WM Technology, the parent company of Weedmaps, has confirmed the receipt of a non-binding proposal from its co-founders, Doug Francis and Justin Hartfield, to take the company private. The offer of $1.70 per share represents a 39% premium over its closing stock price, signaling a significant shift for one of the cannabis industry’s leading technology platforms.
A Reaction to Market Pressures
This proposal emerges as cannabis companies grapple with declining market valuations, regulatory hurdles, and investor fatigue. Despite its role as a major software and e-commerce provider for the legal cannabis market, WM Technology has faced stock price declines due to increased competition and stalled federal legalization efforts.
Francis and Hartfield described the challenges: “WM is facing significant headwinds, with licensed end-markets continuing to decline from the peak volumes achieved at the time of the company’s de-SPAC transaction in 2021,” they wrote in a letter to the board. “They also noted that consolidation among cannabis retailers and brands, along with competition from traditional technology providers, poses significant risks to WM’s current business model as a public company.”
Analyst Perspectives
Industry analysts view the move as a strategic response to current market conditions. Pablo Zuanic of Zuanic & Associates commented, “We believe shareholders should accept the offer,” citing potential downsides if the proposal is not approved and the execution risks associated with remaining public.
Trending Move in the Cannabis Industry
WM Technology is not the first cannabis company to consider delisting from public markets. In recent years, several cannabis brands have sought financial restructuring or returned to private ownership due to market challenges:
- MedMen Enterprises: Once a high-profile cannabis retailer, MedMen faced financial difficulties and underwent restructuring under private ownership.
- Parallel: A multi-state operator that canceled its SPAC merger in 2022, opting to avoid public market instability.
- Harborside: Merged with Urbn Leaf and Loudpack to form StateHouse Holdings, focusing on consolidation to navigate financial challenges.
These cases reflect a broader trend of public cannabis companies reassessing their market positions amid regulatory uncertainty and financial pressures.
Outlook for WM Technology
The special committee appointed by WM Technology’s board will evaluate the proposal with the assistance of financial and legal advisors, Evercore Group L.L.C. If accepted, the company would exit the Nasdaq stock exchange, transitioning to private ownership and potentially restructuring its operations to better navigate the evolving cannabis industry landscape. Ultimately, this decision could influence future strategies for cannabis tech companies facing similar market dynamics.
This is an opinion piece and does not necessarily reflect the views of Beard Bros Pharms.
Navy veteran JM Balbuena is an award-winning author, filmmaker, advocate, and entrepreneur committed to empowering aspiring leaders in the legal cannabis space. Her debut book, The Successful Canna-preneur, earned her “Cannabis Educator of the Year” (2021 Las Vegas Cannabis Awards) and inclusion in The New Latina’s “100 Latinas Shaping The World.” In June 2024, JM published Green Renaissance, exploring cannabis culture, history, and its potential for equity and economic growth, cementing her status as a thought leader in the industry. Find out more about JB Balbuena here.
