for $500 a month. It offers a huge amount of benefits from a compliance and operational efficiency you’d bring because those pieces link together, but separately, if a business were to go out and buy those pieces individually, it would cost several times that. And so, as we look at the go forward, obviously, I think there’s the ability to sort of think about monetization more on the business in a box, that SAS suite, but separately, over 40% of our headcount is engineering, product, and design. We have a zesty roadmap of new products, new features that we expect to bring on and be able to monetize. So, I would say that if you look at that go forward growth if you’re just looking at the steady-state of where the markets are right now, I guess the easiest way to analogize it is there’s a lot of room for growth within existing markets, just on that base level.

Green Market Report:   NASDAQ recently announced its desire to have the companies that list on their marketplace to have diversity in the board and looking at Silver Spike and Weedmaps, it’s just a bunch of white men. Are there any plans for the board to have any females?

Chris Beals:                         Absolutely. Diversity is really a core part of Weedmaps and what we strive to do. Look, I think it’s always an area that companies can improve in and I would say we’re no exception. It’s something that we’ve actually made a focus internally. Separately, in terms of board composition, we absolutely care about having a diverse board. And that was something we would do regardless of the changes or whenever the NASDAQ comes out.

Green Market Report:   Well, that could have maybe happened before. Any acquisition plans?

Chris Beals:                         Keep in mind, just one note on that actually, it’s a closely held LLC. Part of this transition will be forming a new board.

Green Market Report:   Got it.

Chris Beals:                         And that’s part of the merger process.

Green Market Report:   Are there acquisitions planned? It looked like most of the proceeds were planned for just like more tech and an expansion of the tech that’s existing. I didn’t really see that there were any plans for acquisition, so I was just curious if that was part of the mix?

Chris Beals:                         Yeah. We always want to ensure that we have dry powder for acquisitions. I think we are a company that’s looking sort of out further, but I would say one thing that sometimes weighs against that is sort of the continued efficiencies we’ve been able to drive on sort of our internal development efforts and separately as a company ethos, we’re very sort of ROI focused on our investments, whether that be internal initiatives or potential M and A. But that’s something we keep track of, but nothing sort of specific planned.

Green Market Report:   Along the line of the board member question, what Weedmaps has done with regards to any kind of social equity or social justice types of movement. Is that something that you guys are engaging in?

Chris Beals:                         Actually, it’s a pretty core mission. Weedmaps’ mission is to power a diverse and inclusive cannabis industry. We actually launched something called the WM Teal (Together for Equity Access and Legislation) and that was basically a social equity support program that we launched late last year, which was basically intended to give free software, support, consulting services and to help these businesses participate. Separately through our policy team, we actually wrote a lot of the initial draft language on social equity programs and have been big advocates for actually having social equity programs within jurisdictions that are opening up. We’ve worked closely, for instance, with the NAACP and other groups in New Jersey in advocating for that.

I think, yeah, there is a lot we’re doing in this space. I think part of it is the support of folks who get licenses and unfortunately, a lot of these social equity programs have been too slow to roll out, but the other part is advocating. And this is something we’ve been doing for some time and writing white papers and this mock language on, sort of a model legislative language on, which is trying to get more jurisdictions to implement social equity programs or to actually have that opportunity as well as encouraging jurisdictions to realize that starting up a cannabis business is incredibly expensive between the fees, the licensing, but then the sort of sheer rigor of these compliance regulations where we’re really regulating cannabis like it’s a radioactive substance. And so, encouraging state and local governments to think about things like grants or sort of loan forgiveness programs or things like that because you can have the programs, we can give the software, we can give all these enablement tools, but ultimately, raw capital is, unfortunately, sometimes feels like a must in this industry just because of sort of how we’re regulated for this.

Green Market Report:   So, looking at your revenue numbers, they were pretty solid. You consistently, as you noted, grew your revenues. Why go public? Because going public is certainly not, as I’m sure you’re finding out, the end all and be all. You got special accountants, you’ve got to have so many things that you’re doing with regards to the compliance and then, of course, reporting every quarter to your shareholders. Why go that route? Why not just stay private?

Chris Beals:                         We have a pretty seasoned executive team and we have folks who are fairly familiar with the rigors of the process and yeah, we would not disagree with you that there’s a lot of increased work and rigor. Look, I was a former life scientist and tech transactions attorney, I’m, yes, very familiar with it. I think for us, it’s a couple of things. I think one, being the first sort of tech company at this valuation you got at NASDAQ, in and of itself I think has a frankly, sort of these positive externalities in terms of raising the profile of the company and also enabling us to do successive transactions more easily, to have a public currency that we can utilize if we’re going to go about and do M and A, but then the other part of it is, is that this was frankly, a very effective way for us to raise capital, but also bring, given the fact that we’ve essentially been a bootstrap company for our entire history, to bring bellwether investor groups in and to support the story and grow.

I know it sounds a bit cliche, but I think one of the toughest things about doing what we do, doing this very regulatorily intensive software stack, working on this marketplace, which frankly, wouldn’t have transactability without us doing a bunch of machine learning and data normalization and building the wrong product catalogs that actually underpin these listings so that when you click on an individual menu listing, there’s information that enables a consumer to transact. These are really complex things where we’re doing things like machine learning and that sort of thing. And I think by bringing these investors around the table, I think it highlights and it is a sign of recognition of, I think, just how tough what we’re doing is and sort of, I think, how future says, we’ve been in our approach.

Green Market Report:   Have you had any pushback from NASDAQ? Because I know that NASDAQ folks are not very friendly towards the cannabis companies. They’ve certainly not shown a desire to really work with them very much. And while Greenlane and Akerna and a couple more have managed to get in the door, have you felt any pressure from them with regards to any of the marketplace transactions that you would be engaged in selling cannabis?

Chris Beals:                         A couple of things to note there. We’ve had a very cordial and open dialogue because as you can imagine, they want to understand that this is a compliant company and then how we operate. I think the thing here that’s really important to note is we provide SAAS software on a licensing fee basis and then we provide the sort of broader consumer reach things. We don’t do anything that is involved in a cannabis transaction. We don’t enable payments for cannabis transactions, we don’t take Visa on cannabis transactions, anything like that. And so, I think part of what underpins, and look, we take a fairly conservative approach from a compliance view, so it’s one of the ancillary benefits of having a large compliance and policy team for building the software we build, is they also give you advice on sort of everything else.

We as a company, keep a very conservative path from a compliance view and I think that’s something that NASDAQ understood and took comfort in, but there’s a lot of intentionality there. And look, undoubtedly, there are definitely opportunities for us. In fact, I think frankly, very large opportunities exist when federal legalization or something like federal banking, like when the Safe Banking Act passes and we simply don’t or won’t, or can’t do now because of that compliance first mindset.

 


Debra BorchardtDebra BorchardtDecember 3, 2020
money4-2.jpg?fit=960%2C640&ssl=1

5min9801

Ackrell SPAC Partners I said it plans to raise $100 million for a SPAC (special purpose acquisition corp.) primarily focusing on the alcoholic and non-alcoholic beverage and wellness sectors, as well as hemp-based branded consumer goods. It plans to list on the Nasdaq under the symbol ACKIU.

The company said in its filing, “Our strategy is to identify and complete our initial business combination with a target operating in the branded FMCG industry. Our focus will be on the alcoholic and non-alcoholic beverage and wellness sectors of the FMCG market. In addition, we believe that there is an emerging opportunity within these sectors to target businesses that are focused on hemp-based branded consumer goods. While we intend to initially focus on potential opportunities in the United States, the branded FMCG industry is global and we may pursue opportunities internationally.”

The Claymont, DE-based company plans to raise $100 million by offering 10 million units at $10. Each unit contains one subunit and one-half of a warrant, exercisable at $11.50. Each subunit contains one share of common stock and one-half of a warrant. At the proposed deal size, Ackrell SPAC Partners I would command a market value of $133 million. It has 12 months in which to establish a business combination.

The company is led by Chairman Michael Ackrell, founder and CEO of Ackrell Capital; Vice Chairman Shannon Soqui, co-founder and CEO of Next Frontier Brands; CEO nominee Jason Roth, co-founder and Chief Strategy Officer of Next Frontier Brands; and COO nominee Stephen Cannon, who serves as President of Everest Partners and has experience from several other SPACs.

At this time, it looks as if all the members of the board of this SPAC are male. NASDAQ recently filed a proposal with the Securities and Exchange Commission that would require listed companies to have at least one woman on their boards, in addition to a director who is a racial minority or one who self-identifies as lesbian, gay, bisexual, transgender or queer.

Roth will serve as the Chief Executive Officer. Since April 2020, Roth has served as Chief Strategy Officer and a member of the board of directors of Next Frontier Brands. From 2018 to 2019, Mr. Roth was the Chief Executive Officer and Chairman of the board of directors of Mile High Labs International, which the company said it believes was one of the world’s largest processors of hemp-derived CBD concentrates in 2019. 

Ackrell has been a director of a number of private companies, including Stable Technologies, Inc., a manufacturer of water-soluble CBD products, CMLM Holdings, Inc., doing business as QIND, a branded retailer of CBD products, American Giant, Inc., a U.S.-based manufacturer of apparel and activewear, Vator, Inc., a professional network for entrepreneurs, and Scrubbed.net, LLC, an online accounting and bookkeeping services company. CMLM Holdings, Inc. was acquired by Next Frontier Holdings, Inc. in August 2020.

From 2018 to 2020, Mr. Soqui was the Chief Executive Officer of CMLM Holdings, Inc., prior to its acquisition by Next Frontier Brands. From 2017 to 2018, Mr. Soqui was the head of U.S. cannabis investment banking at Canaccord Genuity, a leading global cannabis investment bank. From 2015 to 2017, Mr. Soqui was the Head of Cannabis Investment Banking at Ackrell Capital.

Ackrell SPAC Partners I was founded in 2018 and. The company filed confidentially on October 17, 2019. EarlyBirdCapital is the sole bookrunner on the deal.


Debra BorchardtDebra BorchardtNovember 24, 2020
money4-2.jpg?fit=960%2C640&ssl=1

6min9830

Special purpose acquisition company (SPAC) Subversive Capital Acquisition Corp. (OTCQX: SBVCF) or SCAC entered into definitive agreements with global icon, entrepreneur and MONOGRAM founder, Shawn “JAY-Z” Carter, entertainment powerhouse Roc Nation, California cannabis company CMG Partners Inc. (Caliva) and Left Coast Ventures, Inc. to form TPCO Holding Corp. (The Parent Company). The deal is expected to close in January 2021.

Caliva and Left Coast Ventures expect combined pro forma revenues of $185 million in 2020 and $334 million in 2021. These acquisitions together constitute SCAC’s “qualifying transaction”. SCAC currently holds approximately $575 million in cash-in-trust, which would make The Parent Company one of the most well-capitalized cannabis companies in the United States assuming no redemptions.

Brand strategy and marketing playbook led by Shawn “JAY-Z” Carter and Roc Nation, will be leveraging the cultural influence of leading artists and entertainers to build the most valuable and scalable brand IP in cannabis. The Parent Company will become Roc Nation’s “Official Cannabis Partner”, Roc Nation will provide The Parent Company with special access and
rights with respect to Roc Nation’s roster of artists and athletes and Roc Nation will promote The Parent Company’s brand portfolio and provide various services.

Carter, who will become The Parent Company’s Chief Visionary Officer following the closing of the deal, said: “Although we know we can’t fully redeem the injustices created
by the ‘war on drugs’, we can help shape a brighter and inclusive future. The brands we build will pave a new path forward for a legacy rooted in equity, access, and justice. We’re creating
something people can trust and we’re investing in our future, our people, and our communities.”

SCAC has received private placement commitments of $36.5 million at a price of $10.00 per share issuable immediately prior to, and conditional on, completion of the Transaction (the “Private Placement”). Investors in the private placement commitments received to date include Fireman Capital Partners, Tuatara Capital, and Subversive Capital, the largest investors in Caliva and Left Coast Ventures, as well as Roc Nation artists Rihanna, Yo Gotti, and Meek Mill. The proceeds of the Private Placement are intended to be used in connection with the Transaction and to fund the growth of The Parent Company following the deal’s closing.

Caliva currently reaches over 50% of consumers in California through its existing platform for delivery. The Parent Company is expected to have the greatest consumer reach of any cannabis company in California reaching 75% of consumers in the state by the end of 2021 and almost 90% by the end of 2022 through scaling of its omnichannel platform.

Steve Allan, who will become The Parent Company’s CEO following the closing of the Transaction, said: “In addition to building the most influential portfolio of cannabis and hemp brands in the world, The Parent Company’s vertical operational platform has been designed for growth and future mergers and acquisitions, forging a path to redefine the cannabis industry in California.”

Social Equity Component

Led by Carter, The Parent Company will fund The Parent Company Social Equity Ventures with an initial target of $10 million and an annual contribution of at least 2% of its net income to invest in minority-owned and Black-owned cannabis businesses and contribute to the effort to rectify the wrongs of prohibition through initiatives that are working toward meaningful
change in the criminal justice system. These initiatives will include bail reform, industry vocational training, job placement, expungement clinics, and Social Equity application
support.

Terms of the Deal

Caliva shareholders will receive aggregate consideration of approximately $282.9 million. Caliva shareholders will receive consideration in the form of newly issued common shares in the capital of SCAC, subject to exceptions for certain U.S. persons that will receive consideration in cash. Left Coast Ventures shareholders will receive aggregate consideration of approximately $142.2 million less the Sisu Consideration. Left Coast Venture shareholders will receive consideration in the form of newly issued SCAC Common Shares, subject to exceptions for certain U.S. persons that will receive consideration in cash. In connection with the consummation of the LCV Transaction, SCAC has also agreed to repay in full certain promissory notes of LCV for an aggregate amount equal to $15.0 million which LCV Note Repayment will adjust the consideration paid to Left Coast Ventures shareholders on closing. In addition, the Left Coast Venture shareholders may receive up to approximately 3.9 million additional SCAC Common Shares in the event the VWAP of SCAC Common Shares reaches $13.00, $17.00 and $21.00 within three years of closing (with one-third of such shares delivered at each such price threshold).


Debra BorchardtDebra BorchardtOctober 7, 2020
plant.jpg?fit=960%2C640&ssl=1

6min11060

Subversive Real Estate Acquisition REIT LP (NEO: SVX.U) (NEO: SVX.RT.U) (OTCBB: SBVRF) has become the latest cannabis SPAC (special purpose acquisition corp.) to begin trading. The company just announced it has entered into binding agreements to acquire real properties in the amount of approximately $97.4 million and originate or acquire $85.4 million of first-lien mortgages. the company’s goal is to become a leading real estate capital provider for prominent cannabis operators that own or are seeking industrial and retail real estate in high growth markets in the United States. Subversive is the first instance of a SPAC vehicle converting into a public REIT.

“We are thrilled to announce our Qualifying Transaction that delivers on what this experienced cannabis real estate team set out to create, which is a diverse initial portfolio consisting of high quality, mission-critical industrial and retail assets operated by leading U.S. cannabis operators”, stated Michael Auerbach, Executive Chairman of the REIT LP and Founder of Subversive Capital, the REIT LP’s lead sponsor. “Subversive REIT LP’s platform combines disciplined real estate underwriting with deep operator and industry knowledge to meet the needs of the high growth cannabis industry.”

Subversive joins Innovative Industrial Properties (NYSE:IIPR) as one of only two publicly traded cannabis REITs. At the closing of the qualifying transaction will have $182M in portfolio assets with 15 properties of cannabis retail, industrial cultivation, greenhouse cultivation, and manufacturing assets across 8 states. The company said it expects to have two additional properties to close in 2020 for a total of $200 million in assets in 17 properties across 9 states with a 1.6M sq. ft. footprint. It is targeting an eight percent distribution yield.

The REIT LP also announced a private placement of subscription receipts. On Closing, the Subscription Receipts shall convert into $40 million aggregate principal amount of 6% senior secured convertible debentures at a price of (a) US$1,000 per Debenture and 137,500 limited partnership units of the REIT LP (“Debenture Units”) or (b) US$950 per Debenture, as specified by the holder (each, as applicable, the “Offering Price”). The REIT LP has also granted Canaccord Genuity Corp. and Compass Point Research & Trading, LLC a 30-day non-transferable option to purchase Subscription Receipts convertible into up to an additional $25 million Debentures and up to an additional 125,000 Debenture Units.

Mr. Auerbach continued, “With a robust pipeline including asset purchase options, we are very pleased to be entering the public market via our SPAC transaction, which should allow us greater access to capital to continue to grow our business and deploy capital into a capital-starved industry.  We believe that our strong portfolio and platform positions the REIT LP to provide an attractive level of distributions as well as a substantial growth opportunity over time.”

“The cannabis industry continues to grow at an incredible rate, COVID-19 notwithstanding, driving demand for well-located cannabis industrial and retail assets,” said the REIT LP’s CEO Richard Acosta. “Our compelling thesis regarding the value of strategic cannabis real estate assets was validated by our ability to raise and deploy capital with some of the strongest and most well-known operators in the space. We are excited to be providing much-needed growth capital to operators across the supply chain, while providing investors an exciting investment opportunity that combines meaningful growth and income potential as the second publicly traded cannabis REIT.”

The Portfolio:

  • California – 8 assets across Los AngelesNorth HollywoodDesert Hot SpringsCoachellaGreenfield, and San Francisco (total of 432,000 square feet) (including the two additional assets expected to be acquired following the Closing)
  • Florida – two assets across Alachua and Jacksonville (total of 296,000 square feet)
  • Nevada – one asset in North Las Vegas (455,000 square feet)
  • Arizona – one asset in Mesa (9,000 square feet)
  • Maryland – one asset in LuthervilleTimonium (6,000 square feet)
  • Michigan – one asset in Lansing (65,000 square feet)
  • Ohio – one asset in Columbus (7,000 square feet)
  • Pennsylvania – one asset in Johnstown (3,000 square feet)
  • Washington – one asset in Tacoma (319,000 square feet)

 


Debra BorchardtDebra BorchardtJuly 28, 2020
clever.png?fit=1200%2C797&ssl=1

5min11890

As announced in early June, Clever Leaves International is expected to be one of a few cannabis companies listed on the NASDAQ making this investment available to a substantially broader base of investors. The company has one of the largest cultivation and extraction operations in Latin America and is among the largest in the world, including Canada’s licensed producers and top extractors.

It is making its way onto the NASDAQ through the Schultze Special Purpose Acquisition Corp. (NASDAQ: SAMA). The deal is expected to close in the fourth quarter and will be known as Clever Leaves Holding Corp. Kyle Detwiler, Chief Executive Officer and Andrés Fajardo, President, will continue to lead the combined company.

Terms

The deal is valued at approximately $255 million, which includes an estimated $74 million of net cash ($111 million in cash, assuming no redemptions, and $37 million in debt) on the balance sheet at closing. Clever Leaves’ shareholders will be rolling over 96% of their equity ownership into Holdco, reflecting continuing majority ownership of the combined company in excess of 55% (assuming no redemptions). Clever Leaves will have an earn-out of up to 1.8 million shares reflecting an alignment of interests and limited dilution. The transaction is subject to a minimum cash condition of $60 million, after any redemptions, compared with approximately $132 million of cash held in SAMA’s trust.

George J. Schultze, Chairman and CEO of SAMA, said, “We are incredibly excited to partner with Clever Leaves and look forward to consummating this transaction. The Company is led by an outstanding and highly accomplished management team, and we believe that with its disruptive, low-cost and vertically integrated operating model, Clever Leaves is well-positioned for substantial growth and profitability. We view the transaction valuation as highly attractive to investors, and upon closing, we expect Clever Leaves to be among the best-capitalized companies in the cannabis industry. We believe that our strategic alignment, coupled with our own background in successfully building businesses, including through targeted M&A, has the potential to create significant value for shareholders over time.”

Clever Leaves

Clever Leaves has ownership in two medical cannabis distribution companies in Germany as well as a branded nutraceutical producer and distributor in the US and is currently distributing non-cannabis products.  The company’s investments are anticipated to drive sales growth in rapidly expanding cannabis markets within Europe, Australia, the Middle East, and South America. Clever Leaves also recently secured a regional supply agreement with Canopy LATAM Corporation, a wholly-owned and controlled subsidiary of Canopy Growth Corporation.

The company has successfully developed low-cost, pharmaceutical-grade cannabis cultivation and extraction platform, operating under Colombian Good Manufacturing Practices (GMP) for cannabis production. Clever Leaves is also in the process of becoming one of the few cannabis companies in the world, and the only cannabis company in Latin America, to be granted a European Union Good Manufacturing Practice certification for extracts, subject to the successful completion of the certification process. The

Clever Leaves currently cultivates in over 1.9 million square feet of greenhouses. Clever Leaves employs a staff of approximately 500 globally and has raised approximately $120 million of capital to date, including substantial debt and equity investments from leading institutional investors with a demonstrated track record in the cannabis sector.

Kyle Detwiler, CEO of Clever Leaves, added, “We are proud of what we have accomplished to date in achieving an industry-leading position through our high-quality EU GMP certified operations and scalable cultivation and extraction capacity. These attributes have made us a global leader in low-cost cultivation with pharmaceutical-grade production primed for export. Our business combination with SAMA will significantly strengthen our balance sheet and take us to the next level, enabling us to accelerate the commercialization of our high-quality products as well as expand our operations and distribution in attractive markets around the world.”



About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


READ MORE



Recent Tweets

@GreenMarketRpt – 1 day

RT : The State of Cannabis SPACs was recorded on April 13, 2021. If you want to learn everything about SPACs in the cannabis i…

@GreenMarketRpt – 1 day

Not sure if you missed some news this week? Here’s a quick recap in #Psychedellux…

Back to Top

You have Successfully Subscribed!