Top cannabis site Leafly in talks to merge with blank-check company Merida Merger Corp I in a deal that would value the combined company at more than $530 million, three people familiar with the matter told Reuters.
The blank check company is owned by Leafly, one of the biggest backers of Merida Capital Holdings whose site visits have witnessed a meteoric rise thanks to easing regulations in the United States and rising weed usage.
A deal could be announced as soon as next week, the source said, warning that talks could fall apart.
Then the merger will move up to Merida on the combined company's board, while Leafly's team will continue to be led by Chief Executive Yoko Miyashita, sources said, declining to be named as talks were still confidential.
Leafly and Merida did not immediately respond to a comment.
The company plans to use the proceeds of the deal partly to invest more into its east coast business, the sources said.
Founded in 2010 by cannabis-focused private equity group Privateer Holdings between 2012 and 2019 Leafly was owned by public equity firm Nova Capital Management LLC.
The company offers consumers ways to find weed stores to buy the cannabis strains they want, posts reviews on different marijuana products, runs a pickup and delivery service and advertises items for pick up and delivery.
More than half of all Canadian cannabis dispensaries use Leafly in their e-commerce, advertising and other services.
Prospects of pandemic legalization and federal lockdowns have pushed Leafly's website views to more than 220 million last year, up 12 % from 2019, making it the world's most visited website on weeds.
If approved, the deal would be the latest in a blank-check sector that caught the latest frenzy. Rival Weedmaps' parent company struck a blank-check deal in December to list on Nasdaq.
Leafly intends to list under the ticker symbol 'LFLY' on Nasdaq, one of the people said.
Blank-check firms are private companies that use the funds from initial public offerings to buy private firms, taking them public in the process.
Billionaire TPCO Holdings have also issued similar deals to join US pot producer Jay-Z.