Leafly IPO: What to know about a SPAC merger

Thematic investors love cannabis, not just for its medicinal and recreational effects, but also for the opportunity it provides to relish in capital gains. As cannabis becomes more mainstream on all fronts, the industry is growing—many are going public. Leafly is one of them.

Leafly has been in the business for over a decade and now looks to become publicly traded through a SPAC (special purpose acquisition company). After a turbulent 2020 with many staff cuts, the company plans to close out 2021 by going public on the Nasdaq under the symbol LFLY.


  • Subscription-based cannabis platform Leafly was founded in Seattle, Washington in 2010.
  • As of 2021, Leafly features more than 4,600 cannabis-related retailers online and serves 125+ million customers per year.
  • The company went through severe layoffs early in 2020 and hired a new chief executive in August 2020, Yoko Miyashita.
  • Leafly concluded its latest funding round in June of this year.
  • Leafly is going public via a merger with a SPAC, Merida Merger Corp.
  • Leafly’s reverse merger IPO is expected to bring the newly combined company a $385 million enterprise valuation.

A history of Leafly as a company

Leafly was launched in 2010 and provides an online marketplace for consumers to shop and purchase cannabis products from licensed dispensaries. Its revenues come primarily from the monthly subscription fees cannabis retailers pay to be listed on the Leafly website and use its e-commerce tools. They also generate revenue through ads.

Between 2012 and 2019, Privateer Holdings was Leafly’s parent company. Privateer is a private equity firm that focuses on cannabis-related businesses.

Outside of Leafy, Privateer’s disclosed historical holdings include Tilray, a medical cannabis research, production, and distribution firm; Marley Natural, a cannabis lifestyle brand; and The Goodship, which makes cannabis-infused edibles. Leafly spun out from Privateer in 2019.

Leafly’s app won “App of the Year” at GeekWire’s 2014 Awards. In 2015, Leafly’s co-founders Brian Wansolich, Cy Scott, and Scott Vickers departed the company to focus on their new business, a cannabis-related intelligence platform called Headset.

Frequent executive leadership changes have occurred at Leafly:

  • Brendan Kennedy was CEO in 2011.
  • Drew Reynolds took over as CEO in 2015 when the founders left the company.
  • Chris Jeffery became CEO in 2017.
  • Former Amazon executive Tim Leslie took the chief executive job in 201.
  • Yoko Miyashita has been the CEO since August 2020.

In February 2021, the company announced a new strategic partnership with cannabis e-commerce platform Jane. Per the partnership, Jane integrated onto Leafly Menu Solutions, enabling retailers to manage online menus from both companies in a central place.

Leafly’s CEO said that combining Leafly’s knowledge and connectivity with Jane’s product catalog and B2B tools would “power the explosion of online ordering for retailers throughout North America.”

Leafly fundraising until now

  • Convertible Note: In November 2019, the company raised $2.3 million via a convertible note. At the time, it was also taking steps to curb spending, like pausing new hires and non-essential travel.
  • Venture Round: In May of 2020, Leafly conducted a venture capital funding round that raised $15.5 million for the cannabis platform. Growcore Investments was the primary investor in that round.
  • Venture Round: The $31.5 million round took place in June 2021.

The path to the Leafly IPO

For Leafly, 2020 wasn’t peachy. They let go of 54 employees, or about 18% of its workforce, in January of that year. Even deeper staff cuts took place a few months later as the coronavirus pandemic began affecting the marketplace.

Leafly is merging with Merida Merger Corp, which is backed by Merida Capital Holdings. Merida Merger Corp. raised $120 million in 2019 with an upsized IPO. It offered 12 million units in the offering, or 2 million more than anticipated, at $10 apiece.

The terms of the deal indicate a $532 million transaction that could generate proceeds of up to $161.5 million. Those figures also include Leafly’s recent funding round of $31.5 million from investors (Merida Capital Holdings was among those who invested in that round).

Following the merger, current Leafly shareholders will own about 72% of the merged company. Merida will take the Leafly name, and the company will be listed for trading on the Nasdaq under the symbol “LFLY.”

Members of both the boards of Merida and Leafly have unanimously voted in support of the merger. Once regular closing conditions have been met, the SPAC deal taking Leafly public is expected to close during Q4 2021.

Chief executive Miyashita said of the IPO, “With this transaction, we are looking forward to entering the next phase of our company’s journey—creating more personalized consumer experiences, driving more value to our retail partners, amplifying brands on our platform, and further scaling our presence in local markets as legalization continues.”

Risks and benefits to investors in the Leafly IPO

As investors interested in the cannabis industry already know, cannabis companies have struggled in the past to go public. Many have ended up on the Canadian public markets or the over-the-counter (OTC) market due to US regulations, as marijuana is still illegal on the federal level in this country.

The current CEO, Yoko Miyashita, had fourteen years of experience at Getty Images serving as Senior Vice President and General Counsel when she came to Leafly in 2019 as General Counsel. Her legal expertise will serve the company well as it navigates possible legal challenges after going public.

The Parent Company, backed by rapper and entrepreneur Jay-Z, recently went public on the NEO Exchange in Canada. Weedmaps is one of Leafly’s competitors that recently completed its own SPAC merger to go public on the Nasdaq. It, too, is a top online marketplace for cannabis consumers and businesses.

Other competitors include Eaze, Player’s Network, MassRoots, Dutchie, and Criticality.

Fortunately for Leafly, Roundhill Investments is working on its upcoming launch of the Roundhill Cannabis ETF, reportedly coming in November.

Kiplinger lists Leafly and its Merida Merger as a top marijuana stock to buy for 2021. The firm expects to reach $43 million of revenue in 2021, with that number anticipated to increase to $65 million in 2022 for a 52% growth rate.

All that aside, Leafly is not yet profitable and doesn’t expect to be until 2024, according to the Seattle Times.

As a non-plant-touching platform, Leafly stands to benefit from continued increases in legalization of weed in North America. Even as laws are restrictive, Leafly provides an essential link between retailers and consumers, since those retailers can’t legally advertise on social media. Leafly’s CEO says they have “one of the largest audiences in cannabis.”

Bottom line

Leafly has a hand in much of the cannabis industry, with its ability to connect millions of customers with cannabis brands and dispensaries. While federal marijuana decriminalization is not guaranteed, the more states that legalize it for medical or recreational use, the better the performance we can expect to see on the market from Leafly and its competitors.

Rachel Curry is Pennsylvania-based content writer and journalist talking all things finance. She likes to give meaning to numbers by humanizing them. You can connect with her on Twitter at @writingsofrach.

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