Weedmaps to list on Nasdaq via SPAC (SSPK)
WM Holding Company, LLC (WMH) and Silver Spike Acquisition Corp. (Nasdaq: SSPK) (“Silver Spike”), a publicly-traded special purpose acquisition company, have announced a definitive agreement for a business combination that would result in WMH becoming a public company at a valuation of $1.5 billion. The transaction will provide up to $575 million of gross proceeds, including $325 million through a fully-committed common stock PIPE at $10.00 per share.
Founded in 2008, WMH operates Weedmaps, the leading online listings marketplace for cannabis consumers and businesses, and WM Business, the company’s comprehensive SaaS subscription offering sold to cannabis retailers and brands. The company solely provides software and other technology solutions and is non-plant touching. 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 estimates 2021 revenues of $205 million.
Weedmaps’s business model has garnered it the nickname ‘Yelp for pot.’ Its website allows users to rate and review dispensaries, and it generates advertising revenues from cannabis retailers. Aside from hosting ads, the company also charges pricing for placement. In a Wired article from 2019, it was reported that a single dispensary in Santa Ana paid $20,000 a month for almost a year to be listed third from the top on Weedmaps’ listings for Santa Ana. The company also sells a cloud-based operating system for cannabis businesses.
Weedmaps has gained controversy over legal issues related to unlicensed dispensaries. In 2018, the California Bureau of Cannabis Control sent the company a cease-and-desist letter ordering Weedmaps to stop advertising unlicensed operators. In 2019, the company was subject to a grand jury subpoena investigation. The company has since changed its policies to only allow state-licensed dispensaries to be advertised on the site.
On the news of the merger, SSPK jumped 37.3% yesterday.
Clever Leaves makes first EU GMP, high-CBD extract delivery from Colombia to Germany (SAMA)
SAMA/CLVR is on the Hedgeye Cannabis LONG Bias List.
Clever Leaves has successfully delivered the first shipment of EU GMP certified cannabis standardized extract from Colombia to Germany, imported by their distribution partner Paesel + Lorei GmbH & Co. KG. (“P&L”). To available knowledge, this is the first legal shipment of an EU GMP certified pharmaceutical controlled substance from Colombia to Germany. The shipment contained an initial sample of Clever Leaves standardized cannabis high CBD extract manufactured under EU-GMP certification with more than 0.2% of THC, making it a controlled substance in Colombia and Germany. It is expected to be available in the German market in 2021.
Clever Leaves CEO Kyle Detwiler commented, “The shipment demonstrates our execution on the pipeline from Colombia to a significant market, Germany, Europe’s largest cannabis market and one of the most influential pharmaceutical markets in the world. Our ability to develop and deliver market-leading products opens doors, not only for Clever Leaves but also to improve the quality of life and care for patients in need of these products.”
Clever Leaves is a multinational operator and licensed producer of pharmaceutical-grade cannabinoids with its primary operations in Colombia. We are bullish on SAMA/CLVR and believe in the company's opportunity: the company is early stage, the global cannabis opportunity is significant, and Clever Leaves appears to be positioned for material revenue growth coupled with a very desirable cost structure in 2021 and beyond.
Last week, we hosted a conversation with Clever Leaves CEO Kyle Detwiler. Clever Leaves is expected to close its merger with Schultze Special Purpose Acquisition Corp. (NASDAQ: SAMA) around December 18th under the new ticker "CLVR." It's anticipated that CLVR will be listed on the NASDAQ.
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A look at Jay-Z’s premium cannabis brand Monogram (SBVCF)
SBVCF/TPCO is on the Hedgeye Cannabis LONG Bias List.
Yesterday marked the launch of Jay-Z’s Monogram brand in the California market with the rollout of three products: packaged flower, pre-rolled mini joints, and a cigar-like pre-rolled joint. Monogram offers four San Jose-grown cannabis strains at select California dispensaries and via their own delivery service: No. 01, No. 70, No. 88, and No. 96. Their numeric naming is further categorized by ‘light,’ ‘medium,’ and ‘heavy’ to denote their high strength.
Monogram’s products carry a premium pricing – two grams of No. 01 flower (light) costs $40 or $20/gram. According to Price of Weed, a crowd-sourced, global price index for cannabis, the average cost of high-quality cannabis in California is $258.48/ounce or ~$9.23/gram. Monogram’s OG Handroll, their individual, cigar-like, hand-rolled joint product, goes for $50 at 1.5 grams. The website markets it as inspired by “the smoke experience of a premium cigar” and implementing “a proprietary roll technique allowing the flower to burn slowly and evenly for multiple sessions.”
Given that SBVCF/TPCO is heavily leveraging its celebrity attachment with Jay-Z to increase brand awareness and drive mainstream recognition, Monogram’s performance in the highly competitive and saturated California market will give some idea of the company’s future success with its brand portfolio.
Towards the end of November, Subversive Capital Acquisition Corp. (OTCQX: SBVCF) announced it had entered into definitive transaction agreements with Jay-Z, Roc Nation, Caliva, and Left Coast Ventures, to form TPCO Holding Corp., the largest cannabis SPAC with a mission to both consolidate the California cannabis market and create an "impactful" global company. The transaction is expected to close sometime in January. Before this agreement, Caliva had signed a multiyear partnership with Jay-Z in July 2019 that made him Caliva’s Chief Brand Strategist. Monogram is the first product line Jay-Z has launched with Caliva.
At transaction close, Jay-Z will become TPCO’s Chief Visionary Officer, leading the company’s brand strategy, and will lead The Parent Company Social Equity Ventures. The fund has an initial target of $10 million and an annual contribution of at least 2% of its net income to invest in minority-owned and Black-owned cannabis businesses and contribute to the effort to rectify the wrongs of prohibition through initiatives that are working toward meaningful change in the criminal justice system.
