In 2020, most of the investments that were made in the cannabis space came from SPACs, or special purpose acquisition companies, Benzinga's Javier Hasse said on this week's BZ Cannabis Hour.
There was a 70% dip this year compared to last year, with most of the capital coming from SPACs, including one helmed by Joe Crouthers, Ceres Group CEO.
"How do you raise $120 million in an environment like the current [one]?" Hasse asked.
Over the past year, pre-COVID pandemic, cannabis was already a "capital restricted market," Crouthers said. If you were looking to raise $5 million or above "you were [likely] struggling for those larger checks."
"That's been a problem cannabis has dealt with since the beginning," he said. Institutions were dried up. However, we're starting to feel our way out of that via SPACs.
"SPACs make sense even for non-cannabis companies," Crouthers said, citing "the lack of options." There are very few reverse takeovers and traditional IPOs. And so the question remains: "How do we fund cannabis in the right way?"
A SPAC, for investors, provides a free look into a potential deal where — in the meantime — you can earn "a treasury-like return," Crouthers said. "They allow investors to dip their toes into cannabis."
"I think that's why there's interest there," he explained. "SPACs are going to play a huge role going forward and certainly an important role inside the cannabis ecosphere as well."
This week also featured:
- Rodney Wallace, Founder, Rewind by Rodney Wallace: CBD changed the Costa Rican footballer's perspective on "the body and the mind." For Wallace, the CBD option allows him to stay healthy and active without relying on traditional prescription medicines.
- Scott Greiper, President, Viridian Capital Advisors: All of the activity Greiper has seen since 2012 — since Colorado and Washington became recreationally legal — "the big players are still not here," he said. "We're always trying to evolve our platform, the companies we represent [and] our board, to be prepared for this onslaught of activity that wants to come in but they're just nervous on the legal aspects of scheduling."