The MJ Freeway-MTech Acquisition Corp. merger is buzzing along, and management provided an update this week and reported a $9.2-million raise ahead of closing....

The MJ Freeway-MTech Acquisition Corp. merger is buzzing along, and management provided an update this week and reported a $9.2-million raise ahead of closing. The deal was announced last fall, and the resulting business intends to trade on the Nasdaq. 

The new company will be named Akerna Corp.

Jessica Billingsley, co-founder and CEO of seed-to-sale tracking business MJ Freeway, told Cannabis Business Times last year that the foundation of this deal is access to capital; Akerna Corp., upon closing, will reportedly be debt-free. “This gives us a position of strength in terms of the balance sheet that we’ll have available to us to execute our strategy and to really make sure that we’re able to expand our product development at the rapid and extensive effort and depth that the cannabis industry requires,” Billingsley said, “as well as gives us the ability that would have been challenging previously to look at some strategic acquisitions within our states.”

To get from here to there, MJ Freeway has linked up with MTech. The latter is a U.S.-listed special-purpose acquisition company (SPAC). In short, a SPAC is an investment vehicle with the ability to trade on public stock exchanges and engage in M&A transactions. MTech issued 5 million shares on the Nasdaq at $10 each in January 2018.

When MTech launched its IPO, company management laid out a broad plan for what to do next: “The Company’s efforts to identify a prospective target business will not be limited to a particular industry or geographic region, although the Company intends to focus its search on companies ancillary to the cannabis industry, with a particular sector focus that includes compliance, business intelligence, brand development and media.”

The company’s first marquee move is the planned merger with MJ Freeway, which holds a client base in 29 U.S. states and Washington, D.C.

To that end, MTech issued an additional 215,475 shares of Class A common stock at $10.21 in private placement this week, as part of a larger goal of raising $9.2 million. At closing, the MTech stock will convert, one-to-one, to shares of Akerna Corp.

Cresco Capital Partners II is among the private investors joining this placement. (The fund was already invested in MJ Freeway.) 

Other notable funds in the private placement include The London Fund and Khitan Capital.

“As an existing MJ Freeway investor, making this investment in Akerna was an easy choice considering the trend of global legalization we are seeing, especially in Asian markets. We believe Akerna is well-positioned to capitalize on this growth through their robust ERP offerings and tracking & compliance technology,” MJ Freeway board member and Khitan Capital member Emery Huang said in a public statement. “Further, we believe the value proposition with the pending merger and Nasdaq listing enhances Akerna’s financial position and opens the door to acquisition opportunities, which should drive further shareholder value.”

MJ Shareholders avatar

MJ Shareholders is the largest dedicated financial network and leading corporate communications firm serving the legal cannabis industry. Our network aims to connect public marijuana companies with these focused cannabis audiences across the US and Canada that are critical for growth: Short and long term cannabis investors Active funding sources Mainstream media Business leaders Cannabis consumers

( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )