SPAC Archives - Green Market Report

Debra BorchardtMay 3, 2022
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Cannabis marketing firm Springbig is dramatically reducing its valuation in its IPO deal with SPAC company Tuatara Capital Acquisition Corp. (NASDAQ: TCAC)to $275 million from the previously announced valuation of $500 million. In November, Tuatara Capital Acquisition Corp. said it reached a deal with Springbig to merge with an estimated equity value of $500 million of the combined company with a $300 million springbig enterprise valuation plus $200 million cash on the balance sheet from the SPAC.  On Tuesday, the sides agreed “that market conditions have changed since the proposed merger agreement was initially announced,” according to a statement. Although it is worth noting that Springbig’s annual revenue is just $24 million, making even the lowered valuation pretty frothy.

Paul Sykes, Chief Financial Officer of Springbig, said: “These latest developments represent further significant steps towards completing our business combination with TCAC. The amendments to the terms of the merger have enhanced the value of this transaction to our public shareholders. By reducing valuation and combining this with the innovative structure of offering up to one million bonus shares to be issued pro-rata to non-redeeming public shareholders, we believe we have created an attractive proposition that adequately reflects current market dynamics. Additionally, the commitments we have received from the global institutional investor with respect to the senior secured convertible note, the CEF Facility with Cantor, and the previously announced $13 million common equity PIPE will ensure that springbig starts life as a public company with access to adequate capital to continue to scale our existing business and pursue our expansion strategies as opportunities emerge.”

New Financing

The companies released a statement outlining additional financing changes. Springbig and TCAC said they have an agreement for the issuance of senior secured convertible notes with a 24-month maturity, up to $16 million principal amount that has been subscribed to by a global institutional investor. “An initial tranche of $11 million will close in connection with the closing of the merger agreement. The second tranche of $5 million, subject to certain conditions in the agreement, will close 60 days after the resale registration statement is declared effective by the SEC.”

Additionally, TCAC has also agreed to a $50 million equity financing facility with Cantor Fitzgerald LP. Jeffrey Harris, CEO of springbig, added: “We are delighted to have the support of Cantor and an institutional investor. The growth opportunity ahead of springbig is significant as we look to strengthen our core loyalty and marketing communication capabilities, execute our expansion strategies, and deploy the additional capital we receive from our transition into a public company.”

2021 Earnings

In March, Springbig reported that it had strong year-over-year revenue growth of 58% to $24 million in 2021 from $15 million in 2020. Gross margin improved by 4% YoY to 71% in 2021 from 67% in 2020 and the retail client base increased by 63% from 759 in 2020 to 1,240 in 2021.


Debra BorchardtFebruary 14, 2022
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Cannabis blank check company Relativity Acquisition has sold 12.5 million units at $10 each, and its underwriters have a 45-day option to buy up to an additional roughly 1.9 million units, which could raise another $18.75 million. Relativity Acquisition’s common stock is set to trade on the Nasdaq under the symbol “RACY” (the units will trade at RACYU) and its offering is expected to close on February 15, 2022.

Relativity Acquisition said that while it’s primarily looking for businesses in the cannabis industry, it may also eventually combine with a company in sectors such as consumer packaged goods, health, and wellness, pharmaceuticals, or logistics.

The company is led by CEO and Chairman Tarek K. Tabsh, who has over 15 years of legal, commercial cannabis experience. In 2017, Mr. Tabsh co-founded and guided the initial vision and strategy for Oxford Cannabinoid Technologies, a UK-based pharmaceutical company that develops therapies targeting the endocannabinoid system, in areas such as pain and cancer, in partnership with Oxford University. Mr. Tabsh was instrumental in raising an institutional round of investment from one of the largest tobacco companies in the world.

The CFO is Steven Berg, a business leader with over 30 years of experience spanning investment banking to building prominent companies in the cannabis industry. Mr. Berg most recently was CEO of NWT Holdings, LLC (dba Firefly Vapor), from June 2017 to December 2019, a leader in cannabis vaporization technology and consumer products. The board includes John Anthony Quelch, Emily Paxhia, and Francis Knuettel II.

According to the company’s filing, it will seek to acquire a company that:

•        Has an enterprise value of approximately $500 million to $1 billion;

•        Has a market and/or cost leadership position and would benefit from our management expertise and extensive relationships (i.e., “rewards stellar management”);

•        Occupies relatively fast-growing markets (i.e., “top line growth”);

•        Has strong drivers of revenue and earnings growth and exhibits “barriers to competition”;

•        Has the potential to generate strong and stable free cash flow;

•        Is underperforming its operating potential and underutilizing its balance sheet.

 

The company said in its filing, “We believe that there are several types of target businesses that could benefit from our partnership and are compliant with all applicable laws and regulations within the jurisdictions in which they are located or operate. In the United States, this would currently include certain non-plant touching businesses that support the functioning of state-licensed commercial cannabis activity but are not directly related to cultivation, manufacturing, processing, branding, transportation, distribution, storage or sale of cannabis and cannabis-based products. Another set of eligible targets in the U.S. would include certain hemp derived cannabidiol (“CBD”) businesses that are compliant with the U.S. Agricultural Improvement Act of 2018 (the “2018 Farm Bill”), which would include targets engaged in (i) cultivation and/or processing of hemp, (ii) the manufacturing of hemp extracts and/or extraction of cannabinoids from hemp, and/or (iii) branding, transportation, distribution, storage or sale of hemp-derived CBD.”

 

 


Debra BorchardtFebruary 14, 2022
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Cannabis banking company Safe Harbor Financial (SHF, LLC) will go public through the SPAC (special purpose acquisition corporation) Northern Lights Acquisition Corp.  (NASDAQ: NLIT) has chosen it for the qualifying transaction. Safe Harbor is a subsidiary of Partner Colorado Credit Union, a Colorado-chartered credit union based in Arvada, Colorado. Safe Harbor will be led by Sundie Seefried, Founder and Chief Executive Officer of Safe Harbor.

“The acquisition by Northern Lights will allow Safe Harbor to advance its efforts to remain the premier cannabis financial services provider,” said Seefried. “Over the last seven years, our team has pioneered what many consider to be the industry standard cannabis banking platform by establishing strong internal processes and controls, and by complying with rigorous state and federal banking guidelines. Through the SPAC transaction, we believe Safe Harbor will be well-positioned to expand its suite of financial services for our existing and new clients and continue to support the growth of the cannabis industry at a very high level. Our goal is to become a ‘one-stop-shop’ for cannabis business financial needs.”

Safe Harbor was formed in 2015 by the PCCU to provide an unmet need, which was compliant access to banking and financial services for the cannabis industry. Over the past seven years, Safe Harbor has grown to nearly 600 accounts spanning 20 states. Additionally, Safe Harbor has processed over $11 billion in transactions with $4 billion in 2021 and has grown deposits at a 73% CAGR since inception. Safe Harbor addresses these challenges with its industry-leading financial services and commercial lending platform, providing its clients with increased safety and security through access to normalized banking and cash management. Through its proprietary risk management and compliance program, Safe Harbor operates under regulations promulgated under the Bank Secrecy Act and additional FinCEN guidance, as demonstrated by passing 15 state and federal examinations since inception.

Transaction Details

Northern Lights will acquire Safe Harbor for a total of $185 million, of which $70 million will be paid in cash and $115 million in shares of Northern Lights Class A common stock. The estimated post-transaction equity value of the company will be approximately $327 million, assuming no redemptions by the stockholders of Northern Lights. The transaction will provide up to $107 million of gross proceeds (assuming no redemptions), including $117 million from Northern Lights’ cash-in-trust and a fully committed $60 million PIPE from institutional investors.

“Safe Harbor is the most compelling investment opportunity we have encountered in the cannabis industry as both operators and investors. Safe Harbor is one of the only multi-state financial service organizations to successfully navigate the highly regulated cannabis banking industry, providing services that operators in other industries take for granted,” noted John Darwin and Joshua Mann, Co-CEOs of Northern Lights, both of whom will remain on Northern Lights’ Board of Directors upon completion of the transaction. “Setting the gold standard for regulatory compliance, as well as providing access to growth capital across the entire cannabis value chain, Safe Harbor is uniquely positioned to scale. We are confident that our collective experience in the cannabis industry and strong pipeline of lending opportunities are complementary to the incredible business Sundie and her team have established.”


Debra BorchardtJanuary 21, 2022
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Silver Spike Acquisition Corp. II (NASDAQ: SPKB/SPKBU/SPKBW), a publicly-traded special purpose acquisition company or SPAC sponsored by an affiliate of Silver Spike Capital announced on Thursday that it has signed an agreement expected to make Eleusis a public company. Eleusis is a clinical-stage life science company that aims to unlock the therapeutic potential of psychedelics. The combined company will be operated through Eleusis Inc., a new holding company, and will apply to have its common stock listed on Nasdaq under the symbol “ELEU.” Eleusis said it expects to use the proceeds received from SPKB’s trust account in the transaction to support clinical development of ELE-Psilo, early stage drug discovery and translational research, and the nationwide expansion of Andala-managed clinics.

“This is an ideal moment for Eleusis to go public with a partner like Silver Spike,” said Shlomi Raz, CEO and founder of Eleusis. “We are thrilled to work with the Silver Spike team, whose extensive financial and industry experience complement our expertise. We believe access to public capital markets will accelerate our efforts to transform psychedelics into modern medicines, and ultimately offers the potential to improve millions of patients’ lives while creating long-term value for our shareholders.”

Eleusis was founded in 2013 and is dedicated to transforming psychedelics into medicines. ELE-Psilo, Eleusis’s lead drug candidate, is being developed to treat depression and is expected to enter Phase I trials in 2022, subject to regulatory authorization. Eleusis designed ELE-Psilo, if FDA-approved, to be compatible with existing U.S. healthcare infrastructure and insurance coverage and reimbursement requirements. Eleusis formulated ELE-Psilo to deliver psilocin, the active ingredient in psilocybin, via IV infusion. IV-administered psilocin has the potential to offer more consistent therapeutic effects to patients, more controllable therapies to clinicians, and shorter treatment times – planned to be two hours or less – than orally-administered psilocybin exhibited in third-party clinical studies.

Scott Gordon, CEO and Chairman of SPKB, and CEO and Founder of Silver Spike, added, “At Silver Spike, we believe that realizing the vast therapeutic potential of psychedelics will require companies like Eleusis to develop practical solutions to accelerate mainstream adoption and spur innovation that leads to approved psychedelic therapies that are both accessible and affordable. In addition, Andala’s groundbreaking work managing clinics to address the ‘last mile’ challenge of psychedelics is consistent with our investment thesis in alternative health and wellness categories – find the companies that enable an entire market to scale. We believe Eleusis has identified the ‘end game’ of developing psychedelic drug therapies, and we are excited to be playing a role in potentially realizing its inspiring vision.”

Silver Spike Acquisition Corp. II is a $287.5 million SPAC sponsored by Silver Spike, an asset manager with deep expertise in health, wellness, and cannabis investments. The team’s experience includes the completed merger of Silver Spike’s first SPAC, Silver Spike Acquisition Corp., with WM Holding Company better known as WeedMaps.


StaffDecember 1, 2021
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The newest cannabis SPAC (special purpose acquisition corp.) Canna-Global Acquisition Corp. (NASDAQ: CNGLU) priced its initial public offering of $200 million and began trading on the Nasdaq Global Market on Tuesday using the ticker symbol “CNGLU”. The SPAC said it has not selected a business combination target or spoken to any companies about becoming the qualifying transaction. It did say in a statement that it will target a business addressing a large market opportunity with a company that is driving its growth in the medicinal cannabis or cannabinoid industry but only in a federally legal market.

The company is led by its Chief Executive Officer, J. Gerald (“Gerry”) Combs. Combs also serves as the CEO of CASH International Asset Management Ltd., a Hong Kong-headquartered asset management business. The SPAC’s chief financial officer is George Koi Ming Yap, who also runs the Sydney, Australia-based financial consulting firm KMYG Global. However, the company did state in its filing its plans to avoid targeting any businesses in Hong Kong or China.

Offering Details

Each unit consists of one share of the Company’s Class A common stock and one redeemable warrant entitling the holder thereof to purchase one share of Class A common stock at a price of $11.50 per share. Once the securities comprising the units begin separate trading, the shares of Class A common stock and warrants are expected to be listed on Nasdaq under the symbols “CNGL” and “CNGLW” respectively.

EF Hutton, division of Benchmark Investments, LLC, is acting as sole book-running manager for the offering. The company has granted the underwriters a 45-day option to purchase up to an additional 3,000,000 units at the initial public offering price to cover over-allotments if any. The offering is expected to close on December 2, 2021, subject to customary closing conditions.


Debra BorchardtOctober 1, 2021
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Ceres Acquisition Corp. (NEO: CERE.U)(OTCQX: CERAF) has decided to call off the Business Combination Agreement dated February 21, 2021, with SH Parent, Inc. also known as Parallel. Ceres said it plans to continue looking for another company for its qualifying transaction before the deadline of March 3, 2022, unless of course that date is extended, with shareholder approval.

Premium Price

Back in February, the deal was valuing Parallel (formerly Surterra Wellness) at an implied enterprise value of $1.884 billion saying the expected net revenues would $447 million in 2021. The expected pro forma cash on hand was to be $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. At the time, the deal was expected to close in Summer 2021.

Parallel has ongoing operations in four medical and adult-use markets with approximately 50 locations nationwide, including 42 retail stores, and cultivation and manufacturing sites. The company has retail brands using the name Surterra Wellness in Floridagoodblend in Texas; New England Treatment Access (NETA) in Massachusetts; and The Apothecary Shoppe in Nevada. Parallel also has a license under its goodblend Pennsylvania brand for vertically integrated operations and up to six retail locations, in addition to a medical cannabis research partnership with the University of Pittsburgh School of Medicine. Subject to regulatory approval, Parallel said it will add Illinois as a sixth market when its announced acquisition of six Windy City Cannabis licenses is complete.

No Confidence

Reuters reported that “several investors had lost confidence in Parallel’s ability to deliver on lofty financial projections it provided in February when the merger was announced.” With just 42 stores and in some small markets like Texas, the ability to deliver more revenue than companies twice its size had to give investors pause. Reuters also reported that several investors who had committed to the $225 million private investment had refused to invest over the following months. Since Parallel is a private company, actual revenue figures aren’t disclosed. If one estimates Parallel’s revenues and Parallel doesn’t like it, get ready to hear from their lawyer.

 

 


StaffAugust 3, 2021
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Viridian Capital Advisors pointed out this week that while cannabis SPACs have finished approximately $5 billion of qualifying transactions, there is still plenty of money that remains to be invested. Viridian said it expects the second wave to be equally significant with approximately $5.9B of deals announced or projected.

Chart provided by Viridian Capital Advisors

The company said in a recent note, “Nine SPAC mergers have been completed totaling $5.4B in merger value from $1.8B in IPO proceeds, 2 SPAC mergers are pending totaling $2.1B in merger value from only $270 M in IPO proceeds, and 7 SPACs are searching for a target after raising $1.2B from IPOs. Five of the seven SPACs searching for mergers in the cannabis industry have raised $853 million in IPO proceeds this year, much more than the $397 million raised through traditional IPOs year-to-date.” This confirms that the trend of using SPACs for capital raising in cannabis continues to be popular.

Of course, the drawback of SPACs is that the clock begins ticking creating stress to find an appropriate target. Viridian noted that two of the seven SPACs that are searching for companies are running out of time. Tuscan Holdings Corp II has obtained an extension until September 30, 2021 and Merida Merger Corp I has only until November 2021 to complete a merger.

Viridian pointed out that in addition to the time constraints, larger US-listed SPACS are limited to non-plant touching deals which shrinks the pool of options. “This has led 5 SPACs that started out searching for cannabis targets, to complete a merger in a different industry like Collective Growth Corp’s merger with an automotive company, and Tuscan Holdings Corp. I’s acquisition of a EV battery company.”

Premiums Paid

The lack of options for cannabis SPACs has led to premiums being paid for the few companies that fit the deal parameters. Viridian wrote, “One example is the Silver Spike Acquisition Corp purchase of cannabis software company Weedmaps for 6.8x 2021 projected revenue, while it’s closest public comp traded at 3.9x. Similarly, Mercer Park bought cultivation & retail company Glass House Group for 5.6x 2021 revenues and 28.8x EBITDA compared to peers at  3.94x  and 15.7x, respectively. One counterexample is the Subversive Capital Acquisition Corp. purchase of Caliva and Left Coast Ventures valuing the entities at 1.8x 2021 revenue and 18.1x EBITDA compared to peers at 4.4x and 19.3x respectively.”

Last month, cannabis SPAC Clover Leaf Capital (Nasdaq: CLOEU) closed its IPO raising $138 million.  Clover Leaf is listing on Nasdaq and focuses on Cultivation Technology, Processing Technology, Testing Technology, and Consumer Goods Technology investments. “The deal is a new twist on SPAC structure; most SPACS have included warrants for between ¼ and one share in their units,” said Viridian. The company also suggested that it is likely that Clover will need to bundle more than one acquisition in its de spacing transaction.


StaffMarch 24, 2021

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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 BorchardtMarch 15, 2021
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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 BorchardtFebruary 22, 2021
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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.”


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