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Online cannabis marketplace Leafly to go public

Online cannabis marketplace Leafly to go public

cannabis company Leafly is going public

In a historic year for Washington companies going public, Seattle-based Leafly, an online cannabis marketplace, will push the 2021 total even higher.

The company announced Monday it will go public through a special merger with New York-based Merida Merger Corp (Nasdaq: MCMJ). The transaction is expected to value Leafly at $385 million and add approximately $161 million of additional proceeds to the company.

The combined company will adopt Leafly’s name, and is expected to trade on Nasdaq with the ticker symbol “LFLY.” The company said it will list its shares once the merger is complete, likely sometime this fall.

According to PitchBook, 15 companies in Washington have gone public in 2021 so far, five more than last year’s total, and the most the state has seen in the last five years.

“Online retail shopping is in our DNA,” said Yoko Miyashita, CEO of Leafly, in an interview. “What you see is … this realization from consumers that say ‘Oh, (cannabis) is like any other retail product I can order online.”

Leafly earned $36 million in revenue last year, up from $30 million in 2019, according to its investor presentation. This year, revenue is expected to increase to $43 million, and grow roughly 50% annually through 2024.

Still, the company does not expect to be profitable until 2024, predicting it will lose at least $15 million in net income from 2021 to 2023.

The company makes money mostly through subscription fees it charges cannabis retailers who list their menus on Leafly’s platform. Customers place orders with retailers through the online site, but still have to go to the cannabis shop in person to pick up their product. Leafly does not take a commission from each transaction but does make money off ad sales from retailers.

The company said it has 4,600 paying retail subscribers, with approximately 55% of North American retail cannabis licensees on its platform and 125 million annual visitors.

Miyashita said cannabis retailers are “constrained” in their ability to advertise on major social media networks because of federal prohibition laws. Leafly’s platform, giving retailers and consumers an opportunity to reach each other, is “huge,” she said. “We have one of the largest audiences in cannabis.”

Weedmaps joins Nasdaq with $579 million infusion

Weedmaps joins Nasdaq with $579 million infusion

Weedmaps has been listed on thr NASDAQ

Cannabis advertising platform Weedmaps started trading on the Nasdaq on Wednesday in the wake of the completion of its merger with special purpose acquisition company Silver Spike Acquisition Corp.

The transaction brought California-based Weedmaps, a leading but sometimes controversial online marketplace for cannabis consumers and businesses, $579 million in gross proceeds, according to a news release.

In connection with the closing of the deal, Silver Spike changed its name to WM Technology. Its Nasdaq ticker symbol is MAPS.

Shares were up 9% Wednesday at more than $20 each.

The transaction was approved unanimously by Silver Spike’s board of directors. It also was approved by stockholders at a special meeting last week.

Chris Beals, Weedmaps chief executive officer, said in a release that the merger will enable the company to accelerate its growth as it benefits from ongoing legalization across the country.

For the year ended Dec. 31, 2020, the company generated net income of $39 million on $162 million in revenue.

Weedmaps, which has been operating as WM Holding Co., has run into issues with regulators in recent years.

In early 2018, California regulators ordered the company to stop carrying advertising from illegal cannabis retailers.

Weedmaps also was the focus of a federal investigation at least partially tied to its relationships with licensed and apparently illicit California companies.

Are Big Cannabis Stocks Losing Steam?

Are Big Cannabis Stocks Losing Steam?

As the cannabis industry expands, so do cannabis IPOs.

In other words, as more and more states legalize cannabis, the opportunity to become a publicly traded cannabis company has become enticing to many in the industry. But restrictions are fierce.

Due to federal law in the United States, no plant-touching cannabis business — regardless of its operation in a legal state — can list their business in American stock markets. Which is why Canadian cannabis stocks have become the focus of any would-be cannabis investor.

Canadian Cannabis Stocks

Being the first first-world country to fully legalize the sale and consumption of cannabis, Canada is on the forefront of managing a nationwide industry. And with a 100% legal industry, Canadian cannabis companies are free to go public. This has led to some big companies all but taking over the entire marketshare of cannabis.

The three main competitors in Canada currently are Canopy, Aurora and Tilray. Over the last year, these companies went public with a bang, building up shares and raking in the investment dollars. But after the IPO, there has been a consistent decline in stock value for all of these companies.

While Tilray made close to $46 million in this quarter ended June 30, they still posted a loss of $32.9 million. The second place contender, Aurora is still holding strong with no reports of major losses that would impact shareholders. However Canopy, the largest marketshare holder in Canada’s industry isn’t showing great gains.

While none of these major stocks are in danger of bottoming out any time soon, the recent projections that show profitability is still some time away have some investors considering other options. This is leading to a rising interest in smaller cannabis stocks in Canada and the US.

Smaller Cannabis Stocks Rising Up

No “small” business is going to be listed on the stock exchange, which means even the smaller cannabis stocks we talk about here are still going to be relatively large businesses. It is also important to keep in mind that as big as Canada is in size, it’s legal cannabis industry is relatively small compared to the U.S.

For example, while Colorado has an average of one cannabis dispensary to every 10,000 people, Ontario has one store for every 600,000 people, and Quebec only has one store for ever 500,000. That’s a lot of people for one location to service, which means that demand is high for quality products from whoever is selling it.

While Canopy made a lot of money in the topical, oils, and edibles market, they failed to account for the demand for high-THC products, including cannabis flower. Now they are changing their strains and upping their THC content, but until that happens, smaller companies can come in and get the deals.

Companies like Supreme Cannabis Co., MediPharm Labs Corp. and Pure Sunfarms Corp. all posted positive gains and earnings this quarter. Pure Sunfarms Corp. even reported a net income of $37.2 million Canadian, which is the largest net income reported to date in the Canadian market.

What’s next for cannabis stocks

There are people who are paid a lot more money than me to determine the future of cannabis stocks, so I won’t even try to guess. What I can say though, is that Canadian cannabis stocks aren’t going to be the only option in the near future.

While plant-touching businesses cannot be listed on the NYSE or NASDAQ, ancillary businesses are all fair game in the United States. This opens the door for companies that design the containers that cannabis is sold in, paraphernalia manufacturers, and other businesses that supply equipment, legal services and more to the legal cannabis industries around the country.

Whether or not companies in these fields will list themselves is up to them, just as deciding whether or not to invest in them is up to you. But The Real Dirt will do its best to keep you updated on exciting stocks and news that you should know about the industry.