Cannabis companies have just found a backdoor strategy to go public and place their shares right into your hands.
What they’re doing is forming a special-purpose acquisition company (SPAC), also known as a “blank check” company. Through a SPAC, some of the smartest people in any room – lawyers, finance wizards, and startup founders – raise money through an IPO. They will then use that money to buy a company or several companies.
There’s a little bit of catch with this because you won’t know what the SPAC is going to buy until it makes an acquisition. It won’t list any specifics in its paperwork.
But this makes it even easier to buy cannabis stocks than ever before.
Right now, because cannabis is illegal under federal law, most cannabis companies list their shares on over-the-counter markets (OTCMKTs) or Canadian exchanges. With a stock listed on the OTC, it can be more difficult to buy shares at the price you went and sell at a certain price because there are just less buyers and sellers.
For U.S. investors who want to own shares of companies on Canadian exchanges, they have to work with their brokers and usually pay additional fees to trade stocks on foreign exchanges.
With a SPAC, those shares are listed on the New York Stock Exchange or Nasdaq. SPACs focused on the tech or healthcare fields are increasing in popularity, but cannabis in particular is a hot market. Just last month, Illinois broke its own record with $61 million in sales, and New Jersey and Arizona will have legalization efforts on the ballots this November.
That’s why we’re excited Don Yocham, the Executive Director of the National Institute for Cannabis Investors, was able to join Alex Kagin for the latest episode of the Digitization-X podcast.
Don has managed investors’ money at firms with assets under management ranging from $250 million up to $16 billion.
This guy knows his stuff, and he has all the answers when it comes to investing in cannabis SPACs.
- At the 1:09 mark, Don and Alex give you a thorough explanation of what a SPAC is and how one operates.
- When you get to the 7:40 mark, Don shares why so many of the insiders he networks with are looking to SPACs as investments.
- There are also examples of successful cannabis SPACs that have already launched, so make sure to listen closely at the 14:10 mark.
- Finally, Don will walk you through everything you need to know before making your first cannabis SPAC investment at the 29:00 minute mark.