Veterans of Ohio's marijuana and CBD industries have raised $30.5 million for a blank-check public company – better known as a SPAC – to acquire wellness brands including services and plant-based personal care products, foods and beverages.
Better For You Wellness Inc. has a term sheet with Williamsburg Venture Holdings LLC, according to regulatory filings. The investor group is to buy $30 million in a registered stock offering to fund future acquisitions, and an additional $500,000 in a private placement largely to cover transaction costs and expenses like marketing.
Already the Columbus company is vetting about 15 potential acquisition targets, which would range in size from less than $1 million to $15 million, said co-founder and CEO Ian James. CBD might be in the mix, but the scope is the broader health, nutrition and wellness market – estimated at $1.5 trillion in consumer spending globally by McKinsey & Co.
"I’ve been watching this for the last seven years, a variety of small wellness companies eke out their life cycles," James said. "A lot of these companies just have been undercapitalized."
Under the larger Better For You umbrella, the brands would gain financial backing as well as operations expertise, group purchasing and a network of strategic relationships, he said.
In the past two years, SPACs, or special-purpose acquisition companies, have been a popular way for private companies to go public without the expense and long wait times of an IPO. Usually an investor group raises hundreds of millions of dollars as a blank check to find an operating business.
"We're kind of like a micro-SPAC," James said.
James also is co-founder of Ideation Laboratory, formerly CBD Idea Factory, in Columbus and co-founder and president of Cincinnati-based Green Light Acquisitions, a holding company that invests in the cannabis industry.
He had been part of the group behind an unsuccessful state marijuana ballot initiative in 2015, members of which later applied for licenses in the eventual state medical marijuana program.
Stephen Letourneau, James' partner, is a co-founder of both Better for You and Ideation, where he is chief brand officer.
One of Green Light's investments is Cannuka, a Columbus-based CBD skin care line. Better For You possibly could consider Cannuka or Ideation products, but James and Letourneau would recuse themselves from the decisions.
"There are other targets that aren’t as complex and don’t have insider issues," James said.
Based in a mansion on East Broad Street, Better For You itself went public by merging into a shell holding company, then called Fast Track Solutions. Turnaround consultants in Rhode Island had formed Fast Track by finding an OTC stock that had ceased operating but not withdrawn its securities registration, then James and Letourneau acquired that.
"For our investors, (going public) made sense because it provides them a greater opportunity for liquidity," James said. "It provides them greater insight into what’s happening with the company."
Besides the co-founders, directors of the company are: Montel Williams, the former talk show host and an investor in cannabis businesses; Leslie Bumgarner, CEO of Telhio Credit Union; Joseph Watson, CEO of Petland Inc.; David Deming, COO of investment firm ID Fund LLC; and Dr. Nicola Finley, a physician and author specializing in wellness.
"This is the start of what is going to be, I believe, a very successful and broad initiative to expand wellness on a variety of different categories," James said.
