Since its inception, Cannabis Wheaton Income Corp. (TSXV:CBW) has developed its streaming platform by funding numerous cannabis facilities/partners across Canada
SmallCapPower | March 19, 2018: Cannabis Wheaton Income Corp. (TSXV:CBW) Thursday announced that it has entered an agreement with Ontario-based R&D firm Honest Inc, part of Province Brands of Canada, the first global brand offering products made from cannabis. As per the agreement, Cannabis Wheaton will assist Province Brands in obtaining the Federal licensing necessary to engage in the research, development and commercialization of cannabis-based beverages through its Wheaton Licensing Program.
As per the deal terms, Cannabis Wheaton will receive 2,068,284 preferred shares in the capital of Province Brands of Canada, which represents 10% equity stake. Additionally, Cannabis Wheaton will issue 303,030 common shares to Province Brands of Canada. The agreement is valid for at least three years and will automatically renew for one-year periods unless otherwise mutually terminated by both parties.
Additionally, the companies have agreed to explore and collaborate on further commercial opportunities including supply and off-take arrangements, cannabis genetics development and refinement, co-branding opportunities, white-label opportunities, IP development and licensing as well as international distribution opportunities.
Since its inception, Cannabis Wheaton has developed its streaming platform by funding numerous cannabis facilities/partners across Canada in exchange for minority equity interests and portions of the cultivated production. Over the past few months, Cannabis Wheaton has also been pursuing the development of distribution channels in Canada and internationally through alliances. The current investment in Province Brands helps Cannabis Wheaton capture a slice of the large recreational opportunity through cannabis-infused beverages.
Cannabis Wheaton is not the only company focused on developing cannabis-infused beverages. As cannabis recreational legalization fast approaches, several other cannabis players are also accelerating their efforts to capture the market through cannabis-infused beverages. Alcohol giant Constellation Brands has also set its sights on developing cannabis-based beverages for sale in markets globally and has invested $200 million for a 10% stake in Canopy Growth Corp. (TSX:WEED) in 2017. And, WeedMD (TSXV:WMD) recently formed a JV with Phivida to develop cannabis-infused beverages.
The deal combines the regulatory and industry expertise of Cannabis Wheaton with Province Brands of Canada’s experienced team, which will eventually play a huge role in the cannabis industry and ultimately be disruptive to the alcohol industry. Post the announcement, shares of Cannabis Wheaton rose 3% on Thursday. Cannabis Wheaton stock currently trades at a market cap of $730 million.
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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