Cannabis SPACs’ Cross-Border Push Threatens Tax Hit on Investors

Canadian SPACs are courting U.S. cannabis startups to grant them access to quick cash and the U.S. public market, but that backdoor method to getting listed in the U.S. could come with a punitive tax hit.

It isn’t legal for many cannabis companies to go public in the U.S., leaving investors eager to cash-in on the marijuana boom no choice but to trigger an “anti-abuse” rule that could wipe out half of any future payout and drag future valuations.

Yet seven Canadian special purpose acquisition companies are ready to deploy $1.9 billion in pursuit of U.S. cannabis companies and other ...