WM Holding Company, LLC, better known as Weedmaps, and Silver Spike Acquisition Corp. (Nasdaq: SSPK), a publicly-traded special purpose acquisition company, announced today a definitive agreement for a business combination that would result in WMH becoming a public company that would remain on the NASDAQ marketplace. The estimated post-transaction equity value of the combined company is approximately $1.5 billion and provides up to $575 million of gross proceeds through the approximately $250 million of cash held-in-trust by Silver Spike Acquisition Corp. and a fully-committed common stock PIPE of $325 million
The combined company will be led by Chris Beals, Chief Executive Officer of WMH. Weedmaps was founded in 2008 as an online listings marketplace for cannabis consumers and businesses. The company solely provides software and other technology solutions and is non-plant touching, which makes it NASDAQ friendly. WMH has grown revenue at a CAGR of 40% over the last five years and is on track to deliver $160 million in revenue and $35 million in EBITDA for 2020.
The company said in a statement that as a result of outsized demand, the PIPE offering was significantly oversubscribed and upsized, including investment from funds managed by AFV Partners, the Federated Hermes Kaufmann Funds and Senvest Management LLC along with a $35 million commitment from Silver Spike Capital. WM Holding’s executive officers will retain 100% of their equity in the combined company, which will have approximately $100 million of cash on hand after closing
Many cannabis consumers are familiar with the business location tool the company is mostly known for. There are over 10 million monthly active users and 18,000 business listings across the U.S.. The maps give customers information about retailers and product availability. In addition to the consumer facing product, Weedmaps also has a cloud-based WM Business SaaS subscription offering that provides cannabis retailers with an end-to-end operating system to access valuable users, grow sales and scale their businesses at a compelling return-on-spend.
Th company describes this “business-in-a-box” functionality that ranges from integrations supporting product menus that have online order-ahead, delivery order fulfillment software, data & analytics, a point-of-sale solution and a wholesale marketplace. “WMH has been investing in and optimizing its WM Business software solution to also facilitate compliance for businesses amidst the complex, disparate and constantly evolving regulations governing the cannabis industry. Underlying this compliance functionality is a proprietary and sophisticated rules engine that is a core underpinning of the WM Business SaaS platform.”
Illegal Operator Issue
Weedmaps came under fire in 2019 for listing unlicensed dispensaries and began 2020 in an effort to remove those listings. That was after California regulators sent a cease and desist order to the company to stop advertising illegal operations. At the time, Weedmaps President Christopher Beals defended the company’s decision to run the ads, saying that Weedmaps was “showing the same information that Google and Yelp and Craigslist and 30 other websites are showing.” Then Weedmaps’ main competitor Leafly decided to no longer support illegal dispensary ads putting pressure on Weedmaps to comply.