Pot firm eyes new hori­zons

Metro Canada (Ottawa) - - Front Page -

An Ot­tawa com­pany that fi­nances and in­vests in mar­i­juana en­ter­prises says it plans to use a new $12-mil­lion credit fa­cil­ity to ac­quire stakes in pot-pro­duc­ing and pro­cess­ing firms.

On Mon­day, Can­naroy­alty said it had signed an agree­ment with an un­named Cana­dian in­sti­tu­tional in­vestor for $12 mil­lion in fi­nanc­ing and to form a new joint ven­ture.

The new cor­po­rate en­tity will fo­cus on in­vest­ment op­por­tu­ni­ties in the Cana­dian cannabis mar­ket, about one year be­fore the fed­eral govern­ment is ex­pected to le­gal­ize mar­i­juana for recre­ational use in this coun­try. The joint ven­ture will be funded and man­aged by the in­sti­tu­tional in­vestor while Can­naroy­alty is ex­pected to “lever­age its re­la­tion­ships and in­vest­ment pipe­line to iden­tify and re­fer at­trac­tive Cana­dian op­por­tu­ni­ties such as pro­duc­tion as­sets, prop­erty and equip­ment,” the Ot­tawa-based com­pany said in a state­ment.

“This joint ven­ture gives us a ve­hi­cle to par­tic­i­pate in these op­por­tu­ni­ties,” stated Can­naroy­alty CEO Marc Lustig, call­ing it a “first in the cannabis sec­tor.”

In an ear­lier in­ter­view with OBJ, Lustig said he sees many cannabis en­trepreneurs in North Amer­ica who have great ideas but are in­ex­pe­ri­enced in rais­ing cap­i­tal. He also sees banks avoid­ing the risks of the in­dus­try, un­will­ing to dive into the mar­ket un­til they’re sure the ma­jor­ity of in­vest­ment con­di­tions and risk cal­cu­la­tions fall in their favour.

Can­naroy­alty aims to solve that prob­lem by en­abling in­vestors to hold eq­uity stakes in mar­i­juana com­pa­nies while pro­vid­ing cannabis com­pa­nies much-needed cap­i­tal.

The fi­nanc­ing an­nounced Mon­day is ex­pected to be com­prised of a re­volv­ing $12-mil­lion se­cured credit fa­cil­ity bear­ing an an­nual in­ter­est rate of 10 per cent. The in­vestor will also re­ceive the right to nominate a di­rec­tor to Can­naroy­alty’s board.

The com­pany’s shares were up 4.88 per cent, or 10 cents, to $2.15 in mid­day trad­ing Mon­day on the Cana­dian Se­cu­ri­ties Ex­change.

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