Weedmaps to Go Public at $1.5 Billion Valuation

Soft Secrets
10 Dec 2020

The cannabis review website founded in 2008 in California headed towards a major shift. The U.S. operator of Weedmaps, the online platform where cannabis users can rate cannabis sellers, will go public at a $1.5 billion valuation after a merger with a blank-check acquisition firm, the company said on Thursday. 

According to sources, WM Holding Co, which owns Weedmaps, has earlier announced intentions to merge with Silver Spike Acquisition Corp. The combined company will be led by WM Holding’s Chief Executive Officer Chris Beals, and will remain listed on the Nasdaq, the company said. 

The deal would come only a few days after a historic vote to decriminalize cannabis at the federal level, taking place in the U.S. House of Representatives. It's the first time that either chamber of Congress has greenlit the use of marijuana since the drug was labeled a "controlled substance" decades ago. However, the legislation is not expected to advance further as long as the Senate remains controlled by Republicans.

In the meantime, neighboring Mexico appears to be a step ahead of the U.S. While there’s a glitch with the federal legality of weed in the U.S., the prospects are looking different state by state, with 15 U.S. states and the District of Columbia having legalized recreational use of cannabis, and over 30 states allowing some form of the drug as part of medical treatments.

Due to such a patchy legal framework, Weedmaps has been targeted by law enforcement agencies and regulators for its advertising and promotional practices. The company would now stand to gain from harmonizing the rules governing the cannabis industry across the United States. Weedmaps was founded in 2008 in Irvine, California, and has since expanded with offices in Denver, New York, Toronto, Berlin, and Barcelona. 

As noted on Crunchbase, “Weedmap is the world’s first marijuana technology and media brand; and the first and most comprehensive marijuana directory on the planet. The Weedmaps website and app enable legal marijuana users to locate dispensaries, delivery services, doctors, and deals in their area.” 

While the company, founded by Doug Francis and Justin Hartfield, sells a cloud-based operating system for cannabis retailers as well as hosting reviews and ratings for sellers, Silver Spike is a special purpose acquisition company (SPAC). 

“Silver Spike is a special purpose acquisition company (SPAC), an increasingly popular investment vehicles which raise funds in an initial public offering (IPO) with the aim of buying a private company. The acquired company then becomes public as result of the merger and is an alternative to the traditional IPO process,” writes Joshua Franklin for Reuters.

“Silver Spike, led by cannabis industry executive Scott Gordon, raised $250 million in an August, 2019 IPO on Nasdaq with a focus of buying a company in the cannabis sector,” reports Reuters. SPACs are coming out as an increasingly popular route to the stock market for private companies as they can be completed more quickly than an IPO. Another perk is that there’s greater certainty over the funds a company will raise. 

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