SEATTLE, WA--(Marketwired - Jun 2, 2017) - CFN Media Group ("CFN Media"), the leading agency and digital media network
dedicated to legal cannabis, today announced publication of an article covering ABcann Global Corp.'s (TSX VENTURE: ABCN) binding interim agreement with Cannabis Wheaton Income Corp. (TSX VENTURE: CBW) and why it marks a significant
turning point for both companies.
New Cultivation Facility
ABcann is a globally-licensed, cost-efficient producer of premium quality, organic, standardized medicinal cannabis under the
Canada's Access to Cannabis for Medical Purposes Regulations (ACMPR). Over the past few years, the company has invested over $1.5
million in a partnership with the University of Guelph to perfect controlled environmental systems capable of producing
pharmaceutical-grade cannabis without pesticides at double the average industry yield.
The company's phase one facility is a 14,500 square foot facility, known as the Vanluven Facility, that's already operational
and producing 1,000 kilograms of dried cannabis per year. ABcann is currently doubling Vanluven to about 30,000 square feet.
Concurrently, the company is building a 100,000 square foot facility -- known as the Kimmett Facility -- in Napanee, Ontario with
production capacity of about 20,000 kilograms per year. All of this construction and expansion is currently funded and owned by
ABcann Global.
On May 29, the
company announced a deal whereby Cannabis Wheaton agreed to invest $30 million into ABcann (helping with the current
operations and expansion to 130,000 square feet). Cannabis Wheaton further committed, pending some conditions and the completion
of the initial $30 million equity investment, to fully fund the construction of an additional 50,000 square feet worth of the
Kimmett Facility at some point in the future. The proceeds (minus certain costs) from this new 50,000 sf production area would be
split 50-50 between the two companies.
The 180,000 square feet of funded production capacity sets ABcann near the top of the licensed producer pile in that metric.
The first $15 million investment is being made by June 30th, 2017 at C$2.25 per share, with the second $15 million committed at
C$2.25 or 2x the ten day average for the stock at the time (as late as March, 2018), whichever is greater. This pricing
represents a significant premium to the current price of C$1.00 per share. But even assuming a C$2.25 per share valuation -- or
roughly C$226 million, the company still represents a compelling value in the industry with some licensed producers commanding
valuations two to four times higher.
First Streaming Deal
Cannabis Wheaton is the world's first cannabis streaming company with 15 agreements across six provinces to fund facility
construction, expansion, and innovations in exchange for minor equity interests and portions of the cultivation production. For
investors, this means access to the high-margin upside of multiple cultivation facilities without the many risks associated with
owning bricks and mortar -- or highly-diversified operations, in other words.
Under its agreement with ABcann, Cannabis Wheaton will receive 50% of the net proceeds of future wholesale or retail sales
completed by ABcann with respect to cannabis produced in the new 50,000 sf portion of the Kimmett facility. Management estimates
this to be roughly eight million grams of cannabis per year, which translates to about $40 million at $5 per gram. The company
will also retain a minority equity interest in ABcann and become a strategic partner.
ABcann will be the sixth licensed producer in Cannabis Wheaton's portfolio, but it's their first publicly-traded producer with
a sales license. This represents a key turning point for Cannabis Wheaton after just recently becoming a publicly-traded company
itself. The deal is highly attractive and could provide internal rates of return in excess of 50% without any consideration for
equity, as well as serve as a model for future agreements with public companies.
Please follow the link to read the full article: http://www.cannabisfn.com/abcann-cannabis-wheaton-sign-win-win-deal-expand-production/
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About CFN Media
CFN Media (CannabisFN) is the leading creative agency and media network dedicated to legal cannabis. We help marijuana businesses
attract investors, customers (B2B, B2C), capital, and media visibility. Private and public marijuana companies and brands in the
US and Canada rely on CFN Media to grow and succeed.
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