Millions of dollars were poured in on cannabis-focused SPACs in the year, making them one of the more lucrative investments on Wall Street.
Several celebrity names have also jumped in on the action of investing massive sums of money in these shell companies. Moreover, the positive investor sentiment about federal marijuana reform has led to a record capital raise of $600 million in the first three months of 2021. Therefore, the industry is red hot, and it’s an ideal time to be investing in the sector.
Though it may appear that SPACs have just surfaced, these instruments have been around for several years. They first became popular before the 2008 financial crisis, but their popularity soon faded away until they came back in 2020.
Cannabis-focused SPACs, in particular, have been on a tear this year, and these are three of the most promising ones at this time.
- Merida Merger I (NASDAQ:MCMJ)
- Greenrose Acquisition (OTSMKTS:GNRS)
- Ceres Acquisition (OTCMKTS:CERAF)
Cannabis SPACS to Buy: Merida Merger I (MCMJ)
Merida Merger Corp. I is a New York-based shell company that was founded in 2019. The company has agreed to take the online cannabis discovery marketplace Leafly public. The deal values both companies at roughly $532 million and generates up to $161.5 million. With its SPAC deal, Leafly is likely to enter its growth phase.
Leafly provides a subscription-based platform that provides access to hundreds of marijuana brands. Its e-commerce platform also offers detailed information regarding current events, retailers, and other elements. It expects its revenues to skyrocket to $43 million by the close of this year and $65 million by 2022.
Moreover, the company will be using the proceeds of the merger to improve its advertising platform and to execute its customer acquisition activities. Therefore, MCMJ stock has a bright future ahead in line with the mouthwatering prospects of its merger target.
Greenrose Acquisition (GNRS)
Greenrose Acquisition is a SPAC that targeting companies in the marijuana industry. The company’s president, Paul Wimer, outlined plans to acquire four different cannabis companies in the United States. The goal is to acquire enterprises with robust management teams focusing on becoming “cultivation forward.”
Its merger targets include Shango Holdings, Futureworks, Theraplant and True Harvest. With its acquisitions, Greenrose hopes to establish itself in profitable licensed markets, including Nevada and Arizona. Moreover, it will operate a consolidation strategy to maximize returns from California, Oregon and Colorado. It could generate a massive $158 million in pro forma revenues in 2021 and $230 million in the following year.
Upon the deal’s closure, the company will become cash flow positive powering GNRS stock to new heights.
Cannabis SPACS to Buy: Ceres Acquisition (CERAF)
Ceres Acquisition is a SPAC that plans to take Atlanta-based cannabis producer Parallel public in a $1.9 billion deal. The multistate cannabis operator has 42 retail stores outside of California but has major plans for expansion in Los Angeles in the coming years. The proceeds will be used for research and development and for Parallel to position itself ahead of its competition.
This year, it expects to generate $447 million in revenues and plans to utilize the funds to accelerate product development and merger and acquisition activity. Moreover, the company is spearheaded by William “Beau” Wrigley Jr., who belongs to the family behind Wrigley chewing gum.
“You just don’t get a (cannabis industry) management team that is as well-credentialed and well-led as this,” CEO Joe Crouthers said. Therefore, CERAF stock can become one of the more attractive marijuana plays in the long term.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.