April 8 (Reuters) - Glass House Group, California’s largest pot producer, will go public by merging with a blank-check firm that is backed by industry veteran Jonathan Sandelman, in a deal worth more than $1 billion, sources familiar with the matter said on Thursday. As part of the deal, Glass House will take over pot retailer Element 7’s licenses in California and buy a tomato greenhouse in the state with 5.5 million square feet of space that will be converted to grow cannabis, the sources said. The addition of the greenhouse will make Glass House, which currently has a cultivation footprint of over 500,000 square feet, the second-biggest cannabis grower in the United States, just behind Ultra Health, according to data from industry media outlet Greenhouse Grower. Element 7’s licenses will also make Glass House the biggest retailer in the world’s largest cannabis market, California, with around 21 stores by the first quarter of next year, the sources said. The deal could be announced as soon as Thursday, three sources said, speaking on condition of anonymity as the talks are confidential. Glass House joins a host of pot producers looking to list on Canada’s NEO stock exchange as growing hopes of nationwide legalization in the United States spur companies to tap public markets for funding potential future growth. The company will merge with Sandelman’s Mercer Park Brand Acquisition Corp. Mercer will pay around $570 million in cash and stock, the sources said, adding that it had also engaged investors for an $85 million private investment in public equity. Mercer is Sandelman’s second blank-check firm, or SPAC - shell companies which raise funds in an initial public offering with the goal of merging with an unidentified private company. Sandelman’s previous SPAC, Cannabis Strategies Acquisition Corp, was the first such vehicle listed on the NEO exchange that took U.S. multi-state cannabis operator Ayr Wellness Inc public in 2019. An ex-Bank of America executive, Sandelman now serves as CEO of Ayr.