Weedmaps, a popular website where users can learn about different strains of marijuana and locate local dispensaries, has agreed to go public by merging with Silver Spike Acquisition Corp. in a deal which values the webstie at approximately $1.5 billion, according to Reuters – which adds that it’s a “rare example of a business focused on the cannabis sector listing on a U.S. stock exchange.”
Companies which involve direct selling of marijuana, or which are ‘plant touching’ are unable to list shares in the Untied States. Weedmaps does neither.
“When you look at what we’re offering (to investors), there’s really not too much else like it,” said Chris Beals, CEO of Weedmaps parent, WM Holding Company.
The Irvine, California-based website was founded in 2008 by Doug Francis and Justin Hartfield, and offers marijuana dispensaries the ability to list their inventory in real time, while the site also hosts a review and ratings platform.
Weedmaps expects to receive gross proceeds of up to $575 million from the deal, in part from proceeds Silver Spike had raised and also through $325 million in a private investment in public equity, or PIPE, transaction. Investors in the PIPE include funds from the Federated Hermes Kaufmann Funds, Senvest Management LLC and AFV Partners.
Silver Spike shares were indicated up 8.8% at $11.41 in premarket trading. Reuters first reported news of the deal on Wednesday. –Reuters
The company is expected to deliver $160 million in revenue and has been profitable for its entire 12-year history, according to Beals.
The deal comes less than a week after US lawmakers in the House of Representatives voted to decriminalize marijuana at the federal level, which is expected to remain a symbolic vote unless Democrats regain the Senate in a January runoff election in Georgia. It’s the first time either chamber of Congress has voted to end the federal ban on marijuana since 1970, when it was listed as a “controlled substance.”
Meanwhile, 15 US states and the District of Columbia have legalized marijuana for recreational use, while 30 states allow some form of medicinal use.
Silver Spike, a special purpose acquisition company (SPAC) raised $250 million in an August, 2019 Nasdaq IPO with a focus on buying within the cannabis sector.
“There was no better opportunity and no more dynamic company and story for us to consider a transaction with than with WMH,” said Gordon in an interview.