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NEO Exchange & Viridian Capital Advisors Discuss How SPACs Saved The Cannabis Market

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NEO Exchange & Viridian Capital Advisors Discuss How SPACs Saved The Cannabis Market

This special presentation from NEO Exchange is from Benzinga’s June 1 Virtual Cannabis Capital Conference. Click here for more coverage of this event, with presentations from some of the top CEOs, investors, and lenders in the cannabis space.

Launched in 2015, NEO Exchange is a senior stock exchange in Toronto, Canada. The exchange sets itself apart from other markets in Canada and abroad through its focus on long-term investors, and its open involvement in the US cannabis industry. They continue to help private cannabis companies raise capital on their journey to public markets. In 2019 alone, NEO facilitated over $1.5B worth of cannabis and hemp SPAC (Special Purpose Acquisition Corporation) IPOs.

Chief Revenue Officer of NEO Exchange, Erik Sloane, spoke with Moderator Scott Greiper, President & Founder of Viridian Capital Advisors at the Benzinga Cannabis Capital Conference where the two discussed how the SPAC IPO offers a needed alternative in the cannabis sector, providing liquidity for US companies.

The number of companies going public via traditional IPO has been declining for years now, particularly in the senior exchange space, says Sloane. “One thing we’re doing to combat this is bringing an existing concept back to the market and positioning it into a new sector – US cannabis SPACs. These vehicles may one day become a public company creating a viable liquidity event for organizations evaluating a larger strategy requiring significant capital. As important, they often bring together experienced management teams to navigate the pathway to public markets.”

NEO is now home to over half-a-dozen SPACs including a few notable highlights: 

  • the first-ever, dual-listed SPAC with NASDAQ, and 
  • the IPO of the largest Canadian SPAC ever, via Subversive Capital Acquisition Corporation who raised over $575MM USD 

How SPACs Helped Private Companies

Private cannabis had a viable pathway to liquidity up until about a year ago. They could sell their business to another operator or go public; that all came to a grinding halt midway through 2019. The SPAC is enabling private companies to reengage with experienced SPAC management teams and explore significant merger and acquisition plans, said Moderator Scott Greiper. 

Erik Sloane, who has a great deal of experience in bringing private companies public, spoke about what companies are evaluating today: 

"There are a few options our corporate clients are exploring, ranging from additional capital raises while staying private, all the way through to public markets. Ultimately, for our SPACs, it is very likely we’ll see multiple acquisitions to create a new, credible, and integrated public company. 

SPACs are very well positioned in today’s marketplace, as they have money in the bank and often access to significant additional capital that they can use to build the next new MSO. All of our SPACs are U.S. cannabis-focused today, though we are starting to see teams explore using these vehicles for other asset classes, sectors, and geographies also."

Photo by Matteo Paganelli on Unsplash

 

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