Cannabis Wheaton scraps $80M deal with banks

The marijuana sector’s first streaming company Cannabis Wheaton Income Corp., which came roaring onto the marijuana scene a month ago, has cancelled an $80-million financing deal with investment banks that also have stakes in the company.

Cannabis Wheaton, which provides seed money to marijuana producers in exchange for a slice of future production, said in a statement Monday that ending the deal was a mutual decision between the Vancouver-based royalty company and its lead financing agents Eight Capital and Canaccord Genuity Corp. It did not give a specific reason but alluded to damaging reports about the agreement.

“Over the preceding week the company has been the subject of multiple inflammatory false or misleading reports, published primarily online by persons seeking to discredit the company,” it said. “Cannabis Wheaton as well the co-lead agents have been referenced and targeted about various matters, including the ownership of securities in Cannabis Wheaton by employees of the co-lead agents.”

The private placement deal was signed May 23 with Eight Capital and Canaccord.

The company’s stock had risen from just pennies to as much as $3.35 a share after it went public last month and rolled out its plan to raise money for its novel streaming idea. But its financing arrangements have led to concerns about perceived conflict of interest as banks’ employees own significant stakes in the company.

Eight Capital and Canaccord did not immediately respond to requests for comment.

CEO Chuck Rifici said in a statement that the business itself has been making positive strides since the private placement was announced and that the deal’s termination was not related to any due diligence findings or lack of investor interest.

He said the timing of the termination was disappointing but that the company has received an “enthusiastic response” from other firms looking to act as new agents in the private placement.