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Weedmaps: Lawsuits threaten entry into Nasdaq

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Photo: DR | PYMNTS.com

The weedmaps, based in California, on the stock exchange Nasdaq could be at risk. This week, weedmaps' parent company revealed, in a presentation to investors with US securities regulators, that a federal investigation into the cannabis industry involving the advertising giant remains "unresolved."

The disclosure raises questions about the current status of the investigation and whether it could affect weedmaps' plans to go public for public investment in Nasdaq through an agreement with a Special Purpose Acquisition Company, which 1,5 billion US dollars the new company created with the transaction.

However, the company's parent company, WM Holding Co., included in its presentation to investors the following "supplementary investor disclosure" related to an investigation of the US Department of Justice (DOJ), more specifically a subpoena related to the company's commercial negotiation records:

“As of November 10, 2020, the DOJ investigation is unresolved. Our dialogue with the DOJ resulted in productive discussions on the possible resolution, but no agreement was reached,” notes the presentation on the last page of the document. “Following an initial delivery of documents in November 2019, further documentation in response to the subpoena is in progress. stand-by, pending the discussions on the resolution of this matter.”

Prosecutor does not speak 

The U.S. Attorney's office for the Eastern District of California, which issued the subpoena to Weedmaps' then-parent company in September 2019 – Ghost Management Group – declined to comment on the disclosure.

The subpoena identified nearly 100 companies and individuals in the cannabis industry and requested a large amount of weedmaps records relating to the entire history of the company since 2008.

To date, the DOJ has not filed any charges related to the investigation.

Investigation details could undo the deal between weedmaps and Silver Spike

New York consultant Matt Karnes, director of GreenWave Advisors, based in New York, said he believed the disclosure "will raise a lot of questions among shareholders." Karnes pointed out that the special purpose acquisition company (SPAC), through which weedmaps plans to go public – Silver Spike Acquisition Corp. – can still get rid of the deal if investors are not satisfied with the amount of detail disclosed by weedmaps.

“There is uncertainty. This transaction, we don't know what the DOJ will conclude, or what other issues there are,” Karnes said. “If I were a shareholder in Silver Spike, I would think hard about approving this transaction.”

Read the DOJ subpoena on Marijuana Business Daily

 

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[Disclaimer: Please note that this text was originally written in Portuguese and is translated into English and other languages ​​using an automatic translator. Some words may differ from the original and typos or errors may occur in other languages.]

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I am one of the directors of CannaReporter, which I founded together with Laura Ramos. I am from the unique Island of Madeira, where I currently reside. While I was in Lisbon at FCUL studying Physical Engineering, I became involved in the national hemp and cannabis scene and participated in several associations, some of which I am still a member of. I follow the global industry and especially legislative advances regarding the different uses of cannabis.

I can be contacted by email at joao.costa@cannareporter.eu

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