Cannabis SPAC’s Still Shopping For Investments

CANNANNEW REPORT

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…

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