OPINION: Why Cannabis Wheaton’s (CBW) Unique Business Model Will Win

In a space that is likely to be dominated by a b2c business models, a company like CBW who has both b2b and b2c capabilities will have massive leverage. CBW has no direct competitors in Canada that come close to their scale and ability. They are unique in the sector and their competitive advantage is their business model which includes streaming and licensing deals.

Cannabis Wheaton is headed by Chuck Rifici, the CFO for the Liberal Party of Canada under Justin Trudeau. He also founded Tweed (later to become Canopy (WEED)) and was on the board of Supreme Pharmaceuticals (FIRE) as well as Aurora (ACB). To say Chuck has a pulse on the industry would be an understatement. Chuck’s role in the cannabis space has to be seenas a major asset for investors looking at this company. The next phase of this sector will be dominate by who can execute and who can deliver on the promises of years past.

The brilliance of this business model that Cannabis Wheaton has created is in the supply deals. These range from 33% to 50% of production yields from funded projects, bringing the total anticipated annual yields to 620,000 kg’s. This number is constantly rising and some have estimates of much higher as recent deals are in the process of growing through like Aphria and Broken Coast. This also means that they are not in the business of cultivating cannabis themselves, however, 230,000 kgs is a larger supply than any LP in Canada has.

As an investment, CBW is low risk in that their supply is coming from several different sources. That means that if there is an issue with a growing operation like a contamination, poor health inspection, product recall etc. It wouldn’t be nearly as detrimental to Cannabis Wheaton as it would be that company.

They will not only have a massive supply, they will have distribution as well. Spirit Leaf Holdings currently has 95 licenses for dispensaries across Canada. Through a deal brokered by CBW and Spirit Leaf,  Cannabis Wheaton’s product has rights to 50% of the dispensary chains shelf space. One can imagine that this agreement will be extremely profitable for CBW. Designs of the new dispensaries were posted earlier this week.

Spirit Leaf Inc. Unveils Concept Design for Recreational Cannabis Retail Locations (CNW Group/Spirit Leaf Inc.)

‘Wheaton Licensing is an accelerator platform to support exceptional entrepreneurs through all stages of the application process to become licensed producers of cannabis in Canada. We have collectively worked on over 100 applications at each stage of the federal licensing process—from initial submission through to full sales license. Our team works closely with our partners, aiming to help accelerate their businesses to the next level. Wheaton is a collective of experts and partners who are passionate about the cannabis industry and all of the opportunities within it. Our goal is to ensure the future of the industry continues to be diverse, energetic, innovative and prosperous.’ – Cannabis Wheaton.

Cannabis Wheaton has carved out a clear path to profitability by striking attractive deals with LP’s, having connections in the industry and having a distribution plan to get their product circulating across the country.

From a projected production amount of cannabis the largest holder of Cannabis may not be a grower and, they are not one of the big 3 (Aurora, Canopy, Aphria). Through SEDAR research, we have worked with the Cannabis Wheaton Investor Facebook Group to produce this article detailing the specifics behind Cannabis Wheaton’s massive operation.

Here’s the breakdown:

Cannabis Wheaton’s streaming partners (and the supply amounts for each respective agreement) (in kg’s)

Abcann ON SA BIA Sales Licence 8,000 10% 50% of proceeds from 50k sqft exp. after current 100k sqft expansion is complete
Aphria ON SA BIA Cult. & Sales 15,000 Until 2022 – 60000kg over 4 yrs. for export
Artiva ON SA BIA Pre-Affirmation 17,800 20% 33% of cultivation at cost + 10% for 10 years. Right of first refusal for future expansion.
Beleave ON SA BIA Cult. Licence 15,000 49% 50% proceeds of 200,000 sqft joint venture named ‘Newco’
CannabisCo. (IDP Group & HMT Solutions) ON BSA/SA DA Early Stage 22,500 Nestle Building – kg based on 300,000 sqft build out
Robinson’s Cannabis NS SA BIA Affirmation 10,400 18.3% formerly Cannahort Agriculture
CannTx Life Sciences ON SA DA Affirmation 1,980 16% 33% of all cannabis for 10 yrs. For Phase 1 and Phase 2 build out…total 24000sqft.
Curative Cannabis ON SA BIA Pre-Affirmation 15,000 46% Initial footprint of 30,000 sqft with additional facility of 120,000sq.ft.
FV Pharma-Century Financial Capital Group Inc. ON JV DA Cult. Licence 200,000 49.9% Kraft Building – 620,000 sqft – new name ‘Cannabis ConneXion Corp’
Great White North Growers QC SA DA Affirmation 8,300 17.6%
GreenhouseCo – Peter Quring ON JV DA Pre-Affirmation 162,000 45% 4.2 m sqft of greenhouses in Leamington..360,000kg production total after Phase 3
Green Relief ON SA BIA Cult. & Sales 115,500 24.5% In active discussion regarding their facility expansion
Level Ten ON SA BIA Pre-Affirmation 8,100 20% 30% perpetual stream of cannabis cultivated in Phase 1 – 278,000sqft
Lotus Ventures BC SA DA Active Review 6,000 15.6% 50% of all cannabis proceeds for 10 yrs. and right of first refusal for expansion projects
Plan C BioPharm BC SA DA Affirmation 7,000 49%
Kolab Project – RockGarden Medicinals ON SA DA Cult. Licence 2,080 100% Online Medical distribution with application for Export Licence
Sustainable Growth Strategy Capital – SGSC ON BSA/SA DA Pre-Licence 5,500 30% perpetual stream of cannabis from initial 145,000 sqft build out

 

Total: 620,160 kg’s

 

Cannabis Wheaton also has several distribution channels in place for its large supply.

Independent Pharmacy Group Alliance – Sept 20, ’17 Exclusive Distribution Alliance 40 independent pharmacies for 10 yrs.
Convenience Store Group – Oct. 16, 2017 Exclusive Strategic Alliance 350 conv. stores exclusively for 10 yrs. Physical or online distr. of any form of cannabis
Kolab Project – Jan 15, 2018 Fully-owned subsidiary Established to offer monthly subscription platform to authorized medical patients
Navisent Inc. – Jan 17, 2018 Fully-owned subsidiary Established for distribution to federally legal international jurisdictions
Inner Spirit Holdings Inc. – Feb 7, 2017 Strategic Alliance Agreement 18.5% Over 100 franchise agreements – rights to 50% of the dispensary chains shelf space
National Access Cannabis Corp. – Feb 16, 2018 To be determined Lic. in Manitoba to operate retail stores, intends to deepen relationship with CBW
Province Brands of Canada – March 15, 2018 Strategic Alliance Agreement 10% Research, development and commercialization of cannabis-based beverages. 3 years auto. renewed for 1-year periods unless mutually terminated

 

Cannabis Wheaton Facebook Group:

https://www.facebook.com/groups/cbwinvestors/

 

 

Related:

 

Sources:

Sedar

https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00005865

Cannabis Wheaton

https://wheatonincome.com/

 

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