Cannabis SPAC acquires Caliva and Left Coast Ventures, hires Jay-Z

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New York-based Subversive Capital Acquisition Corp., a special purpose acquisition company (SPAC), said it has acquired two California cannabis companies and hired rapper and producer Shawn “Jay-Z” Carter to foster social equity in the industry.

The company is purchasing marijuana brand Caliva and cannabis investment firm and producer Left Coast Ventures.

The purchases will create a new parent company, TPCO Holding Corp., and include $36.5 million worth of equity commitments from new and existing shareholders, according to a news release.

Terms of the transaction, which is expected to close in January 2021, were not disclosed.

The merger of the two California companies creates a vertically integrated platform that includes cultivation, manufacturing, brands, retail and delivery – allowing TPCO to control its supply chain.

According to the news release, Caliva and Left Coast Ventures expect combined pro forma revenues of $185 million in 2020 and $334 million in 2021.

“California is the most powerful cannabis economy in the world, and we have a unique opportunity to consolidate the market,” Subversive Capital Acquisition Corp. (SCAC) Chair Michael Auerbach said in a statement.

The news release predicts TPCO will “have the greatest consumer reach of any cannabis company in California reaching 75% of consumers in the state by the end of 2021 and almost 90% by the end of 2022.”

SPACs are growing in popularity for private cannabis companies looking to raise money and become publicly traded. SCAC itself currently holds around $575 million in cash-in-trust.

Steve Allan, meanwhile, will serve as TPCO’s CEO.

Carter will serve as the holding company’s chief visionary officer, a role in which he will help guide brand strategy as well as lead the company with a goal of raising $10 million to invest in minority- and Black-owned cannabis companies, among other efforts.

TPCO will also contribute at least 2% of its net annual income to support social equity initiatives.

“The brands we build will pave a new path forward for a legacy rooted in equity, access, and justice. We’re creating something people can trust and we’re investing in our future, our people and our communities,” Carter said in the release.