Akerna Corp., the parent company of pioneering cannabis technology company MJ Freeway, said Friday it’s exiting the marijuana industry based on headwinds much of the market is facing.
Denver-based Akerna is merging with cryptocurrency business Gryphon Digital Mining in an all-stock deal that will allow the latter company to go public on the Nasdaq.
Akerna also is selling its software business to POSaBIT Systems Corp., which offers payment solutions to the cannabis industry, for $4 million in cash.
Akerna CEO Jessica Billingsley told MJBizDaily via email that the moves were influenced by federal marijuana legalization happening “slower than anticipated” and “a changing macroeconomic climate that is unfavorable toward our financial obligations.”
“This decision was not taken lightly,” Billingsley added in a separate LinkedIn post.
“After much consideration and evaluation, we believe it provides the best outcome for all of our stakeholders, including our team members and our valued clients.”
Akerna will sell to POSaBIT:
- MJ Freeway, a marijuana point-of-sale platform. In the LinkedIn post, Billingsley said the company invented seed-to-sale tracking more than 14 years ago.
- Leaf Data Systems, a seed-to-sale tracking software for U.S. cannabis markets.
- Ample Organics, a seed-to-sale tracking software for the Canadian market.
The software business combined with POSaBIT is expected to generate roughly $11 million in revenue and $6.8 million in gross profit during 2023.
The deal nearly doubles the number of merchant locations served by Kirkland, Washington-based POSaBIT.
“At a purchase price of 0.4 times 2022 estimated revenue, we are acquiring high-quality software assets at an attractive valuation,” Ryan Hamlin, CEO and co-founder of POSaBIT, said in a release.
“Despite the challenges facing our industry, our business is growing at a steady rate.
“We are adding new team members and our pipeline of both organic and strategic opportunities is expanding.”
The reverse merger with Gryphon Digital Mining will allow Akerna shareholders to access the bitcoin mining industry, according to a release, and the company will continue to be publicly traded.
If the deal goes through, Gryphon will become a wholly owned subsidiary of Akerna.
Gryphon equity holders are expected to own approximately 92.5% of the combined company, and current Akerna equity holders will own approximately 7.5%.
Akerna Corp. will be renamed Gryphon Digital Mining and headquartered in Las Vegas.
Rob Chang will serve as CEO of the combined company; Billingsley will retain a seat on the company’s board.
Akerna trades as KERN on the Nasdaq.
Earlier this month, Akerna sold enterprise resource planning software 365 Cannabis back to some of 365’s previous investors in a deal worth roughly $2.8 million, significantly less than what Akerna paid to acquire the company in 2021.
The company also restructured and cut jobs in 2022 and raised new capital.
MJ Freeway was one of the first major POS systems in the cannabis industry, with marijuana retail clients across the country.
Bart Schaneman can be reached at firstname.lastname@example.org.