FinCanna Works with Cultivation Technologies to Drive Near-term Revenue


Ryan Allway

January 24th, 2018

Exclusive, News, Top News


The cannabis industry is projected to reach $50 billion over the coming years, according to Cowen & Co., driven by the new laws legalizing medical and adult-use cannabis in California and other states. While investors have many ways to capitalize on the industry, royalty companies offer some of the best opportunities given they do not require companies to surrender equity, they seek to have diversified revenue streams, and represent potential for high-margin revenue as the industry continues to mature.

FinCanna Capital Corp. (CSE: CALI) is a cannabis royalty company that’s focused on building a portfolio of investments in scalable, best-in-class projects in the licensed medical cannabis sector. With its flagship investment in Cultivation Technologies Inc. (“CTI”), the company is uniquely positioned to generate near-term income following California’s new laws that took effect earlier this year.

Interim Extraction Facility

Cultivation Technologies Inc. recently announced the launch of an interim medical cannabis extraction facility in advance of its planned permanent facility to be developed on its 6-acre property in Coachella, California. Since October 2017, the interim medical extraction facility was operated by a third-party tenant on CTI’s Coachella property in accordance with CTI’s Conditional Use Permit, and CTI was entitled to a maximum of 20% of the production capacity and a minor profit share on the remaining 80% of production.

With California’s new regulations in place, CTI obtained state licenses for Type 7 manufacturing and distribution and took the direct operational role in the extraction facility. The move gives CTI the rights to 100% of production capacity, which it will allocate towards extraction services, including white-label and CTI-branded sales.  In total, CTI expects to initially process 6,000 pounds of biomass per month into approximately 3.7 million grams of raw oil per year. Under the new operating arrangement, CTI has the ability to add an additional extraction machine and fractional distillation and winterization equipment.  This would result in additional capacity to process 3,000 pounds of biomass per month and the ability to service third-party vaporizer, winterization and distillation customers at a scale of approximately 100,000 grams of finished product weekly. FinCanna continues to be entitled to receive 50% of the profits of CTI which are derived from this interim medical extraction facility.

“We are thrilled with the new operating structure of CTI’s extraction operations,” said FinCanna CEO Andriyko Herchak. “As revenues from the extraction and manufacturing business are now expected to be the largest segment of CTI’s Coachella Campus, the increase in expected royalties to FinCanna are very significant. We continue to be impressed by CTI’s exceptional management team and support their strategic approach to the market.”

Under the terms of the deal with FinCanna, CTI will receive $3.15 million in tranches under the existing loan agreement and the funds will be used to restructure extraction operations, secure more power, and for working capital purposes. The annual interest rate on the loan will double from 10% to 20% with 7% of CTI’s revenue to be paid to FinCanna and applied against these loans, additionally the royalty to be earned on the planned permanent facility project will increase from 10% to 14% of revenue.

Long-term Ambitions

FinCanna aims to fund a variety of licensed medical cannabis operations in exchange for an ongoing royalty over time. As its flagship investment, Cultivation Technologies Inc. has plans in place for its 6-acre Coachella campus that once constructed will include indoor cultivation centers, manufacturing facilities, a testing lab, a distribution hub, and a centralized processing center.

Investors may want to consider royalty companies as a way to participate in the cannabis industry’s growth given their potential for diversification and high margins. If a royalty company has numerous projects in a portfolio, the poor performance of any single project may not impact the entire company’s stock as it might for a single project company.

Looking Ahead

FinCanna Capital Corp. (CSE: CALI) represents a unique investment opportunity for investors interested in capitalizing on California’s licensed medical cannabis industry. As a result of CTI restructuring its extraction operations, FinCanna anticipates generating near-term revenues in California from the interim medical extraction facility.  In addition, the economics of this new operating arrangement result in potential royalty revenues to FinCanna that are significantly higher than those expected on the permanent facility to be constructed at Coachella. Investors may want to take a closer look given this catalyst and the company’s long-term goals.

Please visit the company’s website for additional information and associated risks at http://fincannacapital.com

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The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please see our disclaimer below and follow the link to view our full disclosure outlining compensation: https://cannabisfn.com/legal-disclaimer/

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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