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The largest Cannabis Industry IPO to date: Cannabis

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JohnCM Member Level  Thursday, 10/25/18 11:34:49 PM
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The largest Cannabis Industry IPO to date: Cannabis Strategies Acquisition Corporation (CSAC)

April 11, 2018 by Rob Meagher

CBE was fortunate enough to learn first-hand, about a new venture, Cannabis Strategies Acquisition Corporation (CSAC), that has built a war chest to pursue the strategic acquisition of cannabis touching licensees and other synergistic companies to build an international company composed of successful entities.

The company vision, structure and financing is the brainchild of Wall Street veteran CEO Jonathan Sandelman. Sandelman is the Chief Executive Officer, Founder and Chief Investment Officer of Sandelman & Associates Inc, the past President of Bank of America Securities LLC and CEO of Mercer Park LP, a privately-held family office.

Mr. Sandelman has assembled an impressive array of experienced Cannabis Industry executives to execute on his vision, including Meg Sanders and Erik Williams who cut their teeth as founding members of Colorado based Mindful and principles at the Will & Way Consulting Group, and Mark Smith, the Chief Executive Officer of Green Cross Colorado, Green Cross Nevada and Tumbleweed Companies, who also holds the COO position at CSAC.

Since announcing the formation of CSAC, (a special purpose acquisition company (SPAC) via press release back in the fall, the venture has raised $135 million U.S. to target the acquisition of one or more businesses or assets in the marijuana production, marijuana distribution, and related sectors. It is listed on the Aequitas NEO Exchange.

Below is the text the recent conversation between CBE and Sandelman.

CBE: Nice to meet you Jon and congratulations on your recent listing on The NEO Exchange and raise which rivals some of the largest to date in the Cannabis Industry. I was hoping that you could clarify your strategy and plan for CSAC and why you chose the SPAC route.

Jonathan Sandelman, CEO, CSAC: There are advantages to both the SPAC investor, potential acquisition targets as well as for CSAC that aren’t necessarily available from going public on the other Canadian stock exchanges.

For the CSAC SPAC, we raised funds from a blind pool of investors with the promise to acquire great assets in the U.S. Cannabis Industry.

Our blind pool investors are guaranteed a rate of return and have the say in the acquisition(s) that the SPAC makes. The blind pool investors have invested in CSAC’s mission and are basically waiting for us to follow through; CSAC has an 18 month qualifying transaction (QT) period to acquire assets that they approve of by majority vote.

If after the QT period CSAC has failed to acquire any assets, the investor receives their original investment plus approximately 2% earned from the Canadian treasury bills (T-bills) and frankly they have the ultimate control in any potential acquisition decision which is decided by a majority vote.

Potential acquisitions have the potential to maximize their return in a sale to CSAC versus let’s say a CSC or TSX traded company offer. For example, if we offered $100 million to an acquisition target, half in cash and half in shares issued after de-SPAC, there is a very good chance that our offer will be more attractive since CSAC de-SPACed will be a publicly traded regular company.

The advantage to the investor is they will have a pretty good idea of the de-SPACed share value based on the revenue/share price multiples readily available for Canadian cannabis touching listed companies. Going public is very difficult for U.S. companies in the Cannabis Industry, if our SPAC buys them, they become public overnight.

The benefit to CSAC is also based on the potential acquisition, we feel very confident that we have a big edge in any offer we make with our public currency.

CBE: Why did you choose to list on the The NEO Exchange (“NEO”) and not the more familiar Canadian Stock Exchange (CSC) or The Toronto Stock Exchange (TSX) like many of the other Canadian cannabis firms?

Jonathan Sandelman, CEO, CSAC: We really like the management of the exchange and their customer service has been excellent and very responsive to our needs.

CBE: The background information you guys provided refers to the management team once de-SPAC occurs. Whats the process and what happens after de-SPAC occurs with CSAC.

Jonathan Sandelman, CEO, CSAC: As I have explained above, once we de-SPAC, we become a publicly traded stock on the exchange that we are listed on and we can begin staffing. Obviously we have identified our management team which brings together the 3 fundamental attributes that we believe are imperative to long and short-term success, financial marketplace experience, operational experience and professional management. Having Mark Smith as our COO brings one of the most successful cannabis operators, having built multiple verticals with one of the largest capital pools and that gives us an incredible edge.

CBE: The background information you guys provided refers to the management team once de-SPAC occurs. What’s the process and what happens after de-SPAC occurs with CSAC.

Jonathan Sandelman, CEO, CSAC: We find a qualifying asset. The shareholders vote to give us their approval. We de-SPAC and become a regular pubic company.

CBE: Your plans for “the strategic acquisition of cannabis touching licensees and other synergistic companies” is pretty broad, can you elaborate specifically on the type of companies in the Canadian and U.S. markets that are of interest to CSAC?

Jonathan Sandelman, CEO, CSAC: We want to build a comprehensive national brand with verticals in distribution, manufacturing and retail.

CBE: How does access to the international cannabis consumer play in your short and long-term strategic plans?

Jonathan Sandelman, CEO, CSAC: Apart from tourism customers in adult-use states, it doesn’t.

CBE: Does CSAC intend to be one central brand or a conglomerate of free-standing cannabis enterprises with their own management teams and brands?

Jonathan Sandelman, CEO, CSAC: We intend to be a central branded company creating the first nations brands.

CBE: How does access to the international cannabis consumer play in your short and long-term plans?

Jonathan Sandelman, CEO, CSAC: Apart from tourism customers in adult-use states, it doesn’t.

CBE: What else would you like to share with CBE’s audience of Cannabis Industry decision-makers?

CSAC: CSAC was the largest IPO in the cannabis space. We are looking to acquire extraordinary assets with great management teams that want to continue to build the companies they created and are poised and ready for turbo-charged growth through access to capital. Companies that emerge as the winners in the industry will need to successfully merge the financial resources and wherewithal as well operational expertise in the industry. CSAC will do just that to maximize shareholder return.

Cannabis Business Executive Background Information

Company Name: Cannabis Strategies Acquisition Corporation

Year Founded: 2017

Ownership structure/operating entities: Canadian-listed Public Company (CSA.UN).(a special purpose acquisition company (SPAC)

Management Team: Currently, and under the SPAC rules, there cannot be any employees. The team currently consists of CEO Jonathan Sandelman, COO Mark Smith, and consultants Meg Sanders and Erik Williams.

Headquarters: Currently NYC, but final operational headquarters will be determined based on the acquisitions made.

Website: N/A, plan on launching at a later time.

Industry Segment/Category: Not limited, focusing on US cannabis companies.

Current Number of employees: N/A SPAC’s cannot have employees

Market Strategy/Goal: To be the world’s leading cannabis company with a diverse portfolio of high-performing cultivation, extraction, brands and retail.

Launch Timing: Currently seeking acquisitions.



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