Cannabis SPACs

Friends – so yesterday, I made a comment in my email that exits are getting done these days with paper.  Well, that’s not totally true. Another short, fun lesson in capital markets.

https://www.newcannabisventures.com/5-u-s-cannabis-companies-with-projected-c261-million-sales-in-2019-join-forces-to-go-public-in-canada/

Cannabis Strategies Acquisition Corp. just announced a roll-up of five different cannabis assets, closing simultaneously.  Cannabis Strategies is a SPAC, an acronym that’s fun to say and stands for “special purpose acquisition company”.  SPACs are publicly-traded companies that are formed to raise money in an IPO without any assets, and a mandate to acquire assets within a specific period of time and (sometimes) with a specific industry focus.  It’s a blind pool, and the investor is betting to get in early at a discount in exchange for tying up their capital, in exchange for the hope that the sponsor managing the SPAC will find good assets.  It’s sort of a publicly-traded private equity fund, sort of.

Here, Cannabis Strategies raised a pile of money in December 2017 on the Canadian Stock Exchange, and has now put together a parcel of somewhat different assets to spend some of that money.  I did some quick searching, and didn’t seen any other cannabis-focused SPACs out there. It’ll be interesting to watch how Cannabis Strategies integrates these differing assets, and also if anyone follows suit with raising capital and buying up assets this way for cash.

By: Marc Hauser