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Previous story Cannabis SPAC Greenrose in deal to acquire Oregon-founded Shango Next story
  DRUGS   Cannabis Markets  

Story by Pete Danko - Story Source
Published on Tuesday March 16, 2021 - 3:15 AM

The SPAC wave has sent a ripple into Oregon cannabis.

Greenrose Acquisition Corp. on Monday announced deals to buy four cannabis businesses, including Shango Holdings Inc., which was founded in Oregon in 2014 and operates two grows and a retail outlet in the state.

Greenrose put the total value of the deals at $210 million, but didn't provide a breakdown for the Shango portion. Shango representatives weren't immediately available for comment.

Special purpose acquisition companies go public with investment capital but no commercial operations, then look for a private company to purchase. They boomed in 2020 and have become even more popular in 2021, outpacing traditional IPOs in number and dollar value.

Greenrose is listed on Nasdaq, but U.S. exchanges generally don't do business with cannabis companies that "touch the plant." Greenrose said it expects to move to over-the-counter markets in the U.S., and Canada's NEO exchange.

Shango is owned by Rexroad Marquis Corp., and based in Las Vegas. The other companies in the deal are Futureworks LLC, based in Colorado; Theraplant LLC, of Connecticut; and True Harvest LLC, from Phoenix.

Though founded in Oregon, Shango appears to have retrenched in the state, at least on the retail front; in 2018 it had three Oregon stores, but now lists just one, in Portland. The company was already in Nevada at the time, and had told the Business Journal it was eying growth in several other states. It now lists operations in California, Michigan, Missouri and Arizona, in addition to Oregon.

This could be just the beginning of Greenrose activity in Oregon, the company suggested.

"In established but highly fragmented markets like California, Colorado and Oregon, the goal will be to take advantage of the consolidation opportunities those markets offer, recognizing the favorable risk-reward dynamics of such markets vis-à-vis the newer, limited license markets," Mickey Harley, the company's CEO, said in a statement. "We also anticipate evaluating select distressed and undervalued assets."

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While SPAC activity in Oregon appears new, a few years ago it was pretty common for companies to use listings for inactive Canadian companies (typically mining companies) to go public north of the border. Golden Leaf Holdings, C21 Investments, Halo and Grown Rogue are among the enterprises that took that route.