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Blank-check firm Greenrose buys four companies to build U.S. cannabis network

March 15 (Reuters) - Blank-check company Greenrose Acquisition Corp said it would buy four private companies to build a cannabis cultivation, distribution and retail network across seven U.S. states, betting on the nation’s pot industry opening up soon.

Dealmaking in the U.S. cannabis industry has surged in recent months on expectations that President Joe Biden’s administration will relax federal prohibition and make it easier for companies to operate similarly to rivals in the alcohol or tobacco industries.

Greenrose will buy Shango Holdings Inc, Futureworks LLC, Theraplant LLC and True Harvest LLC at an initial deal value of $210 million and a maximum earnout of $110 million, it said on Monday.

The combined company will have nine dispensaries and over 300,000 square feet of cultivation space, Greenrose said.

Greenrose said it expects to temporarily move from the Nasdaq to over-the-counter trading because companies growing or selling marijuana in the U.S. cannot list on major stock exchanges.

The company also plans to list on Canada’s NEO exchange after the deal closes, though there is still a chance it may not have to leave the Nasdaq, Greenrose Chief Executive Officer Mickey Harley told Reuters.

“We felt that when we did our IPO back in February last year that there would be a chance, that we would get regulatory relief before we close our business combination,” Harley said.

“I think there is still a chance that does still happen,” he added. “It’s going to be a close call.”

Greenrose also looked at deals with cannabis software companies, President Paul Otto Wimer told Reuters, adding the company eventually decided against it as valuations for such businesses were too high, among other issues.

Reporting by Shariq Khan in Bengaluru; Editing by Amy Caren Daniel

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