• The cannabis market offers great potential
• Greenrose acquires four companies
• Vertical business model
More and more US states are legalizing adult marijuana use. According to an evaluation by NBC from November 2020, marijuana can now be consumed for recreational use in 15 US states and medicinal use is even permitted in 34 states.
Also of great importance to the cannabis industry is that the Democrats who advocate legalizing marijuana now control the White House and both chambers of the US Congress. This also increases the potential for this market.
IPO via SPAC
To capitalize on this trend, New York-based Greenrose Acquisition Corp. four cannabis companies operating in the seven states of Arizona, California, Colorado, Connecticut, Michigan, Nevada, and Oregon. The deal, which has a total volume of $ 210 million, is already in the towel.
Greenrose Acquisition is a so-called “Special Purpose Acquisition Company” (SPAC), which can be translated with acquisition companies or shell companies. So it is just an empty, but listed company shell, whose organizers collect money from investors in order to buy up other promising companies, which are then merged with the SPAC and brought to the stock exchange in this way – via an abbreviation, so to speak.
For the companies taken over, this has the advantage that the IPO is significantly less complicated than with a traditional IPO (Initial Public Offering). On the one hand, they do not have to go looking for investors themselves, and on the other hand, the lengthy approval process of the stock exchange regulator is no longer necessary. In the past few years, this type of IPO has become a real trend.
However, as the company, which now wants to rename itself The Greenrose Holding Co., announced, it intends to switch from NASDAQ to OTC trading in the USA. On the other hand, a listing on the NEO Exchange in Toronto (Canada) is planned after the transaction is completed.
Vertical business model
The merged company will cover the entire value chain from production to sale with the four acquired companies Futureworks, Shango Holdings, Theraplant and True Harvest: Futureworks, which operates under the name The Health Center, operates three facilities for growing cannabis plants, a processing facility and three marijuana dispensaries in Colorado. Shango also operates in Arizona, California, Michigan, Nevada and Oregon. Shango operates vertically in the latter three states. Theraplant, on the other hand, is active in Connecticut, with cultivation areas and a plant for processing and packaging. Add to this True Harvest, which grows and processes cannabis at a facility in Arizona.