Weedmaps, a cannabis review site and software company, announced Thursday that it has agreed to go public through a merger with a special purpose acquisition company (SPAC).
The deal values the self-described "cannabis tech marketplace" at $1.5 billion and would be a rare example of a cannabis-related company listing on a U.S. stock exchange, which legally can't list cannabis companies.
Because the company is not "plant-touching," going public was still on the table. The California-based company decided to go the SPAC-route in particular because it offered "a more extended conversation with potential investors," CEO Chris Beals told Cheddar.
Given the stigma that still hangs around cannabis, Beals said this offered a chance to curate investors who appreciated the complex nature of the industry.
"I think we had options that were before us, but the reality is we're a tech and SAAS provider," he said. "We provide this business-in-a-box software in an incredibly complex industry. The regulations are complex in cannabis. The end-market dynamics are complex."
In addition to its comprehensive cannabis review site, which has more than 10 million users, Weedmaps builds point-of-sale software for cannabis retailers in states with legal industries. This has made the company a crucial player in the industry's steady expansion.
Beals said this will help insulate the company from any volatility in the nascent market, which has seen its share of ups-and-downs in recent years.
"I think the last few years for cannabis have been marked by much slower growth at a macro-level than a lot of people thought would exist," he said. "That being said, I think there's a lot of reason for excitement coming out of this November election. I think this was by far the most momentous election we've ever seen for cannabis legalization."
In November, Arizona, New Jersey, Montana, and South Dakota approved ballot measures to legalize recreational marijuana. South Dakota and Mississippi approved medical marijuana measures.
Last Friday, the U.S. House of Representatives also passed a bill to essentially decriminalize cannabis nationwide. The Marijuana Opportunity, Reinvestment and Expungement (MORE) Act would federally deschedule the drug and expunge the records of those with cannabis convictions if passed by the Senate, although that appears to remain an uphill battle.
Whether this measure is successful though won't impact Weedmaps' growth prospects, according to Beals, who said the company still has room to grow in its current footprint. The company is aiming to leverage deeper data sets, covering everything from the smell and taste of the products, to become even more of a key player in the industry.
"Frankly we're not just providing a marketplace for them to find cannabis, we've done a bunch of work providing the actual data," he said.
The company is on track to make $160 million in revenue and is currently profitable. The SPAC, Silver Spike Acquisition Corp, saw shares rise nearly 50 percent at the news of the merger.
Updated December 11, 2020 at 11:05 am ET to note Weedmaps uses the term "cannabis tech marketplace" to describe its core business.