First pot streaming company launched
FINANCES STARTUPS
• The former chief executive of Canada’s largest marijuana company has launched the first cannabis streaming company to provide financing to entrepreneurs looking to get into Canada’s burgeoning legal marijuana market.
Cannabis Wheaton Income Corp. is headed by Chuck Rifici, the founding CEO of Tweed Marijuana Inc., what is now Canopy Growth Corp.
The firm has already invested in 14 companies in six provinces, including some of Canada’s existing 40 licensed producers as well as new applicants. Two of those agreements are public — with Harvest One Inc. and Beleave Inc., which have applied for licences from Health Canada.
It offers financing and guidance to companies in exchange for an equity stake and a portion of the product at a fixed price. Streaming agreements are popular among junior miners who struggle with similar financing challenges. The company, which began trading under the ticker symbol CBW on the TSX venture exchange on Monday, closed at $1.46, down 9 per cent.
CEO Rifici is a former chief financial officer of the federal Liberal party, while former Conservative Member of Parliament Rick Dykstra and current party president in Ontario is a strategic adviser to the company.
The company estimates its total share of production capacity on its partners’ sites to be around 1.3 million square feet by the time all are built at the end of 2019, assuming all applicants are approved.
Rifici has been scanning the industry for his next opportunity since he was terminated from Tweed in August 2014. His dismissal is a point of contention between the two parties that’s now before the courts. Rifici has filed a wrongful dismissal suit against his former employer. The company says in its statement of defence that the termination was proper and in good faith.
Rifici says he’s proud of what he created at Tweed but he’s ready to put the past behind him. Last week, he sold his last remaining shares in the company. “I’m essentially moving on to what I think are far better opportunities in the space,” Rifici says.
Beacon Securities analyst Vahan Ajamian believes Cannabis Wheaton’s diversification across a number of businesses mitigates its risk of exposure to challenges faced by a single company.
“The company views itself as a platform where it can leverage the geographic reach of its streams, the variety of cannabis products it will have claim to, and the nature of being one consolidated entity, which future retailers can more simply interact with — allowing it to be a distribution platform,” he wrote in a note.