Creso Pharma psychedelics merger falls through, NASDAQ listing slated instead

In an ASX statement, Creso says its board believes favourable US regulatory changes will occur soon, making a NASDAQ dual listing “the best vehicle to pursue North American focused growth opportunities”.

In tandem, Creso has announced a mutual termination of its planned merger with Canada’s Red Light Holland, which would have doubled the value of the Australian company and created a global psychedelics and cannabis company called The HighBrid Lab.

“Following ongoing discussions with Red Light Holland and challenges stemming from the impacts of COVID-19, both parties have mutually concluded that the merger would no longer be in the best interests of their respective shareholders,” Creso Pharma said.

"Creso Pharma’s board and management believe that pending regulatory changes in the North American psychedelic and recreational cannabis sectors will provide ample opportunities in the near term for Creso Pharma and remaining listed on the ASX will be in the best interests of its shareholders.”

Though the merger will not progress, Creso says it remains committed to a strong working relationship with Red Light Holland.

As such, Red Light Holland has placed an order to purchase $170,000 of Creso’s hemp-based CBD products, which will be white-labelled through the Canadian company’s brands and distributed across its wholly-owned distribution company SR-Wholesale’s sales channels.

“Over the last two months, Creso Pharma has come to work closely with Red Light Holland to understand its business and accomplishments. Creso management is very impressed with the counterparty and expect to work closely together on further synergistic transactions,” Creso said.

“Creso Pharma management would like to thank Red Light Holland for their efforts with the proposed transaction and wish the company well in its future endeavours.”

To spearhead its proposed NASDAQ dual listing Creso has tapped boutique corporate advisory firm EAS Advisors - a New York-based company that has participated in more than US$6.5 billion in successful transactions since its inception.

EAS was founded by Edward Sugar, a previous managing director of Jefferies & Co, who has vast experience in dual listings, including in the cannabis and psychedelics industry.

The move to dual list is underpinned by what Creso believes are favourable regulatory shifts that will soon materialise in North America, giving the Australian company a positive operating environment to expand in the US market.

Creso, one of Australia's Top 20 Cannabis Companies, is currently assessing its prospects in the 36 US states where cannabis has been legalised for medicinal and recreational use, prior to potential federal legislation.

Its own initiatives in the psychedelic sector will also be buoyed by Senate Bill 519 (SB519), which seeks to legalise the use and possession of psilocybin and other psychedelic compounds in California.

Should SB519 pass, Creso says it is well-positioned to capitalise through its wholly-owned, Canadian-based psychedelic medicines subsidiary Halucenex.

“We are now shifting our resources and focus to the proposed NASDAQ dual listing. The company anticipates that this development will allow for easier comparisons to our North American listed peers and allow Creso Pharma to be valued accordingly,” Creso Pharma non-executive chairman Adam Blumenthal said.

“Following potentially favourable legislative shifts, a NASDAQ listing will also provide us with access to the world’s largest recreational cannabis market and a growing psychedelic medicines sector.

“Pleasingly, a dual listing opportunity will also allow Creso Pharma to retain its ASX listing, which we believe is in the best interests of our longstanding and faithful shareholders. The company remains well capitalised, with considerable financial flexibility to pursue these initiatives.”