This report is a PAID ADVERTISEMENT from Oilprice.com
Canada has a pot problem, as Quartz Media recently warned us, but it’s a lucrative problem to have. One thing holding back this $8-billion market (Forbes Magazine, April 13, 2017) is supply, and one little-known company plans to be the steward of it in a big way.
When Canada legalizes recreational marijuana in less than a year, in line with a bill pushed through by Prime Minister Justin Trudeau, legal supply is likely to be limited. There may not even be enough even if we are only considering medical marijuana usage.
The supply picture is so fantastically 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, a Deloitte report estimates the economic impact will be worth $22.6 billion annually—in other words, more than the combined sales of beer, wine and spirits.
Not only is Cannabis Wheaton jumping into a huge potential market where supply is forecast to struggle to reach demand, but it’s offering a lifeline to new and existing growers who need financing to get off the ground fast.
Producers need a miracle grow 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.
Cannabis Wheaton is intending to ‘stream’ pot, and 15 partners have already been lined up, along with 1.4 million square feet of growing acreage.
#1 ‘Streaming’ Deals Already Lined Up
To say that Cannabis Wheaton is a catalyst for change in an $8 billion market that is set for an explosive boost in less than year is an understatement.
The company’s royalty business model reduces risk for everyone. For the investor, it means less risk associated than with a single-crop producer. For producers, it means more opportunities and avenues of financing to get growth off the ground.
This is the evolution 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 cannabis 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 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 $8-billion industry.
#2 Quick Scaling and Capitalization of Market Share Potential
A unique confluence of factors, including the fact that cannabis remains federally illegal in the United States, means that Canadian companies are in our opinion positioned to become the “multi-nationals” of cannabis – an area that as we know will rival alcohol and tobacco due to the sheer size of demand and revenues.
Within this set of Canadian cannabis producers, an even smaller subset – probably half a dozen or so companies have the capital and ongoing ability to raise funding that make them the most likely to capitalize with first-mover advantage on not just Canada’s 36 million person population, but a potential population of 500 million people or more in jurisdictions like Germany and Brazil that are also opening up to cannabis and that look to Canada’s framework and quality standards as they develop their internal regimes for production and distribution of cannabis products.
If one looks at this as a funnel:
Canada is in a special situation to potentially create the multinationals for cannabis.
Only a handful of companies in Canada are well-funded enough to scale into this.
Of these, Cannabis Wheaton, due to its streaming structure is well positioned due to the fact the company can scale quickly and diversify risk as more than a dozen different teams – its partners – build out facilities concurrently.
The combination of circumstances that have come about to give a handful of Canadian companies and possibly, specifically Cannabis Wheaton (TSX:CBW.V; OTC:KWFLF) a first-mover advantage in becoming the multinationals of cannabis.
Because Cannabis Wheaton is the only company employing the streaming model, it has far and away the best opportunity to meet scaled up capacity and deliver on this huge global market opportunity.
Cannabis Wheaton’s model is intended to maximize profits by minimizing operational expenditures.
Just how quickly should they be able to scale up and capitalize? Well, take a look at comparisons drawn up by the company to its peers in this industry, the ‘single-crop’ producers:
Bottom line: What Netflix is to movies and TV series, Cannabis Wheaton could be to pot. Or, what Silver Wheaton (NYSE:SLW) is to the mining industry. That company 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 could even be 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 takes the royalty or it directs the producer to ship the product to Cannabis Wheaton’s customer.
#3 Management Play Backed by Political Heavyweights
Not only is this an idea that has the potential to take an $8-billion industry into the next phase, with brilliant timing—but it’s also being led by an experienced management team with extraordinary vision, and a track record to go along with it.
CEO Chuck Rifici is a household name in Canada’s marijuana industry. He co-founded the largest full-scale producer of government-sanctioned marijuana—Canopy Growth Corp. – and then took it public in April 2014 as its CEO. It’s still the largest public cannabis company around, and today’s it boasts a $1 billion market cap. And it’s the benchmark for success in the industry.
Not only has he led the industry’s most successful cannabis company to stardom, but he’s also sat on the board of other industry darlings, including Supreme Pharmaceuticals (SPRWF), Aurora Cannabis (ACBFF) and CannaRoyalty (CNNRF).
And it’s not just about management: Cannabis Wheaton is backed by political heavyweights, as Canadian politicians swarm onto the marijuana scene to cash in on the anticipated profits.
Rifici himself is former chief financial officer of the federal Liberal party. And the company’s strategic advisor is Rick Dykstra, former Conservative Member of Parliament and current party president in Ontario.
In June, the company added another heavy weight as president and director—industry-leading expert Hugo Alves. As a partner at Bennett Jones LLP, Alves founded and built the law firm’s Cannabis Group—the leading cannabis-focused legal advisory business in the country. He’s another highly-respected marijuana industry pioneer, who knows everything there is to know about cannabis licensing.
When it comes to regulatory affairs, Cannabis Wheaton (TSX:CBW.V; OTC:KWFLF) has it covered—and beyond—with Alves’ experience and expertise. And this knowledge could benefit all of Cannabis Wheaton’s streaming partners.
Alves was the first big firm lawyer in Canada to take what he calls a ‘big firm’ approach to pot. He ended up acting for 12 of the leading license producers and some 60 license producer applicants, not to mention another 50 ancillary businesses in the cannabis space. He’s got high-level contacts at every vertical in this industry.
#4 Exploiting a Huge Industry Gap with Looming Supply Shortages
Canada has over 150,000 medical marijuana patients, and that number is expected to grow to 500,000 by 2021, according to Canaccord Genuity. Yet, existing patients already bemoan supply shortages. To meet projected demand by 2021 just for medicinal purposes, Canada will need 150,000 kilograms of pot—with a sale value of $1.8 billion.
When this goes recreational, supply will be in real trouble. Canaccord Genuity estimates that by 2021 there will be an additional 3.8 million recreational users consuming 420,000 kilograms of pot (that’s worth around $6 billion).
To put this into perspective, 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.
But shortages are where things 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, it’s all about helping the streaming partners being the most dominant partners they can be, as Alves says.
The gap Cannabis Wheaton (TSX:CBW.V; OTC:KWFLF) 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 First-Mover, and Only-Mover Advantage
Cannabis Wheaton has ‘only-move advantage’ because it’s the pioneering force behind the “financing by streaming” of the Canadian pot industry.
It’s 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 to diversified licensed producers.
With producers under pressure to increase production by 10 times in order to keep pace with legalization for recreational use, Cannabis Wheaton has seen the gap in capital and is taking swift advantage of that. It has already signed deals with 15 partners, and counting. It’s a win-win for everyone: The producers get to keep control of their production, they get to leverage Cannabis Wheaton’s broad capital, regulatory, licensing and cultivation expertise, and Cannabis Wheaton and its investors get a nice stream of product or proceeds royalties.
We’re always looking for pioneers in new market spaces, and when it’s an estimated $8-billion market with a dearth of supply and a voracious demand, the company that has the best chance of fundamentally changing this space usually wins. We’ve found this in Cannabis Wheaton, and the fact that it’s led by industry leaders and backed by political heavyweights from all spectrums doesn’t hurt at all.
Cannabis Wheaton (TSX:CBW.V; OTC:KWFLF) is one most nimble participants and the company is set up uniquely to scale fastest into a market that, if it goes global, is poised to be dominated by Canadian companies with first-mover advantage and an eye on establishing footholds internationally.
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 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 legalizing recreational marijuana could result in recreational demand of about 420,000 kilograms of cannabis; that Cannabis Wheaton’s business model reduces risk for investors; the ability to generate revenue or take production through the streaming agreements; that the opportunity for streaming cannabis may be global; that producers will need to obtain additional financing from companies like Cannabis Wheaton; that there will be timeliness of government approvals for granting of permits and licences, including licences to cultivate cannabis, completion of the 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 Cannabis Wheaton 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.
DISCLAIMERS PAID ADVERTISEMENT. This communication is a paid advertisement and is not a recommendation to buy or sell securities. Oilprice.com, Advanced Media Solutions Ltd, and their owners, managers, employees, and assigns (collectively “the Company”) has been paid by the profiled company or a third party to disseminate this communication. In this case the Company has been paid by Cannabis Wheaton one hundred and twenty five thousand dollars US for this article and certain banner ads. This compensation is a major conflict with our ability to be unbiased, more specifically:
This communication is for entertainment purposes only. Never invest purely based on our communication. Gains mentioned in our newsletter and on our website may be based on end-of- day or intraday data. If we own any shares we will list the information relevant to the stock and number of shares here. We have been compensated by Cannabis Wheaton Income Corp. to conduct public awareness advertising and marketing for [TSX:CBW.V]. Oilprice.com receives financial compensation to promote public companies. This compensation is a major conflict of interest in our ability to be unbiased. Therefore, this communication should be viewed as a commercial advertisement only. We have not investigated the background of the company. The third party, profiled company, or their affiliates may liquidate shares of the profiled company at or near the time you receive this communication, which has the potential to hurt share prices. Any non- compensated alerts are purely for the purpose of expanding our database for the benefit of our future financially compensated public awareness efforts. Frequently companies profiled in our alerts experience a large increase in volume and share price during the course of public awareness marketing, which often end as soon as the public awareness marketing ceases. The public awareness marketing may be as brief as one day, after which a large decrease in volume and share price is likely to occur. Our emails may contain forward looking statements, which are not guaranteed to materialize due to a variety of factors.
We do not guarantee the timeliness, accuracy, or completeness of the information on our site or in our newsletters. The information in our communications and on our website is believed to be accurate and correct, but has not been independently verified and is not guaranteed to be correct. The information is collected from public sources, such as the profiled company’s website and press releases, but is not researched or verified in any way whatsoever to ensure the publicly available information is correct. Furthermore, The Company often employs independent contractor writers who may make errors when researching information and preparing these communications regarding profiled companies. Independent writers’ works are double-checked and verified before publication, but it is certainly possible for errors or omissions to take place during editing of independent contractor writer’s communications regarding the profiled company(s). You should assume all information in all of our communications is incorrect until you personally verify the information, and again are encouraged to never invest based on the information contained in our written communications.
DISCLOSURE. The Company does not make any guarantee or warranty about what is advertised above. The Company is not affiliated with, any specific security. While the Company will not engage in front-running or trading against its own recommendations, The Company and its managers and employees reserve the right to hold possession in certain securities featured in its communications. Such positions will be disclosed AND we will not purchase or sell the security for at least two (2) market days after publication.
NOT AN INVESTMENT ADVISOR. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.
INDEMNIFICATION/RELEASE OF LIABILITY. By reading this communication, you agree to the terms of this disclaimer, including, but not limited to: releasing The Company, its affiliates, assigns and successors from any and all liability, damages, and injury from the information contained in this communication. You further warrant that you are solely responsible for any financial outcome that may come from your investment decisions.
LEGAL ADVISORY. Investing in companies associated with the cannabis industry may be illegal in the jurisdiction where a reader resides. Before investing in any public company involved in the cannabis industry, potential investors should check with their legal advisor as to whether an investment will breach local law.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Investing is inherently risky. While a potential for rewards exists, by investing, you are putting yourself at risk. You must be aware of the risks and be willing to accept them in order to invest in any type of security. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell securities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results
CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR- OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
All trades, patterns, charts, systems, etc., discussed in this message and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author and do not necessarily reflect those of the publisher. No system or methodology has ever been developed that can guarantee profits or ensure freedom from losses. No representation or implication is being made that using the methodology or system will generate profits or ensure freedom from losses. The testimonials and examples used herein are exceptional results, which do not apply to the average member, and are not intended to represent or guarantee that anyone will achieve the same or similar results.
AFFILIATES. Some or all of the content provided in this communication may be provided by an affiliate of The Company. Content provided by an affiliate may not be reviewed by the editorial staff member. Our affiliates may have their own disclosure policies that may differ from The Company’s policy.
The information contained herein may change without notice.
SHTFplan Legal Notice: The content in this article is provided by SHTFplan.com as general information only. The ideas expressed herein are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s). Members of the SHTFplan.com staff and/or owners of SHTFplan.com currently own no shares in the company mentioned. We will not purchase shares in the next 30 days. SHTFplan.com has been compensated for a two week marketing campaign. We were paid directly by OilPrice.com, a third party media company. Any action taken as a result of information, analysis, or advertisement on this site is ultimately the responsibility of the reader. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought. Never base any decision on a single email. The companies mentioned in this post are intended to be a stock ideas, NOT recommendations. The ideas we present are high risk and you can lose your entire investment. We are not stock pickers, market timers, investment advisers, and you should not base any investment decision on our website, emails, videos, or other published material. Please do your own research before investing. It is crucial that you at least look at current SEC filings and read the latest press releases. Information contained in this profile was extracted from current documents filed with the SEC, the company web site and other publicly available sources deemed reliable. Our report is not intended to be, nor should it be construed as an offer to buy or sell, or a solicitation of an offer to buy or sell securities, or as a recommendation to purchase anything. This publication may provide the addresses or contain hyperlinks to websites; we disclaim any responsibility for the content of any such other websites.
This post originally appeared on SHTFplan.com.