It’s Reefer Madness….

Last night, the Tuscan team filed for their second cannabis-focused SPAC with the $125 million Tuscan Holdings Corp II. (THACU).  Except, It’s not their second SPAC. It’s actually their third.  That’s because, yesterday, Subversive Capital Acquisition Corp., another cannabis-focused SPAC (to be listed in Canada), filed for IPO and Steven Vogel, is included as the CFO and Director. Richard Rieger, the CFO of Tuscan II and a Director on Tuscan I, is also on the Subversive team as a Director.

But wait, there’s more!

Steven Vogel is actually on FOUR SPACs!  That’s right, four.  Because Steven Vogel is also the President and Director of Twelve Seas (TWLV).

So let’s review:  Steven Vogel will have three Cannabis focused SPACs out in the market looking for targets, plus Twelve Seas.  On two of the cannabis SPACS he will be Chairman and CEO, and on a third SPAC, he will be CFO and Director.  Twelve Seas, which is still trying to close their combination with Brooge Petroleum, he is President and Director.

This is nuts.  Who’s the favorite child?

However, you’re probably thinking, “Well surely with that many competing deals and conflicts of interests, not to mention the problem of fiduciary duty and time management, Tuscan II will try and make the terms palatable.”  Hmmm….not so much.  In fact, Tuscan II has decided to try for 1/2 warrant this go around as opposed to the full warrant they offered in Tuscan I.  Not only that, but they also would like to remove $250,000 of interest per year for their working capital purposes. I mean, they threw in the Crescent Term at $9.50, so I guess that’s something.

This is all very problematic.  Now we have Gig1 and Gig2, Pivotal I and II, and Tuscan I and II.  Plus, we have both KERN (MTech) and PECK (Jensyn) trading wildly, Nasdaq trying to tighten listing requirements, 72 SPACs out searching for targets (but only 11 in the announced column) and it’s all starting to feel a little queasy.

Here’s the crazy thing…in a SPAC market like this, even with all the issues we’ve just listed above for Tuscan II, this deal will still get done. Sure, investors will push back on the terms (as they should), but it’s still going to get sold.  And that should make everyone a little uneasy.  When we start looking the other way on concerns, things start to feel a little toppy.

Nonetheless, people will argue that these teams are “seeing tremendous deal flow” and that’s why they need multiple SPACs. Ok, makes sense. But when a team still hasn’t announced or closed on their first deal and demonstrated via a share price above trust value to the first SPAC’s shareholders they owe a fiduciary duty to, it feels wrong.  Especially when we’ve had so many SPACs trade poorly post-close. No investor wants to participate in SPACs just to redeem.  They want a Clarivate or a OneSpaWorld.

Ultimately, to keep the SPAC machine humming, we need to see more top notch transactions close or this product won’t work anymore.  I don’t think anyone investing in these deals want SPACs to go away, but investors are the ultimate gate keepers to ensuring a market runs effectively.  So, it will be interesting to see where this deal’s terms ultimately wind up.  As it currently stands, most likely, terms they are a changin’….