Typical. Not one to let an opportunity pass by without grabbing another damn asset, Marc Lustig at CannaRoyalty (formerly Cannabis Royalties) today announced his company’s debut on the CSE with a side note: Oh yeah, we’ve also taken out 70% of DermaLeaf skin products.
Sure. Why not? You also hit the CSE with a $133 million valuation right out of the gate, with almost $5 million in trading volume early, so what’s a little last minute asset grabbing going to hurt?
While Canada’s creaking financial data system is making it tough for some folks to find the CRZ.C new stock on their trading platforms, those that have are buying in, and at the valuation of the company’s last raise. The stock opened the show at a generous $5 per share before eventually finding the $3.75 base it sits at at the time of writing.
In terms of the the 70% DermaLeaf purchase, the company describes that asset as targeting “a growing market for topical, cannabis-infused skincare and health and beauty products.”
It continues, “DermaLeaf’s formula combines fibroblast cells with certain cannabinoids extracted from cannabis. Fibroblasts are a type of cell found in the connective tissue of the body’s organs, where they produce proteins such as collagen. Dermal fibroblasts exist within the dermis layer of skin which are responsible for generating connective tissue and allowing the skin to recover from injury.”
That acquisition is a nice market greeting, but it’s only one of 21 assets the company has a stake in, has licensed, or has financed. The full list of CannaRoyalty’s assets, gathered under the darkness of their private equity days, is as follows:
RESEARCH
- BAS Research: developing pharma-grade cannabis medications, and offering branded testing services; advanced tissue culture and genetics, ailment-specific research and product development (convertible loan)
- Bodhi Research: trialing cannabis use for concussion and post-concussive syndrome (seed capital investment/equity position)
CONSUMER BRANDS
- GreenRock Botanicals: vape pens/cartridges (100% equity)
- Soul Sugar Kitchen: “gourmet-quality” cannabis edibles (100% equity)
- Lucy’s Pre-rolls: machine-rolled joints
- Rockets Mini Pre-Rolls: single-use pre-rolls
- Rich Extracts: licensed lab producing distillates, shatter and rosin concentrates (term sheet for joint venture)
- DermaLeaf Skincare: cannabis-infused lotions for pain relief (majority equity)
- Best Buds Animal Health: CBD dog treats (100% equity)
- MUV Products: delivery systems such as transdermal patches, metered-dose inhalers and rechargeable vape pens (royalty on gross revenues)
- Stokes Confections: cannabis edibles (exclusive licensing in WA, OR, AZ, Canada)
- AbsoluteXtracts: processing extracts (licensing in WA, Canada)
- Care By Design: CBD in sprays, gelcaps, vaping products and edibles (licensing in WA, Canada)
DEVICES/IPs
- Resolve Digital Health: proprietary smart tech inhalers utilizing Bluetooth tech
- DreamCatcher Labs: large-scale mass-market filling systems and sealed extract cartridges (100% equity)
- Wagner Dimas: innovative equipment and proprietary processes for raw cannabis
STRATEGIC INVESTMENTS
- AltoTerra: subsidiary Cascadia Holdings maintains turnkey facilities for licensed cannabis companies (royalty on gross revenue)
- AltMed: pharma industry-based science and biz knowhow
- Eureka Management Services: operates the Magnolia Wellness Centre in Oakland, CA, a dispensary with 30,000 registered patients (equity stake and convertible loan)
- Three Leaf Holdings: advanced logistics (royalty on gross revenue)
CRZ’s strategy is to collect a piece (or all or the IP or the branding) of multiple verticals, from license holders in multiple states in the US, allowing them to take those brands and IP and technologies and cross-pollinate them to build truly national cannabis companies.
As an example, buying into a vape product in Oregon allows them to take that vape product to California for a license holder with a dispensary, who may have an edibles brand that can be shifted back to Oregon, and Washington, and Arizona, and ultimately Canada, where Aphria has a substantial first look deal with the company.
Want to know more?
Well, that voice in the background you’re hearing now is myself and Marc Lustig talking about the company. Enjoy.
— Chris Parry
With file by Bo Ramone. Podcast editing by Gaalen Engen
Ouch… now I remember why I stay far, far away from IPOs. Lesson learned. Again lol. That Financial Post article was very misleading saying the last private trades were in the range of $4.25 to $4.50 a share. Reasonable level to average down? Say (for example) someone… *cough cough* bought shares at open… we talking holding the bag for weeks, months or years if you were to make a wild guess? Smh! Ah well looking forward to following the progress of this promising company.
Brutal IPO. Everyone should be very cautious buying EMC if this is any indication.
I wouldn’t call it brutal at all. People who buy in at minute one of a new listing, for a $5 valuation, are taking their chances. The stock settled quickly into its natural space. I was asked about it yesterday and said I’d look to get in at around $2, maybe $2.50. If it flew beyond that, you’re rolling dice. Same with Emblem tomorrow – maybe it runs to $10, but probably a solid $3-4, same as Canna.
Thanks. Yup, I made an idiot move. Moving on. Not blaming anyone. Didn’t APH invest in CRZ at $2 PP a while ago? Do you really think it could drop to the same level they bought? Averaging down at $2.50 would be great!
Oh, I think it’s worth what you paid for it. Certainly found its base for now, but don’t forget a couple of important things.
1) It’s still going to be some time before its ticker symbol is widely spread. Still not showing up on Google Finance, online trading desks.
2) Lots of folks are keeping their powder dry for the Emblem Cannabis IPO which is now Monday.
I think you’ll be okay.
Chris listened to podcast and see your invested in canna royalty. I spoke to several of the companies they did deals with. while all are pleased the use of canna royalty equity as cash most as 4 month holds by the borrowerers seems either very ingenius or very dilutive maybe Ponzi like or am I being way to harsh or paranoid? that being said I am intrigued by this so called asset accumulation roll up cannabis biz. your work and thoughts are appreciated. Rusty p.s. will the new ventures when they sell their shares depress the share price in or near the 4 to 6 mont time frame?
Hey Rus, it really comes down to whether you prefer to dilute the share base or drain the purse, when doing these deals. Don’t forget, a cash deal still means (at this early stage) that the cash had to be raised, which is generally dilutive too (unless you’re borrowing money). When I see a company agree to be gobbled up for shares in another company, I take that as a sign of confidence in the company giving up the stock. Clearly the parties have done their due diligence on each other, and if the consumed entity believes the stock will rise, I’m generally going to go along with that.