‘The Haymaker’ is Leafly Deputy Editor Bruce Barcott’s weekly column on cannabis politics and culture.
When an investment sector reaches a point of scorching hotness, bullshit becomes monetized. We saw it with Japanese real estate in the late 1980s, with dot-com companies in the late 1990s, and with American housing in the mid-2000s.
In both deals, the estimated value of each company tripled overnight. Nobody in the mainstream media bothered to note that fact, or to question the numbers in play.
But we should. Not because the High Times investors are grifters—I know some of them; they’re not; and personally, I like High Times and want it to succeed. We need to question it because when cannabis company valuations become untethered from reality, it helps the fly-by-night schemers and hurts entrepreneurs building real, solid, American cannabis companies.
How Did $70m Become $250m?
In late July, Hightimes Holding Corp., owner of the venerable magazine, announced that the company had entered into a merger agreement with Origo Acquisition Corp., a special-purpose acquisition company, or SAC. SACs are shell companies, formed by known investors, that go public with the intention of buying or merging with an existing company-to-be-named-later that may have difficulty going public on its own.
Once Hightimes Holding Corp. merged into Origo’s publicly traded shell corporation, the media release stated, “High Times will be a publicly traded company.” The value High Times placed on its equity was $250 million. The details are in this SEC filing.
If you look into other SEC documents, though, you’ll find that Origo had only about $21 million to its name three months ago.
Look, I can tell you I value my 2003 Subaru at $1.2 million. Should you invest in my sweet, sweet ride based on that claim? Probably not. At least wait until you see the bill of sale I file with the state.
High Times isn’t operating a scam. The company has viable assets and brand value. But $250 million is too big, it’s too round, it sounds like a wishful figure somebody wanted on the cake at the deal celebration.