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Shares of blank-check company Silver Spike Acquisition Corp. took off Thursday after it announced plans to merge with cannabis review platform WeedMaps.
Investors sent the stock up as much as 42 percent after the company, formed last year to raise money to buy real businesses, said it has reached a $575 million deal with WeedMaps’ parent company, WM Holding Co., to merge in a transaction that will value the new entity at $1.5 billion.
The stock ended the day up 24 percent to $16.14 a share.
WeedMaps is essentially Yelp for people looking toke up. The deal means it’s parent company will take over Silver Spike’s Nasdaq listing with its own ticker symbol, thus subverting the typical IPO process.
Its rare for pot companies to get their start on a US stock exchange because there are hurdles for businesses involved in selling marijuana, or “plant touching,” to also sell shares in the US.
While some big pot producers like Aurora Cannabis and Canopy Growth now trade on the NYSE or Nasdaq, they first listed in their native Canada before entering US markets via an acquisition or by filing applications proving they had no US-based operations and were in good legal standing North of the border.
California-based WeedMaps, however, strictly offers users information about and reviews of cannabis dispensaries, so it is exempt from these restrictions.
Still, WeedMaps’ future is just as much linked to efforts to legalize pot nationwide as companies that grow or dispense weed.
“We passionately believe in the power of cannabis and the importance of enabling safe, legal access to cannabis for consumers worldwide,” WeedMaps CEO, Chris Beals said in a statement. “Our partnership with Silver Spike will provide us a stronger platform to advance our mission to advocate for legalization, social equity and licensing in many jurisdictions.”
After it became clear in early November that five more states had legalized cannabis and Joe Biden had won the presidential election, weed companies saw their share prices skyrocket. But weed stocks have seen dramatic surges in both directions as investors try to gauge the possibility and timing of federal legalization.