Cannabis SPAC deals hit nadir after investors snub sectorPosted by On


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By Shariq Khan

(Reuters) – U.S. blank check firms eyeing cannabis companies are struggling to find suitable targets and many are merging into unrelated industries, as weak after market performance of recent Special Purpose Acquisition Corps listings dent confidence.

Hopes of legalization of recreational use of marijuana in the United States saw public cannabis companies enjoy some of their best gains ever after Democrats gained slim control of both houses of Congress and promised federal reform.

The ensuing frenzy saw 18 cannabis-focused SPACs raising around $3.3 billion by August, with more than half of the amount invested through SPAC mergers. But with Democrats making little progress on their promises, the euphoria has fizzled.

Bankers and investors said cannabis SPACs that have yet to finalize deals could see negotiations run into trouble. HERBL, a California-based distributor faced a cut to its valuation in recent months during merger talks with BGP Acquisition Corp, Reuters reported in August.

While a global SPAC boom that started last year has calmed and such vehicles are struggling regardless of their target industries, cannabis-focused blank checks have been hit particularly hard.

All but one weed company listed in the United States through SPACs since 2020 are trading below the $10 per share IPO price. By comparison, 46.5% of SPACs overall are trading higher since their mergers,…

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STORY CONTINUES BELOW THESE SALTWIRE VIDEOS

By Shariq Khan

(Reuters) – U.S. blank check firms eyeing cannabis companies are struggling to find suitable targets and many are merging into unrelated industries, as weak after market performance of recent Special Purpose Acquisition Corps listings dent confidence.

Hopes of legalization of recreational use of marijuana in the United States saw public cannabis companies enjoy some of their best gains ever after Democrats gained slim control of both houses of Congress and promised federal reform.

The ensuing frenzy saw 18 cannabis-focused SPACs raising around $3.3 billion by August, with more than half of the amount invested through SPAC mergers. But with Democrats making little progress on their promises, the euphoria has fizzled.

Bankers and investors said cannabis SPACs that have yet to finalize deals could see negotiations run into trouble. HERBL, a California-based distributor faced a cut to its valuation in recent months during merger talks with BGP Acquisition Corp, Reuters reported in August.

While a global SPAC boom that started last year has calmed and such vehicles are struggling regardless of their target industries, cannabis-focused blank checks have been hit particularly hard.

All but one weed company listed in the United States through SPACs since 2020 are trading below the $10 per share IPO price. By comparison, 46.5% of SPACs overall are trading higher since their mergers,…



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