FinCanna: Bringing the Royalty Model to Cannabis, Signs Royalty Agreement with Green Compliance for U.S. Medical Cannabis Compliance Software
February 8th, 2018
Exclusive, News, Top News
The global medical cannabis industry is projected to reach $55.8 billion by 2025, according to Grand View Research, driven by favorable regulatory trends and increasing interest among academic researchers and health care providers. While many companies are ramping up production, investors may want to consider royalty companies, which are financing companies that may have significantly less overhead costs than the operating companies that they finance. Producers and other operating companies may also want to consider royalty companies as an alternative or complementary source of financing that’s less dilutive than equity financing and easier on the balance sheet than debt financing.
FinCanna Capital Corp. (CSE: CALI) is one of the first royalty companies for the licensed medical cannabis industry. The Company currently has two significant projects, options on additional projects and is building a diversified portfolio of royalty investments in scalable, best-in-class projects and companies in U.S. legal states, with a focus on California.
Why Investors Like Royalties
Royalty companies seek to invest in projects in exchange for a percentage of revenue on an ongoing basis. For example, Wheaton Precious Metals. (NYSE: WPM) and Franco Nevada Corp. (NYSE: FNV) are both royalty companies focused on precious metals that invest in mining projects in exchange for a percentage of revenue.
Royalty companies are popular among investors for several reasons:
- Cash Flows – Royalty companies receive a percentage of revenue, which means they’re insulated from production costs and related factors. This makes cash flows potentially a lot easier for investors to predict and model than the underlying operating company that is being financed.
- Minimal ongoing Cash Costs – Royalty companies typically make an initial investment to acquire the royalty, but ongoing cash costs tend to be minimal.
- Low Overhead – Royalty companies don’t require nearly as many personnel or resources as production companies, which keeps overhead costs relatively low and predictable.
- Diversification – Royalty companies can invest in multiple projects across multiple regions or sub-sectors, which makes them typically more diversified than production companies and could lower the risk for investors.
There are also many benefits for operating companies receiving the royalty financing. For example, these companies can receive the funds they require without taking on debt or issuing equity. The deals are often structured as long-term partnerships with economic interests that are aligned and there may be as much or as little involvement as needed. Since royalty payments are made before tax, the deals can also be very tax-efficient for the operating companies.
Bringing Royalties to Cannabis
FinCanna Capital recognized that the licensed medical cannabis industry, particularly in the U.S., faces numerous headwinds when it comes to raising capital and getting projects off the ground. Management’s goal is to become a “whole capital” solution for top-tier businesses in the licensed medical cannabis sector by providing capital investment for a royalty which is essentially a percentage of future revenue. These investments may replace or complement traditional debt and equity financing.
The company’s first royalty investment is with Cultivation Technologies Inc., or CTI, which plans to build a large-scale indoor medical cannabis facility in Coachella in Southern California. The 111,500 sq. ft. campus will include vertical grow cultivation, extraction, testing, distribution, and centralized processing. In exchange for funding, FinCanna will receive a royalty worth 14% of CTI’s revenue from the Coachella project.
While the project is being developed, CTI has established an interim medical cannabis extraction facility on the property in accordance with its Conditional Use Permit. The facility can process up to 6,000 pounds of biomass per month into about 3.7 million grams of raw oil per year with ample room for expansion. FinCanna will receive 50% of the profits from the interim facility that is expected to come into full production in the near-term.
FinCanna’s second royalty investment is with Green Compliance, Inc., which offers a state-of-the-art enterprise compliance and point-of-sale software solution (“ezGreen”) for licensed medical cannabis dispensaries and cultivators. Green Compliance helps its customers comply with both the Health Insurance Portability and Accountability Act (“HIPAA”) and State Laws by ensuring patients’ confidential data is being handled properly, helping to protect from possible security breaches and financial and criminal liability resulting from potential violations. Most dispensaries use a seed-to-sale solution, and ezGreen has the flexibility to integrate as a plug-in with any existing seed-to-sale software or it can operate as a stand-alone point-of-sale system. Green Compliance has commenced sales in the U.S., 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, D.C. FinCanna will receive a royalty worth 10% of Green Compliance’s revenues.
FinCanna is run by a seasoned executive team. President and CEO Andriyko Herchak has over 20 years of executive leadership experience. Prior to leading FinCanna, he was the CFO of an international sales and marketing company generating US$1.4 billion in annual sales and the CFO of a mineral exploration firm that raised C$100 million and was sold for C$650 million in cash.
FinCanna Capital Corp. (CSE: CALI) represents a compelling investment opportunity for investors interested in the cannabis industry, as well as a great partner for top tier companies looking to grow their businesses. With a royalty-based business model, the company seeks to provide its shareholders with several cash flow streams generated from its project royalties and provide companies with a source of funding that doesn’t dilute its shareholders or hurt the balance sheet.
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 or download the company’s Investor Presentation.
CannabisFN.com is not an independent financial investment advisor or broker-dealer. You should always consult with your own independent legal, tax, and/or investment professionals before making any investment decisions. The information provided on https://www.cannabisfn.com (the ‘Site’) is either original financial news or paid advertisements drafted by our in-house team or provided by an affiliate. CannabisFN.com, a financial news media and marketing firm enters into media buys or service agreements with the companies that are the subject of the articles posted on the Site or other editorials for advertising such companies. We are not an independent news media provider. We make no warranty or representation about the information including its completeness, accuracy, truthfulness or reliability and we disclaim, expressly and implicitly, all warranties of any kind, including whether the Information is complete, accurate, truthful, or reliable. As such, your use of the information is at your own risk. Nor do we undertake any obligation to update the items posted. CannabisFN.com received compensation for producing and presenting high quality and sophisticated content on CannabisFN.com along with financial and corporate news.
The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: https://www.cannabisfn.com/legal-disclaimer/
Follow Us on Social Media
About CFN Media
CFN Media (CannabisFN) is the leading creative agency and media network dedicated to legal cannabis. We help marijuana businesses attract investors, customers (B2B, B2C), capital, and media visibility. Private and public marijuana companies and brands in the US and Canada rely on CFN Media to grow and succeed.
CFN launched in June of 2013 to initially serve the growing universe of publicly traded marijuana companies across North America. Today, CFN Media is also the digital media choice for the emerging brands in the space.
Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.