Nearly six months after announcing plans to go public via a SPAC merger, Seattle-based online cannabis marketplace Leafly has sealed the deal and will begin trading on the Nasdaq on Monday.
Leafly is merging with Merida Merger Corp., a special purpose acquisition company sponsored by Merida Capital Holdings. Merida has adopted the Leafly name, according to a Friday news release, and the common stock will trade under the ticker symbol LFLY.
In August, the proposed combined company was listed at an enterprise valuation of $385 million.
Founded in 2010, Leafly’s online marketplace lets customers shop and select cannabis products from licensed retailers. The startup also serves as an educational resource, and its platform has more than 125 million annual visitors.
Leafly CEO Yoko Miyashita said in a statement that becoming a public company was an important milestone for company.
“Backed by substantial funding, tremendous advancements in cannabis legalization and e-commerce tailwinds, we are relentlessly focused on investing in our technology, talent, and content to execute our growth strategy and create value for all stakeholders,” Miyashita said.
A former Getty Images executive, Miyashita was previously the company’s general counsel when she joined in 2019, and took over as CEO in August 2020. Leafly spun out of Seattle marijuana investment firm Privateer Holdings in 2019.
The SPAC move comes at a time of increased turmoil in the market.
The mergers had become a popular alternative to the traditional process for initial public offerings, paving a faster path to going public. But in the new year, stocks are tumbling and deals are being abandoned.
“The SPAC bubble is bursting,” Chris Senyek, a senior equity research analyst at Wolfe Research, said in a CNBC report this week. “SPAC shares are extremely volatile due to their speculative nature.”
Leafly, which employed around 160 people as of last summer, weathered some cuts in January 2020, letting go of 18% of its staff, or 54 positions, which then-CEO Tim Leslie attributed to “market realities of the technology and cannabis sectors.” It cut 91 more employees two months later, citing the uncertainties caused by the coronavirus pandemic.
Leafly raised $23 million in new funding and $38 million to date as of June 2021 as the cannabis market saw an increase in sales as more states legalize pot and dispensaries were declared essential businesses during the COVID-19 pandemic.
Leafly cited “significant acceleration” in its year-over-year revenue growth and gross margin, and a 40% increase in total ending retail accounts in the third quarter of 2021, according to the news release.
Leafly’s revenue primarily comes from a monthly subscription fee paid by cannabis retailers to be listed on the platform and to access e-commerce tools. The company said more than 7,800 brands use its services. It also makes money from advertising.