Shares of Cannabis Wheaton Income Corp. (CVE:CBW) are down more than 50% from its 52-week high of $2 a share
SmallCapPower | October 19, 2017: Cannabis Wheaton Income Corp. (TSXV:CBW) announced recently a strategic partnership with a national chain of convenience stores to distribute and sell marijuana. The Convenience Store Group currently owns and operates over 350 convenience stores and convenience kiosks across Canada in high-traffic locations, such as transit stations and commercial office buildings.
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The deal gives Cannabis Wheaton exclusive right to handle the sale and distribution of recreational cannabis at 350 convenience stores over the next 10 years. In return, Cannabis Wheaton will grant the convenience store operator warrants to buy up to one million shares in the Company at a price of $1.00 each over five years. Post the announcement, Cannabis Wheaton shares moved up 1% to $1 per share.
Cannabis Wheaton Chief Executive Officer Chuck Rifici said the convenience store industry’s experience selling regulated products like tobacco makes for a good fit with marijuana retailers.
Shares of Cannabis Wheaton are down more than 50% from its 52-week high of $2 a share. Canopy Growth (TSX:WEED) and Aurora Cannabis (TSX:ACB) shares, for example, are off 34% and 31%, respectively, from their highs over the past year. Questions have risen as to whether or not the royalty streaming model, which has been employed successfully in the mining industry, can work in the emerging recreational cannabis space.
Read: Cannabis Wheaton CEO Lashes Out
Cannabis Wheaton is the first cannabis streaming company in the world. The Company provides funding for facility expansions, operations and initial construction in exchange for minority equity interests and a portion of the cultivation production. This streaming model enables the Company’s partners a platform for growth so they can focus on production and innovation. Not only do the streaming partners get secure financing, they gain access to the entire collective brand, marketing and other expertise of the Cannabis Wheaton team. So this partnership will give the partners access to distribution points, which is crucial for the sales going forward as we approach recreational legalization of marijuana in Canada.
Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own shares in the company mentioned above.
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