Special purpose acquisition companies (SPACs), or “blank check” companies, have been one of the most popular investments and investment vehicles over the past year – an alarming 308 SPACs have gone public since the start of 2021. In particular, SPACs have played a major role in supporting the marijuana funding boom since the cannabis industry faced a drought in late 2019. In just the first three months of this year, three SPAC initial public offerings have totaled over $570 million.
However, signals glaring from the U.S. Securities Exchange Commission (SEC) have attempted to slow down the momentum of the SPAC market. A few of these public statements so far this year include:
- A public statement in March 2021, by Paul Munter, Chief Accountant of the SEC, highlighting the complexities encompassed by the trustworthiness of the SPAC financial reporting, governance and quality of audits.
- A public statement on April 8, 2021, by John Coates, Director of the SEC’s Division of Corporation Finance, indicating that SPAC’s compliance with disclosure and filing requirements are in the close purview of the staff, and underscores legal liability corresponding to SPAC disclosures once a target is acquired.
- A public statement made on April 12, 2021,
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Earlier this week, the Massachusetts Legislature’s Joint Committee on Cannabis Policy held a virtual hearing on nine proposed bills focused on reforming the approval process of host community agreements (“HCAs”) between municipalities and marijuana businesses licensed to operate in those cities and towns. Massachusetts lawmakers listened to testimony from advocates, former regulators, attorneys, cannabis business leaders, entrepreneurs and others who argued that the existing local approval process gives municipalities undue leverage in HCA negotiations with marijuana establishments.
As a prerequisite to obtaining state cannabis licensure in Massachusetts, marijuana establishments are required to have an HCA in place with the appropriate municipality. HCAs typically include significant fees imposed by cities and towns, which are ostensibly required to offset the impact by the operation of the cannabis business on the surrounding community. Massachusetts cannabis regulations require the community impact fees to be “reasonably related to the costs imposed upon the municipality by the operation of the marijuana establishment.”
Many of the proposed bills in front of the Joint Committee emphasized, in particular, the community impact fees charged by cities and towns in negotiating HCAs with marijuana establishments. A number of the proposed bills centered around further clarifications to ensure that … Keep reading
Legalization efforts (and victories) have continued to spread across the country in 2021. Over the last few months, we have seen New Jersey and, subsequently, New York legalize adult-use cannabis – programs that are expected to produce more than $4 billion in annual revenue within five years. Both the Virginia and New Mexico legislatures also legalized adult-use cannabis earlier this year – programs expected to generate about $2 billion in annual revenue within five years. Now, industry experts are watching other east coast states like Connecticut, Delaware and Rhode Island for the next wave of pro-cannabis legislation.
Legislators around the country are feeling the economic pressure of the market as well as pressure from their respective voters. More than two-thirds of Americans are in support of adult-use legalization, and 40% of Americans now live in states where marijuana is recreationally legal. Just this week, the Louisiana House of Representatives approved a bill to expand the state’s current medical marijuana program by allowing patients to purchase whole-flower cannabis. The legislature also advanced another proposal to establish licensing fees for adult-use cannabis if the state decides to legalize it under separate legislation.
Several other states could legalize medical or adult-use cannabis … Keep reading