The operator of U.S. online platform Weedmaps, where users rate cannabis sellers, is nearing a deal to go public at a $1.5 billion valuation through a merger with a blank-check acquisition firm, people familiar with the matter said on Wednesday.
WM Holding Co, which owns Weedmaps, plans to merge with Silver Spike Acquisition Corp, the sources said. The deal could be announced as early as Thursday, the sources added, requesting anonymity ahead of an official announcement.
The deal would come less than a week after the U.S. House of Representatives voted to decriminalize marijuana at the federal level, the first time either chamber of Congress has voted to end the federal ban on marijuana since the drug was listed as a “controlled substance” in 1970.
The legislation is not expected to advance further as long as the Senate remains in Republican hands. Nevertheless, 15 U.S. states and the District of Columbia have legalized recreational use of marijuana, and over 30 states allow some form of the drug for medicinal purposes.
The patchy legal framework across different states has resulted in Weedmaps fielding enquiries from law enforcement agencies and regulators about its advertising and promotional practices. The Irvine, California-based company would stand to gain from a harmonization of the rules governing the cannabis industry across the United States.
Weedmaps was founded in 2008 by Doug Francis and Justin Hartfield, and sells a cloud-based operating system for cannabis retailers as well as hosting a review and ratings platform for sellers.
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.
SPACs have emerged as an increasingly popular route to the stock market for private companies because they can be completed more quickly than an IPO, and there is greater certainty over the funds a company will raise.
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.