LONDON, September 20, 2017 /PRNewswire/ --
Netflix revolutionized the entertainment industry in 2007 with streaming, and now it's a $78-billion market cap company. Franco-Nevada, now worth $15 billion, and $9-billion Wheaton Precious Metals, changed the mining industry
forever with royalty-streaming option for precious metals.
For investors, it means diversified, reduced-risk exposure to some of the biggest markets in the industry, and now we can add
the multi-billion-dollar cannabis market to this roster. Watching this week are Aphria Inc. (OTC: APHQF)(TSX: APH.TO), Cronos
Group Inc (OTC: PRMCF) (TSX-V: MJN.V), Aurora Cannabis Inc (TSX: ACB.TO) (OTC: ACBFF), Zynerba Pharmaceuticals (NASDAQ: ZYNE),
Scotts Miracle-Gro Co (NYSE: SMG)
A little-known Canadian company is going for another first-streaming pot. And it's aiming to be of the dominant financier of
the marijuana industry.
It's a bold aim for Cannabis Wheaton ( CBW.V ; KWFLF
) ,
But in an expected $8-billion market in Canada alone, and in a country that could potentially
dominate this industry because of first-mover advantage thanks to sweeping federal legislation, it's within visible reach.
Canada's over 150,000 medical marijuana patients are already complaining about supply
bottlenecks, and if Canada's growers are to meet projected demand for medicinal purposes only by
2021 when users grow to an expected 500,000, they will have to produce another 150,000 kilograms of pot, according to Canaccord Genuity.
And that's just the medicinal market. When Canada's bill to legalize recreational use comes
into force in less than a year, the country will really have a pot problem. Again, Canaccord Genuity estimates that by 2021 there
will be an additional 3.8 million recreational users consuming 420,000 kilograms, or $6 billion of
pot.
Canada only has 40 licensed producers right now and last year, they grew only 31,000
kilograms-in other words, 5 percent of anticipated demand, according to the Financial Post.
This is where Cannabis Wheaton makes its dramatic grand entrance. This is the world's first cannabis streaming company, and
it's backed by a powerhouse team with industry trailblazer and political heavyweights from both conservative and liberal
spectrums.
Not only is Cannabis Wheaton jumping into a huge market where supply will struggle to reach demand, but it's offering a
lifeline to new and existing growers who need financing to get off the ground fast.
They need an innovative financing strategy, and Cannabis Wheaton is stepping in to fill the gap with a 'royalty' business
model that is new to this market.
And for investors, the major upside is that this model removes the risks associated with putting all your money into a
single-crop producer.
With Cannabis Wheaton, its business model is to 'stream' pot, and 15 partners have already been lined up, along with 1.4
million effective square feet of growing acreage.
Here are 5 reasons to keep a close eye on Cannabis Wheaton (CBW.V; :KWFLF)
#1 ' Streaming ' Deals Already Lined Up
This pot financing pioneer is the major catalyst for change in Canada's expected $8 billion market-just for starters.
The company's royalty business model reduces risk for everyone. For the investor, it means less risk associated with
investment in a single-crop producer. For producers, it means more opportunities and avenues of financing to get growth off the
ground.
This is the evolution in finance of the traditional licensed cannabis producer-and Cannabis Wheaton is the only company on
this track.
And they've already sealed 15 partnership agreements in 17 facilities across six Canadian provinces to fund the construction
and expansion of cannabis growing facilities and innovations. In return, they get minority equity interests and a portion of the
pot produced. They've also got 39 solid clinic relationships, and this is growing fast, with access to over 30,000 registered
medical marijuana patients.
By 2019, just for starters, Cannabis Wheaton (CBW.V; KWFLF) will have more than 1.4
million effective square feet of pot cultivation.
But it's not just about risk, for investors-it's about exposure. Through Cannabis Wheaton, exposure isn't limited to a
single-crop: You get access to multiple licensed producers to take full advantage of this expected $8-billion industry.
#2 Fast Track Scale-Up
This company is all about scaling up quickly and capitalizing market share. And in this respect, it outshines its peers who
are single-crop producers.
The highlight of this quarter was Cannabis Wheaton's $15-million purchase of common shares of ABcann Global Corporation. This initial investment forms parts of a
larger investment in ABcann that will net Cannabis Wheaton 50% of the grower's product on an additional 50,000 square feet of pot
production, for 99 years.
That deal closed in August, and it's just an initial investment, which forms part of a larger investment to fund a major
expansion at ABcann's second production facility.
ABcann production is set to come online in the fourth quarter of next year, and it should ramp up to full production in the
first quarter of 2020. Using a $4.5/gram margin, that means an expected 70 percent IRR (internal
rate of return) on what amounts to Cannabis Wheaton's approximate $41-million stream purchase,
which infuses capital into ABcann in exchange for a stream of revenue from production in the future.
When you combine the equity investment by Cannabis Wheaton, and potential liquidity, according to company guidance, that results in a blended
expected IRR of 65 percent.
This streaming/royalty deal is only the beginning.
Cannabis Wheaton's model means maximizing profits by minimizing operational expenditures.
Bottom line: What Netflix is to movies and TV series, Cannabis Wheaton is to pot. Or, it's what Silver Wheaton is the
mining industry. Silver Wheaton strikes a deal with a miner to purchase part of its future metal production in exchange for
upfront cash. Investors love it because it gives them lower-risk and diversified exposure to the mining industry.
But this is even better because Cannabis Wheaton finances the facility and then takes a 'stream' of product that comes out of
the facility, but it doesn't touch the product itself; it just takes the royalty.
#3 Industry Trailblazers and Full-Spectrum Political Heavyweights
The team behind Cannabis Whe aton ( CBW.V ; KWFLF ) is pioneering, visionary
and political savvy. That combination is everything in this sensitive industry.
CEO Chuck Rifici has already led Canopy Growth Corp. to great success, taking it public in
April 2014. Today's it's the darling of this space, with a $1-billion
market cap. It's the benchmark for success among marijuana growers.
This team is also backed by political heavyweights. That's because this is an industry that is already huge, and set to explode
when recreational use is legalized. Rifici is former chief financial officer of the federal Liberal party, and Cannabis Wheaton's
strategic advisor Rick Dykstra is a former Conservative Member of Parliament and current party
president in Ontario.
In June, the company added yet another heavy weight as president and director-industry-leading expert Hugo Alves. Alves founded and built his law firm's Cannabis Group-the leading
cannabis-focused legal advisory business in the country-and this pioneer knows everything there is to know about cannabis
licensing and regulations, with the right contacts at every industry vertical. That means that Cannabis Wheaton's streaming
partners get the best of both worlds-financing and highly relevant expertise.
#4 Canada ' s Pot Problem: Very Tight
Supply
The supply picture is so tight that Health Canada has had to streamline the approval process for growers because medical
marijuana users have tripled in number since last year alone, according to Quartz.
When it becomes legal recreationally, Deloitte estimates the economic impact of this industry will be worth $22.6 billion
annually-in other words, more than that combined sales of beer, wine and spirits. From Canaccord Genuity's perspective, growers will have to come up with another 420,000 kilograms of pot to feed
the anticipated 3.8 million recreational users hitting this market.
But shortages are where things can get lucrative, and the Canadian government is also keen to make sure supply meets demand.
That's why they moved to make the licensing process a lot easier in May last year.
For Cannabis Wheaton ( CBW.V ; KWFLF ) , it's all about helping the streaming
partners being the most dominant partners they can be, as Alves
says.
The gap Cannabis Wheaton is exploiting is a huge one: "There is a segment of the marketplace where people are trying to get
their facilities built and they don't have access to capital at all," Alves told us.
Finding money to build facilities when you have no assets is tricky. That's where the evolutionary genius of Cannabis Wheaton
comes in, financing the producer at an aspirational valuation but letting the producer keep control, while Cannabis Wheaton takes
an allocation of their production yield.
#5 Mind the (Lucrative) Gap
Cannabis Wheaton ( CBW.V ; KWFLF ) is the first company to bring the streaming
business model to this market, and its business model makes it easier for investors to get in on this burgeoning market with
lower-risk exposure by financing diversified licensed producers.
Pot producers are now under enormous pressure. Massive market share potential is being dangled in front of them in the most
tantalizing manner-but without financing that still allows them to maintain control over their product, it's hard to get off the
ground. And investors are wary because this is a risky business.
Cannabis Wheaton is convinced it has discovered the answer that will take this burgeoning industry to the next logical step in
its evolution. Producers get the best of both worlds, maintaining control over their companies but gaining access to financing
and expertise on everything from regulations and licensing to cultivation. It's the full package, and a boost for investor
confidence. Investors get broad exposure to one of the most exciting markets in the country-without the risk assigned to a bet on
single-crop producers. And Cannabis Wheaton, well, it gets a nice, steady stream of pot royalties in an industry that is soon to
be demanding much more product.
This is the Cannabis Market 2.0, and Cannabis Wheaton(CBW.V; KWFLF) not only has first-mover advantage, but it has only-mover
advantage, with the expertise and political weight to back it up. Once Canada is secured, this
model will likely be looking to set it set up with first-mover advantage internationally.
Other companies to watch closely:
Aphria Inc. (OTCQB:APHQF) (TSX:APH.TO) is a Canada-based cannabis company which
focuses on the production, sales, and distribution of legal marijuana. The company's business model focuses primarily on online
sales, which is perfect for its patients. A simple point and click and the medication will arrive at the patient's in no time.
Aphria's products are developed to treat to a variety of different patients
and symptoms. The company offers several smoke free medications for those who are unable to consume the products in that manner.
Aphria also produces low-THC products for patients who are more sensitive to marijuana's psychoactive properties.
Aphria's large market appeal make the company an ideal choice for investors, as the company is sure to retain, as well as grow
their customer base over time.
Cronos Group Inc (OTC:PRMCF) (TSX-V: MJN.V) is another Toronto-based cannabis company
with a lot of ambition. The company has prioritized its production acquisitions in order to provide geographically diverse
products. Loaded with values, this company is comprised of passionate and focused employees.
One of the primary objectives of Cronos Group is to destigmatize the
medical use of marijuana and bring medicine to those who need it. Cronos Group has made it their priority to lead as an example
for the industry, and provide the best care possible to the community.
For investors, Cronos Group is especially appealing due to their core and strategic assets. Their portfolio is sure to
impress, and will assuredly continue to grow in time.
Aurora Cannabis Inc (OTCQX: ACBFF) (TSX: ACB.TO) which is a producer and
distributer of medical marijuana across Canada. The company, formally Prescient Mining Corp,
is a Vancouver-based business founded a little over one decade ago. Aurora's main objective is
to bring medicine to the people reliably and economically, which sets it aside from many of its major competitors. In the
marijuana industry, patients will often have to jump through hoops to procure their medication, but with Aurora's caring and
knowledgeable staff, patients no longer have to worry.
One of the most appealing things for patients ordering medications from Aurora is the company's delivery method. This
marijuana major sells marijuana by phone and over the internet and then it is delivered straight to the patient's door.
Aurora is a major player in Canada's cannabis scene. With a $1-billion market cap and solid growth, savvy investors are watching this stock like hawks.
Zynerba Pharmaceuticals (NASDAQ:ZYNE) is a company that is diving deep into cannabinoid therapies. Currently, the company
has only two drugs in development; ZYN001 and ZYN002. ZYN001, a THC
pro-drug patch, aims to treat a number of conditions through a revolutionary transdermal delivery system while ZYN002, another
transdermal delivery system, this time through a gel, is the first and only synthetic non-psychoactive CBD drug of its kind. And
Zynerba has the patents on both products.
Zynerba Pharmaceuticals is another company which has seen modest growth as the marijuana push gains speed. The company, which
is at the forefront of new treatments focusing on THC, is set to make out like a bandit upon legalization. Not only will the act
open more doors for the company, it will also bring well-deserved notoriety.
Scotts Miracle-Gro Co (NYSE:SMG), a very well-known brand, is taking full advantage of the marijuana boom. This
North American company's products include Miracle-Gro, Roundup, Liquafeed and other solutions for growers interested in keeping
their plants healthy and bug-free. Because it is a household name, the company stands to benefit from the coming "green
rush."
Scotts is making large acquisitions within the hydroponic sector and its CEO has noted that the company's plans to take full
advantage of the medical marijuana wave.
In the past several months, Scotts Miracle-Gro has seen a notable gain in its stock price, likely attributed to the recent
string of cannabis stories. Canada's upcoming legalization vote could very well spark further
interest in the company, and send the stock further up in the food chain.
By. Joao Piexe
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**
FORWARD-LOOKING STATEMENT S . Statements in this communication which are not purely historical are
forward-looking statements and include statements regarding beliefs, plans, intent, predictions or other statements of future
tense. Forward looking statements in this article include that new cannabis legalizing legislation will create an $8-billion-dollar industry; that there will likely be a supply shortage; that this industry could have an
economic impact of $22.6 billion annually; that medical marijuana demand is expected to grow to 500,000 kilograms per year; that
legalizing recreational marijuana could result in recreational demand of about 420,000 kilograms from 3.8M users per year; that
Cannabis Wheaton's business model reduces risk for investors; that there will be $4.5/gram
margin and an expected 70 percent IRR on the ABcann investment and 65% overall IRR; that the opportunity for streaming cannabis
may be global; that producers will need to obtain additional financing from companies like Cannabis Wheaton; that timeliness of
government approvals for granting of permits and licenses, including licenses to cultivate cannabis, and completion of grow
facilities will occur as expected; that actual operating performance of the facilities meets expectations, that regulatory change
occurs as announced, that competition does not quickly develop; and that Cannabis Wheaton can retain key employees and contacts.
Forward-looking information is based on the opinions and estimates of Cannabis Wheaton at the date the information is made, and
is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ
materially from those projected in the forward-looking information. Forward looking statements involve known and unknown
risks and uncertainties which may not prove to be accurate. Actual results and outcomes may differ materially from what is
expressed or forecasted in these forward-looking statements. Matters that may affect the outcome of these forward looking
statements include that markets may not materialize as expected; marijuana may not turn out to have as large a market as thought
or be as lucrative as thought as a result of competition or other factors; Cannabis Wheaton may not be able to diversify or scale
up as thought because of potential lack of capital, lack of facilities, regulatory compliance requirements in Canada or outside of Canada or lack of suitable employees or contacts;
partners of Cannabis Wheaton may not be granted licenses or additional capacity under existing licenses for them to grow for the
cannabis market; foreign governments may not allow Cannabis Wheaton to operate in their countries; and other risks affecting the
Company in particular and the cannabis industry generally. The forward-looking statements in this document are made as of the
date hereof and the Company disclaims any intent or obligation to update such forward-looking statements except as required by
applicable securities laws..
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