(Reuters) – Glass House Group, California’s largest pot producer, said on Thursday it would go public by merging with a blank-check firm backed by industry veteran Jonathan Sandelman, in a deal worth more than $1 billion.
The company’s merger with Sandelman’s Mercer Park Brand Acquisition Corp makes it the latest pot producer to list on Canada’s NEO exchange, a favorite destination for companies looking to raise funds for meeting untapped demand for marijuana from potential U.S. federal legalization.
Under the deal, Glass House would acquire licenses of pot retailer Element 7 in California and buy a 5.5 million-square- foot greenhouse that would be converted to grow cannabis, helping it cement its position as the state’s biggest producer and retailer.
The company expects to have a total of 21 retail stores in the state by the first quarter of next year, it said in a statement.
Sandelman said the company’s focus on California – the largest cannabis market in the world – means that federal legalization would not be crucial to its success.
“It is rational that (cannabis) should be federally legalized at some point … But we are not dependent for that to happen with the way that we built this business,” Sandelman said in an interview.
“Let’s talk about who would be able to compete with this scale – nobody,” he said.
California’s pot sales surge
An ex-Bank of America executive, Sandelman is now chief executive officer of U.S. multi-state cannabis operator Ayr Wellness Inc and will continue to focus on that company.
Mercer is Sandelman’s second blank-check firm, or SPAC – shell companies which raise funds in an initial public offering to merge with an unidentified private company.
Glass House co-founder Kyle Kazan, who will be the CEO of the combined entity, said right now his company was a bit weighted toward production of the biomass.
“We’re going to need to add manufacturing, and we’re already in discussions to consider our options on that,” Kazan said.
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