FinCanna Capital Moves Closer to Commercialization in California
Ryan Allway
April 4th, 2018
Exclusive, News, Top News
The cannabis industry is rapidly growing throughout the United States, but there’s little doubt that California will see the next big ‘green rush’. With nearly 40 million residents, the country’s most populous state legalized the medical use of cannabis back in 1996 and it has become an ingrained part of the culture. Investors may want to focus their attention on companies targeting the state’s industry given the vote to legalize cannabis during last year’s election.
FinCanna Capital Corp. (CSE: CALI) (OTCQB: FNNZF) has a flagship investment in Cultivation Technologies Inc. (“CTI”), which owns 6-acres in Coachella, CA that it plans to develop into a cultivation center, extraction and manufacturing facilities, a testing lab, a distribution hub, and a centralized processing center for licensed medical cannabis. In addition, the company has several others royalty agreements in place targeting various parts of the industry.
California’s Burgeoning Market
The cannabis industry is projected to exceed $50 billion by 2026, according to Cowen & Co., driven by the legalization of medical and adult-use cannabis throughout the country. Arcview Market Research believes that the state could see upwards of $2.6 billion in annual revenue by 2020, which would make it larger than Colorado’s $1.5 billion market and Florida’s $1.6 billion market, and one of the largest single legal markets in the world.
While California was the first state to establish laws in support of cannabis, legalizing the plant for licensed medical use back in 1996 the majority of cultivators and collectives have been operating under the radar. Regulators have begun sending cease-and-desist letters to unlicensed operators, including advertising companies that have continued supporting unlicensed operators. In addition to these efforts, a new amendment aims to reduce price disparities between legal and illegal operations by suspending cannabis taxes until 2020, all positive signals for FinCanna’s royalty business model.
Cultivation Technologies Operations
Cultivation Technologies announced that it is directly operating its interim medical cannabis extraction facility on January 15, 2018 and plans to directly operate its permanent facility to be built on its 6-acre site in Coachella. Upon taking control of the extraction facility, CTI gained the rights to 100% of its production capacity and accordingly, is quickly advancing towards commercialization and ramping revenue at the Facility from which FinCanna is entitled to receive 50% of the profits.
In a March update, CTI announced that it began scaling up these operations. After acquiring state temporary licenses and key accounts for contract manufacturing and distribution, the company hired an experienced sales team consisting of a sales director, two full-time sales managers, and three independent sales contractors. The company further pointed out that the state was taking action to shut down unlicensed producers which should support the market for licensed producers like CTI.
Cultivation Technologies extraction facility is capable of processing an estimated 6,000 pounds of biomass per month, which translates to about 3.7 million grams of raw oil per year. The company has the ability to add an additional extraction machine and fractional distillation and winterization equipment that would increase that figure by 3,000 pounds of biomass per month and could scale to 100,000 grams of finished product per week.
Other Opportunities in the Works
FinCanna’s flagship project may be Cultivation Technologies, but the management team has started to expand beyond this campus into other areas of the industry.
On February 6, the company entered into a royalty agreement with Green Compliance Inc., which is located in Fort Lauderdale, Florida. The state-of-the-art enterprise compliance and point-of-sale software provider helps licensed medical dispensaries and cultivators comply with both the Health Insurance Portability and Accountability Act (“HIPPA”) and State Laws by ensuring that patient data is confidential and protected from security breaches. The company has commenced sales in the US and its target market is every licensed operating dispensary and cultivator in the states which have passed laws legalizing medical cannabis – currently 29 states and Washington DC.
A couple weeks later, the company signed a binding term sheet with Gram Co Holdings LLC, a California-based cannabinoid research and refinement facility focussed on the medical cannabis industry. After leasing a facility in Oakland, the company plans to finish retrofitting the facility into a large, state-of-the-art medical cannabis extraction laboratory which is expected to be operational by the end of third quarter of this year. Gram Co plans to become a premier producer of cannabinoid concentrates as well as provider of white label services.
Both of these agreements are expected to generate positive royalty income to FinCanna, while providing diversified exposure to information technology and extraction segments of the cannabis industry.
Looking Ahead
FinCanna Capital Corp. (CSE: CALI) (OTCQB: FNNZF) represents a compelling investment opportunity in California’s cannabis industry. The company is building out its portfolio initially with its royalty investment in CTI, which plans to develop a licensed medical cannabis campus in Coachella, CA and in the interim has commenced operation of an extraction laboratory with near-term potential to generate revenue. At the same time, the company also continues to enter into additional royalty agreements as evidenced by its participation in Green Compliance Inc and Gram Co Holdings LLC, to augment and diversify its revenue streams.
Of additional note for investors is the recent passing of the “Consolidated Appropriations Act 2018” a $1.3 trillion-dollar spending bill which continues protection for the implementation of state medical marijuana programs, which is the primary focus of Fincanna’s royalty investment business, through fiscal year end Sept. 30, 2018.
For more information and to read the company’s statement regarding potential risks associated with FinCanna, its business and its shares, visit www.fincannacapital.com
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This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About Ryan Allway
Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.
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