Leading cannabis industry investor and analyst Viridian attributes the 65% fall in cannabis M&A deals over the past year to "the weakened state of public companies as stock prices plummeted and companies could no longer write blank checks or use common shares as currency".
A well-capitalized and motivated alternative - indeed "the only game in town" according to cannabis industry media heavy Deb Borchardt - are Special Purpose Acquisition Corporations (SPACs).
Ruth Epstein serves as CEO of a $240 Million SPAC called Tuscan Holdings Corporation (THCBU/Nasdaq Capital Markets), part of the $2.5 Billion raised by SPACs in the industry.
Another high-profile entrant into this financing vehicle is Bruce Linton, the former CEO of Canopy Growth.
Says Borchardt in her article Cannabis SPACs Are the Only Game in Town, "SPACs are created by a group of investors in order to acquire a business. It is often used by a larger private company as a way to become a publicly traded entity. It's a bit more complicated than an IPO (initial public offering) or a Reverse Takeover of another public company. The draw is that these SPACs often show up with a big pile of cash and founders can quickly see a return for all their hard work and sacrifice."
"Viridian noted that between March 2019 and May 2020, 11 cannabis and hemp focused SPAC IPOs raised more than $2.6 billion. That's more than all of the cannabis/hemp IPO activity in 2018 and 2019 combined."
Said Epstein, "It is a buyers' market. If you want capital and you want to be in the public market, this is it. We are the only game in town."