December 11 2020,



Regime change in Sacramento

In our last issue, Willis Jacobson looked back at the year in cannabis legislation and ahead to the issues lawmakers will likely wrestle with in 2021.


Infused drinks catch on

The Golden State is driving sales of THC-infused beverages, which have made edibles the fastest growing product category in the country. California's infused drinks market is expected to top $6B by 2025.


With an IPO filing that values the company at $1.5B, the parent company of Weedmaps is the latest major cannabis player to wade into the world of Special Purpose Acquisition Companies, or SPACs, the investment structure that's all the rage in cannabis and the broader economy
Reuters, Barron's

  • WM Holdings expects to receive proceeds of $575M from the deal to go public on the NASDAQ by merging with Silver Spike Acquisition Corp.
  • Weedmaps is best known as the "Yelp of cannabis," but it also offers a software suite for dispensaries and delivery services, which includes facilitating online orders.
  • Between 2015 and 2020 it saw revenue nearly quadruple from $43M to $160M(estimated) as EBITDA surged from $13M to $35M (estimated). 
  • Owing to the pandemic, the company has seen monthly active users soar from 6M in January to more than 10M now. Of them, 70% consume daily.

Weedmaps courted controversy and resentment from licensed retailers in February 2018 when it rebuffed a cease and desist letter from California regulators ordering it to stop accepting advertising from unlicensed dispensaries.

  • In August 2019, Weedmaps said it would stop accepting their business. However, documents tied to the IPO filing reveal the company is the target of an "unresolved" federal investigation by the Justice Department, which requested Weedmaps records involving nearly 100 entities. No criminal charges have been filed.    
  •  In documents the company says they believe the "primary focus of the investigation is advertisers in California "who may not have been properly licensed." CEO Chris Beals has declined to comment further.
  • Observers said "the disclosure was likely to trigger additional questions from investors," MJBiz reports.

In an in-depth write-up, Dai Truong of (recent SPAC target) Left Coast Ventures suggests proceeds from the IPO could help the company compete on several fronts as cannatech has become a venture capital magnet.

  • Weedmaps faces competitors in "retail management (Flowhub, Meadow), consumer marketplace (Dutchie, Jane, Leafly), B2B platform (Leaflink), and Routing (Onfleet)."
  • Truong called the deal "packaged for a pop." In recent days, tech firms like AirBnB and DoorDash have seen their stocks soar on their first day of trading.
  • In an interview, Weedmaps CEO Chris Beals explained why he's not afraid (paywall) of competition from Google and Amazon.
    Business Insider

In other SPAC news, the newly formed The Parent Company released its first product, a $50 joint from Jay-Z's Monogram brand that contains 1.5g of small batch flower and is supposed to smoke like a high-end cigar. 

  • Related: Business Insider found investors have put nearly $3B (paywall) into cannabis companies since the beginning of 2019.

In the week's other big deal, B2B marketplace Leaflink raised a $40M Series C from investors including Peter Thiel's Founders Fund.

  • Leaflink, which doesn't touch the plant, says its platform handles product worth $3B wholesale annually, about a third of the total U.S. market.

Here's what caught our eye this week: