MCMJ/LFLY - Having our doobie.. and smoking it too! 🌿

Merida Merger Corp I (MCMJ) shareholders will be voting on Jan 14, 2022 on the proposed merger with Leafly Holdings, a cannabis marketplace with some bells and whistles, and trade under ticker LFLY shortly after. LFLY valued at ~$385M. Options available.

Tl;dr - High likelihood of price to drop in the long run. Low likelihood of a spike immediately merger, before price drop begins.

Rationale for Price Drop

  1. They do not expect to have positive income until 2024, and do not have parabolic revenue projections like other SPACs that attempt to justify such current unprofitability. Such honesty makes markets frown.

  1. Weedmaps (MAPS) is considered to be the closest peer, and has a market cap of $340M. This is close to LFLY’s valuation of $385M.
    But… MAPS has $51M Q3 revenue alone, and 46% YoY growth. MCMJ/LFLY’s annual revenue projections are $43M for 2021, and $65M for 2022, so a fraction of MAPS’. MCMJ/LFLY confirm they expect very similar growth rates and gross margins (see below).
    Given that MCMJ/LFLY has almost the same ascribed valuation as MAPS, but makes in a year what MAPS makes in a quarter, and does not have higher growth or margin as justification, we can consider MCMJ/LFLY to be grossly overvalued compared to its peer.

  1. What possessed them to ascribe such a high valuation when their own comparables show how unrealistic it is? It’s because the deal was announced at the height of the pot-stock euphoria. MAPS was timely - their max price actually rose to $30 before coming back down to $6 now (see below). MCMJ/LFLY, unfortunately, is very late to the game. We can therefore expect the market to assign it a discount because pot stocks are no longer hot. (And neither are SPACs in general.)

  1. MCMJ shareholders have already voted with their feet - 1.4M out of the 13M redeemed their shares on Oct 29, when they voted on an extension for the merger from Nov 7 to Dec 31. The market is also playing this very close to NAV - MCMJ is trading at $9.99, and MCMJW is trading at $0.98. Quite the discount for warrants this close to the merger. Both shareholders and the market therefore seem to be underwhelmed by this union.

  2. Caveat: Only MCMJ shareholders are free to sell shares after the merger; those held by Leafly and the sponsors are locked up for 180 days. (There is no PIPE in this deal.) This lockup applies to ~75% of the shares in the post-merger company, assuming no redemption.



Based on all this, I therefore expect a price drop, though it may not be as precipitous as some of the other deSPACs because of #5.

Rationale for Spike Immediately After Merger

Given the data presented above, it would not be unreasonable to expect decently high levels of redemptions on the remaining 11.6M MCMJ shares. A 90% redemption would leave us with a tiny 1.2M float. Even a 75% redemption would leave us with a relatively small 2.9M float.

Fintel reports relatively low short interest, but significant redemptions can result in a squeeze from short covering nonetheless, as we saw with HLGN.


If anyone has Ortex data to supplement, that would be lovely.

We see a small rise in CTB, though there seems to be ample shares to short. This may change significantly with high redemption.

Finally, though not enough for a full blown gamma squeeze, we can expect some gamma tailwind from the call OI chains if redemptions are high enough and prices rise enough to cover the 12.5 strike.

Needless to say, this is extremely speculative, and expectations will need to be revised closer to Jan 14.

Fwiw, at the moment, I am anticipating a mini-spike to $12-$14, mostly based on feels.

How I am Playing This

I got the following:

  • For the drop: Feb 18, 10P
  • For the mini-spike: Jan 21, 12.5C


Investor Presentation

MCMJ Subreddit


TLRY ptsd triggered

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@Ridn2lo made a pertinent observation - Tilray (TLRY) and Canopy (CGC) have earnings coming up next week or so, which could provide indications on how Leafly will do.

Both cultivate, produce, distribute and sell cannabis products, and therefore are solidly in the same industry, so their performance can indeed be indicative. Because they are not quite in the same business as Leafly and Weedmaps though, refraining from doing a comparison of multiples.

Still, the price action can be indicative. Below, we see the spike around pot stock euphoria, with TLRY and CGC dropping 90% and 85% from their ATHs respectively, and 40% and 72% from a year ago, respectively.

This seems to support the hypothesis that LFLY stock will wilt similarly once the NAV floor is removed.

Now lets see what their earnings tell us.


I know they are different in business practices, but I thought Tilray and Canopy earnings might provide a decent read on how the market is feeling about the cannabis industry.


Interesting play, good DD!

Yesterday MCMJ closed almost unchanged at 9.99, on 1/6 of daily avg volume. However implied volality for both the calls and puts increased significantly.

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10c and especially 10p are already really expensive… for the way up I’d go 7.5c but the play is mostly on the way down. 1.90 for a 10p is quite the price.


Yeah… fairly steep. I got a fill at $1.70 on a limit buy even though the price was closer to $2 most of the day. IV has crept up, but since volume is low, maybe the opening lurch in prices can produce a fill.

I hope I don’t have to hold till Feb, but I’m counting on the fact that if prices drop 20% ($8), will have ~25% return. And if 30% ($7), should have > 75% return. (Handwavy estimate; have not modelled for IV, theta etc.) Thereby justifying paying the high premium now.

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Got a fill at 1.50 and up to 2.45 even though the underlying hasn’t changed at all. Banger of a first DD here @The_Ni!

Also got me interested in looking at whether it’s worth playing deSPACs for the IV if it seems like there’s going to be high retail interest.


By way of an update. Merger vote is in 4 days (Jan 14), so time is closing for the Jan leg of the play.

1/21 12.5Cs bought for 0.15 a few days ago slightly more than doubled at one point today, so was able to take out cost basis. IV is rising nicely, even though theta is kicking in hard as well.


Will let the remaining half ride despite this risk, as a $2-3 spike will net a ~4-7x return on cost basis (see below). Do note - a bunch of things will have to align for that spike to happen, and it is much more likely that a spike will not happen.



What is NAV for this and is it still in place?

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The NAV is $10, and is in place for a few more days. Merger vote is Jan 14, so ticker change will can be expected within a few days of that, at which point the price can go anywhere.

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i guess you were wrong on the dates. looks like NAV was removed today. your puts are already paying off a +50%, congratz

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Combed through the S-4 again, and it seems redemption requests need to be in 2 business days before the merger vote. To the extent that it is arb funds that prop up the floor, this effectively does translate to a floor removal today. Missed this earlier =/ I suppose it gives us a few more days for the price to fall :crossed_fingers:t3:


MCMJ has: a) postponed the Jan 14 merger vote without announcing a new date, and b) undertaken a $30M convertible note financing (2025 maturity, 8% interest, $12.50 conversion price) which will precede the merger.

From about 2 hours ago:

Now who said SPACs were boring… Last minute shenanigans, very likely because they know there will be massive redemptions, and won’t end up with nearly as much cash as they’d like.

This also means the NAV floor is back, so prices will open at ~$10 and stay there until T-2 of the next meeting date. RIP Puts that did nicely today.


Just repeating my question here in case someone else had the same question:

Is it worth it to wake up early and buy a call if we know the floor is back to 10? Like is there any chance they might have a bit of a delay at all, and spike up in the first hour or so?

Unfortunately, no. Automated systems that pay for order flow or otherwise front-run retail will always get first dibs, and hoover up any such arbitrage opportunity. The markets will open for us as if the floor had never disappeared. Almost.

“Almost,” because IV will probably be a little more jacked up than normal given all the volatility, so anyone already holding Calls or Puts should still be able to exit at at least break even, unless they got the Puts today.

I would not buy options though precisely for this reason - IV is high, and therefore so will be premium. Depending on how much time they take, things will quieten down in the next week or two.

Personally, I plan to exit all my positions tomorrow and will reassess when they announce the new meeting date.

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Now that we have new merger date, any updates on this play? Are we expecting floor to drop next Friday?


Thanks for the note - I’d missed it!

Seems like nothing’s changed other than the date, so yeah, I suppose Puts are on again :slight_smile: I’m still holding the Feb ones I got earlier.


Last Price on Feb 10p was 2.10… that’s quite the price. zz

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Yeah… IV’s still jacked from the fake-merger last week. Else would have topped up on top of the ones I got for 1.70.