We had Michael Auerbach, founder of Subversive Capital and proxy The Parent Company, Jay-Z’s latest business venture on the show. Buzzwords like SPACs, blockchain, and equity are thrown around like dollars in a strip club but, what are SPACs (Special Purpose Acquisition Company), and how do they represent societal inequity?
In our conversation, I learned SPACS are a limited open check. One with wealth already decides they want to raise a large fund to invest, so they ask other wealthy people to take a gamble. I emphasize the already wealthy part because poor people can’t raise 500 million on a hunch; This is neither good nor bad, just how it is.
Do SPACS represent the barrier that poor, black, white, brown, yellow gay, straight people face getting into the cannabis industry? I intended to write this berating the system on how unjust, but the SPAC could help lift a community too. Communities of color have successfully created investment opportunities in the past; the success of black Wallstreet and other thriving minority communities crushed through violence and false legal means proves that. Perhaps the SPAC is the answer for tight-knit communities willing to gather their finances with the intent to invest in something generational wealth building in the cannabis industry.
The disenfranchisement that we often talk about, it’s the “how” that we are referencing. How does one raise themself by the bootstraps when their boots were often taken away? Investments can be like politics, all about the paperwork. SPACs require the investor to put in 2% of the total capital to be raised with deadlines for the money to be invested. Besides the 2% of the overall capital, there’s the legal fees; the SPAC is a spiderweb of legalities that requires a lawyer to register the SPAC, another example of the high barrier of entry into the cannabis industry.
I learned a lot in our talk with Michael. However, it also reinforced my feelings that the recreational market is still not full legalization when the only barrier to enter the cannabis industry should just be a seed.