(FinancialPress)— With the culture of legal marijuana in North America undergoing a seismic shift, companies have cropped up everywhere looking to get a piece of the market estimated to have generated nearly $10 billion in sales in 2017. Being named the best of the best is quite an accomplishment and one that Cannabis Wheaton Income Corp. (CBW)(CBWTF) can wear proudly after being name Startup of the Year at the 2017 Canadian Cannabis Awards.
With California legalizing recreational marijuana at the start of 2018 and Canadians getting geared up for legal cannabis nationwide later this year, Cannabis Wheaton didn’t sit back on its laurels as 2017 wound down. In fact, the Vancouver-based collection of entrepreneurs was busy as ever. CBW isn’t the typical “pot play” that many investors know of, such as growers and dispensaries. More of an incubator, accelerator, advisor and advocate, the company employs a streaming model to partner with an array of companies across the legal marijuana industry, giving its investors access to a diversified portfolio.
Two weeks after winning the startup award, Cannabis Wheaton locked down a new streaming partner, agreeing to a deal with Sustainable Growth Strategic Capital Corp, or SGSC for short. In the pact, Cannabis Wheaton will lend its expertise and non-cash resources to help SGSC get a grower’s license under Canada’s ACMPR (Access to Cannabis for Medical Purposes Regulations) and develop a massive grow facility in Scarborough, which would make it the closest licensed producer to downtown Toronto.
As with any streaming model, Cannabis Wheaton is taking future product as part of its payment for services being rendered. The company estimates it will collect about 5.5 million grams of cannabis annually once SGSC’s facility if operating at capacity.
Only a day later, Cannabis Wheaton disclosed an agreement with an unnamed “prominent Canadian testing, analysis and rating company” for which Cannabis Wheaton is licensing proprietary data on cannabis strains. In the age of big data, Cannabis Wheaton is looking to take a leadership position in the marijuana space by providing order to an industry that greatly needs structure to provide CBW platform partners with a comprehensive data set to make more informed purchasing, sales, and cultivation decisions.
With just over a week left in the year, the company wasn’t done inking deals yet.
On the 21st, Cannabis Wheaton partnered with FV Pharma, a licensed Canadian cannabis producer. The new JV plans to construct the largest indoor cannabis cultivation and processing facility in the world. The property is the location of the former Kraft food manufacturing facility, sitting on 70 acres about one hour outside of Toronto in Cobourg. Existing is already 620,000 square feet of building space, which the companies plan to expand to a whopping 3.8 million square feet dedicated to cannabis cultivation and related ancillary businesses all under one roof.
To lend some color to the magnitude, that’s approximately 66 football fields (end zones included).
For its part, Cannabis Wheaton will assist in all aspects of constructing the facility (designing, developing, financing, etc.), as well as marketing, branding and distributing products once the facility is operating. In return, the company will receive a 49.9% stream of all cannabis or cannabis products produced at the facility under the partnership in perpetuity. Management estimates that will be 200 million grams of cannabis annually in favor of Cannabis Wheaton when the facility is done.
Lastly, only days before Christmas, the company inked a definitive agreement with streaming partner CannTX Life Sciences also related to building a new facility. Per the deal, Cannabis Wheaton, who officially does business as “Wheaton Income,” will provide the privately-held company with $5 million for initial expenses for the first phase of construction, currently expected to be about 13,120 square feet. Cannabis Wheaton has also agreed to fund another $7 million for phase two of the build-out, expanding the cultivation area to 24,000 square feet.
In consideration for the financing, Cannabis Wheaton will receive a minority equity interest in CannTx and is entitled to 33 percent of all cannabis products produced at the facility at a fixed cost for a period of 10 years subsequent to the first date of a product sale.
In order to help fund operations put in motion in 2017 and set the stage for an active 2018, Cannabis Wheaton initiated a private placement of convertible debenture units in December seeking to raise $60 million. MMCAP International has taken the lead in the offering, agreeing to subscribe for up to $48 million of the aggregate principal amount, aligning the company to continue to execute on its aggressive business model as the new year gets underway.
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