Cannabis Wheaton Could Become a Maritimes Force

During the past week, Cannabis Wheaton Income Corp. (TSXV:CBW) said it would acquire two pending cannabis producers located in Eastern Canada

SmallCapPower | April 9, 2018: Cannabis Wheaton Income Corp.’s (TSXV:CBW) last two announced acquisitions appear to be positioning the Company as a force to be reckoned with in Canada’s Maritime provinces. On April 9, 2018, Cannabis Wheaton said it would acquire Robinson’s Cannabis Incorporated, based in Nova Scotia, a privately-owned, late-stage licensed producer applicant under the Access to Cannabis for Medical Purposes Regulations. Robinson’s Cannabis is currently constructing a 27,700 square foot purpose-built cannabis cultivation facility.

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As well, Cannabis Wheaton announced on April 4, 2018, that it has signed a definitive acquisition agreement to acquire all outstanding securities of Dosecann Inc., a late-stage licensed dealer applicant pursuant to the Narcotic Control Regulations with a purpose-built 42,000 square foot facility located in Charlottetown, Prince Edward Island.  As per the terms of the acquisition agreement, Cannabis Wheaton will acquire all of the outstanding securities of Dosecann by way of a ‘three-cornered amalgamation’. After the completion of the deal, Dosecann will be a wholly-owned subsidiary of Cannabis Wheaton.

Dosecann’s securities holder will get an aggregate of up to $38 million, in the form of common shares of Cannabis Wheaton, subject to the fulfillment of certain post-closing time and performance-based milestones. Through this acquisition, all outstanding convertible securities of Dosecann will either be converted into Dosecann common shares and exchanged for consideration shares on the closing of the acquisition or will otherwise be exchanged for convertible securities of Cannabis Wheaton based on the exchange ratio used in the acquisition.

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Owning 66.96% of the outstanding common shares of Dosecann, the Dosecann principals have agreed to enter into lock-up agreements in favour of Cannabis Wheaton limiting their ability to transfer their consideration shares (locked-up securities) until the date that is 18 months following the closing, provided that: (i) one-half of the locked-up securities shall cease to be subject to the lock-up on the date that is six months following the closing; and (ii) the remaining locked-up securities shall cease to be subject to the lock-up in equal tranches on the 12th and 18th month anniversaries of the closing.

The Dosecann acquisition by Cannabis Wheaton is dependent on the fulfillment of several conditions, which includes approvals from shareholders and regulators. The acquisition deal is expected to close on or about April 30, 2018.

Cannabis Wheaton Income Corp. currently trades at market capitalization of $613.49 million with price-to-book multiple of 16.42x.

Disclosure: Neither the author nor his family own shares in the company mentioned above.

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