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Jay-Z Inks Largest Cannabis SPAC Deal Ever With Subversive Capital, Roc Nation, Caliva, Left Coast Ventures

November 24, 2020 6:34 pm
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Jay-Z Inks Largest Cannabis SPAC Deal Ever With Subversive Capital, Roc Nation, Caliva, Left Coast Ventures

Music industry mogul Jay-Z is set to join a newly formed cannabis company that's expected to become the largest in California.

The venture was formed via a partnership between CalivaLeft Coast VenturesSubversive Capital Acquisition Corp. (OTCQX:SBVCF) and Roc Nation, the entertainment company Jay-Z launched in 2008.

Jay-Z, whose real name is Shawn Carter, will take on the title of "Chief Visionary Officer."

Deal Details

Under the agreement, Caliva will buy OG Enterprises Branding Inc., which is currently owned by Caliva and Carter at a 50/50 ratio.

Carter will receive compensation in the form of the new company’s stock.

Subversive Capital will then acquire both Caliva and Left Coast Ventures for $282.9 million and $142.2 million, respectively. The combined entity has been simply dubbed "The Parent Company." 

The transaction is slated to close in January 2021 with Steve Allan as CEO.

The board of directors will include Subversive Capital chairman Michael Auerbach, who calls California "the most powerful cannabis economy in the world," citing how it's ripe for consolidation.

"With its advanced infrastructure, industry leading operational efficiencies, proven strategy of brands, and cultural influence, The Parent Company is expected to be best positioned for the inevitable end of cannabis prohibition in the United States," Auerbach said in a prepared statement.

See also: Jay-Z On Cannabis Advocacy: 'Arbitrary Borders Still Demarcate Who Can Benefit'

A Social Equity Focus

As Chief Visionary Officer, Carter is expected to help oversee a corporate venture fund focused on social equity measures.

The fund will aim at an initial funding target of $10 million and commit to contributing at least 2% of its net income to invest in minority-owned cannabis businesses and donate to organizations seeking to rectify the wrongs of prohibition.

“Although we know we can’t fully redeem the injustices created by the ‘war on drugs’, we can help shape a brighter and inclusive future," Carter says. "The brands we build will pave a new path forward for a legacy rooted in equity, access, and justice. We’re creating something people can trust and we’re investing in our future, our people, and our communities.”

What's Next

For its part, Roc Nation will announce The Parent Company as its “Official Cannabis Partner" and provide promotional services as well as "special access and rights with respect to Roc Nation’s roster of artists and athletes."

The Parent Company will also pay Carter (via SC Branding LLC) a total of $40 million in stock over the course of three years.

Caliva and Left Coast Ventures expect combined pro forma revenues of $185 million in 2020 and $334 million (estimated) in 2021.

The Parent Company said it intends to pursue an aggressive M&A strategy to drive growth and profitability. 

Photo via Monogram.

Benzinga Editor Anthony Noto contributed to this story. 


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