LONDON, May 14, 2018 /PRNewswire/ --
With Canada set to legalize marijuana in
With full legalization in place, Deloitte estimates the total economic impact could be $22.6 billion annually, more than the combined sales of beer, wine and spirits. Included in today's commentary:
Innovative Industrial Properties (NYSE:IIRP), AbbVie Inc (NYSE:ABBV), Zynerba Pharmaceuticals (NASDAQ:ZYNE), Insys Therapeutics (NASDAQ:INSY), Compass Diversified Holdings (NYSE:CODI).
Pretty soon, big hedge funds, investment banks and major investors should catch on and start pumping serious capital into the cannabis sector. And when they do, companies like Cannabis Wheaton Income Corp. (CBW; CBWTF), the world's first "streaming cannabis company," will take advantage.
Here are five reasons why to watch developments for Cannabis Wheaton (CBW; CBWTF) very closely.
#1 Unique Streaming Approach and Vertical Integration
Cannabis Wheaton is driven by a unique business model. It's one of the world's first and largest "vertically-integrated" cannabis companies, with investments in upstream, midstream and downstream sectors. Taking a leaf out of Netflix's book, it is the first company to propose "cannabis streaming", bank-rolling the growth plans of licensed producers, to produce a steady profit.
Here's how it works. Cannabis Wheaton partners with licensed producers or licensed producer applicants looking to construct their facilities and/or expand their facilities. In exchange for its services, Cannabis Wheaton receives a small portion of equity in the producer and a percentage of the producer's cannabis cultivation yield for a defined period of time ranging from 10-99 years.
The company already has partnerships with 39 clinics, with access to over 30,000 registered medical marijuana patients. Partnership agreements have been signed with 16 facilities across six Canadian provinces for cannabis production, with a combined 1.4 million effective square feet of growing space by 2019.
Cannabis Wheaton's (CBW; CBWTF) diversified position means it hasn't placed all its eggs in one basket: if one crop fails, Cannabis Wheaton can turn to another producer without breaking a sweat.
Think of it as an "incubator" or "accelerator" for potential cannabis producers and distributors, a program that will help Cannabis Wheaton grow its profile and curate future streaming partners.
#2 Rapid Scaling Upwards
The legalization of cannabis in Canada puts companies like Cannabis Wheaton in a position to become the new cannabis "multi-nationals."
Investment from the United States, where cannabis remains federally illegal, may soon pour in to meet the growing demand from Canada's 36 million people. The domestic market, according to one Toronto-based investor, "is simply way bigger than a lot of people believe." If markets open up in other industrialized countries, the global cannabis market could expand exponentially, and those companies with first mover advantage are likely to clean up.
Cannabis Wheaton (CBW; CBWTF), thanks to its innovative streaming structure, can raise the capital and produce the product necessary to meet surging demand.
With domestic demand sure to rise, Cannabis Wheaton is increasing upstream investments. Last year, Cannabis Wheaton secured a landmark acquisition: a licensed producer, The KoLab Project (formerly RockGarden Medicinals). The acquisition gave Cannabis Wheaton the ability to legally possess cannabis obtained from its streaming partners and sell it directly through its own downstream distribution channels.
Along with its deal to acquire Dosecann and RockGarden, Cannabis Wheaton announced the acquisition of Robinson's Cannabis Incorporated, a licensed producer that is completing construction of a 27,000 square ft. cultivation facility in Annapolis Valley, Nova Scotia.
The company has also entered into a distribution alliance with a national independent pharmacy chain. The agreement is the first of its kind in Canada and will give Wheaton a 10-year exclusive relationship with multiple independent pharmacy locations for medical cannabis distribution.
CBW also has an exclusive supply agreement with Spirit Leaf, who have signed up over 100 franchisees to operate retail cannabis stores in Western Canada, to supply up to 50 percent of their product needs as well as a profit sharing arrangement to recoup any margin lost to the provincial distributor.
#3 Management Expertise
Cannabis Wheaton (CBW; CBWTF) has a strong team at the helm, an experienced group of cannabis experts with enough market savvy to take full advantage of Canada's changing regulations.
CEO Chuck Rifici is a well-known figure in the cannabis industry, the co-founder of the world's largest government-sanctioned marijuana producer, Canopy Growth Corp., and the man who took it public in April 2014. A pioneer of the legal pot trade, Rifici has also sat on the board of a number of industry standouts and has the political connections to make it in the world of pot as he is the former chief financial officer of the Liberal party.
Cannabis Wheaton is well positioned to navigate the regulatory environment. Rifici can count on legal support from industry expert Hugo Alves, a former partner at Bennett Jones LLP, founder of the Bennett Jones Cannabis Group and now President and Director of Cannabis Wheaton.
Possibly no one in Canada knows more about the regulatory environment than Alves, and possibly no one could give better advice on how to navigate the changing waters of the legal cannabis industry than him.
#4 Upcoming Legislation,
Crucial to Cannabis Wheaton's (CBW; CBWTF) rise is the changing legal environment in Canada. The Liberal government of Prime Minister Justin Trudeau has made legalizing pot a major part of its election platform. Last November, the proposed Cannabis Act was passed by the lower house of the Canadian Parliament and is now with the Senate with a third reading in the Senate scheduled for June 7, 2018.
Canada right now has only 104 licensed producers who grow about 50,000 kg of pot, a mere 7 percent of potential demand once pot is legalized. The most recent data by Marijuana Policy Group asserts that demand for recreational cannabis in Canada will be much stronger than expected and that Canadian demand could exceed 900,000 kgs next year.
Production, distribution, marketing: it's all in need of rapid expansion, and Cannabis Wheaton is well positioned to exploit it all. According to Alves, "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." Cannabis Wheaton can meet that need with ease.
Plus, its partnerships with both distributors and producers make it a well-positioned platform to connect firms, form more lucrative relationships and facilitate the growth of supply where it's most needed.
Thanks to their vertically integrated structure and streaming agreements, Cannabis Wheaton plans to enjoy higher EBITDA margins of up to 50 percent once upstream investments start paying off.
#5 Massive Opportunity in Recreational Use
Up until now, the story in cannabis has been based around the medical marijuana market: with pot still criminalized in most industrial countries, but that could all be about to change. The expected legalization and regulations of recreational pot use in Canada is the first major step. Next year, it could become possible for licensed producers to reach millions of new customers.
When the Trudeau government first showed serious signs that it intended to pass legislation in 2017, investment in cannabis surged. Now there's a second surge coming, one that investors should be ready for. Cannabis Wheaton (CBW; CBWTF) has taken advantage of the excitement to scale up its activities.
Cannabis Wheaton won Start-Up of the Year Award at the 2017 Canadian Cannabis Awards, while CEO Chuck Rifici also won Innovator of the Year award at the same gala. The company's profile is rising, fast.
The possibilities are huge. The market for recreational cannabis could be $8 billion, and that's just Canada. Cannabis Wheaton could become a future cannabis "multi-national," serving firms throughout the world. By some estimates, the legal cannabis market in North America could be $24.5 billion by 2021.
While federal law in the United States may take some time to change, many expect that Germany, Ireland, France, the United Kingdom, Brazil, and a host of other countries will take notice and may also join the cannabis craze.
Where there's smoke, there's fire. And Cannabis Wheaton (CBW; CBWTF) is a company to watch for upcoming developments. By. Ian Jenkins Other companies to watch closely in this budding business: Innovative Industrial Properties (NYSE:IIRP) is set to boom in the coming years. The company has formulated a strategy to target properties for acquisition and management to be leased to state-licensed marijuana growers, a market which is certain to flourish. Innovative Industrial's leasing plan is simple: the tenant is responsible for everything from taxes to maintenance. AbbVie Inc (NYSE:ABBV) is no stranger to the biopharmaceutical industry. AbbVie was one of the first companies to enter the pharmaceutical marijuana space with Marinol, which is almost chemically identical to THC, the main component in marijuana. 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. Insys Therapeutics (NASDAQ:INSY) main product is a sublingual pain medication known as Subsys. However, using the same proprietary sublingual spray technology and their advanced knowledge of synthetic cannabinoids, the company is at the forefront of a new pharmaceutical movement.
Compass Diversified Holdings (NYSE:CODI) is a holdings company which rings true to its name. Its portfolio is diversified and expansive. Compass Diversified is included in this list due to its Manitoba Harvest holding. Manitoba Harvest is a leading hemp foods producer and distributor, priding itself on high quality and easily accessible products. By. Ian Jenkins
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY** FORWARD-LOOKING STATEMENT. 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 the Canadian government will fully legalize and regulate cannabis this year; that the Canadian medical and recreational markets combined will grow substantially; that Cannabis Wheaton Income Corp. ("CBW") can raise funds and partner quickly with producers; that the global cannabis market could expand exponentially; that CBW supply cannabis to markets outside Canada; that CBW can reach EBITDA margins of 50%. 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 forecasted. Matters that may affect the outcome of these forward looking statements include: that Cannabis may not be legalized on the timeline as expected or at all; that markets may not materialize as expected; that cannabis 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; that Cannabis Wheaton may not be as 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, partners or suppliers; partners of CBW may not be granted licenses or additional capacity under existing or newly applied for licenses for them to grow for the cannabis market; that foreign governments may not allow Cannabis Wheaton to operate in their countries; that actual operating performance of the facilities affiliated with Cannabis Wheaton do not meet expectations; that competition quickly develops; costs may be higher than expected and profits therefore lower; and other risks affecting the cannabis industry generally. The Company disclaims any obligation to update such forward-looking statements except as required by applicable securities laws.
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